U.S. Department of Education Office of Inspector General Semiannual Report to Congress No. 45 April 1, 2002 – September 30, 2002 U.S. Department of Education Rod Paige Secretary Office of Inspector General John P. Higgins, Jr. Acting Inspector General Analysis & Inspection Services Mary Mitchelson Acting Assistant Inspector General November 2002 This report is in the public domain. Authorization to reproduce it in whole or in part is granted. While permission to reprint this publication is not necessary, the citation should be: U.S. Department of Education, Office of Inspector General, Analysis & Inspection Services, Semiannual Report to Congress, No. 45, Washington, DC 20202. To order copies of this report: • Write to: ED Pubs, Education Publications Center, U.S. Department of Education, P.O. Box 1398, Jessup, MD 20794-1398; • Fax your request to: (301) 470-1244; • E-mail your request to: firstname.lastname@example.org; • Call in your request toll-free: 1-877-433-7827 (1-877-4-ED-PUBS). If 877 service is not yet available in your area, call 1-800-872-5327 (1-800-USA-LEARN). Those who use a telecom- munications device for the deaf (TDD) or a teletypewriter (TTY) call 1-800-437-0833; or • Order online at: www.ed.gov/pubs/edpubs.html. This report is also available on the Department’s Web site, at: www.ed.gov/offfices/OIG. On request, this publication is available in alternate formats, such as Braille, large print, audiotape, or computer diskette. For more information, please contact the Department’s Alternate Format Center at (202) 260-9895 or (202) 205-8113. U.S. Department of Education Office of Inspector General Semiannual Report to Congress No. 45 April 1 - September 30, 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 April 1, 2002 to September 30, 2002. During this time, we issued 60 audit and inspection reports and memoranda and closed 104 investigations. Our work demonstrates OIG’s strong commitment and valuable role in assisting the Department in ensuring the integrity of its operations and improving its programs to provide the best service to the American public. We direct our resources to critical priorities that are central to the President’s Management Agenda, the Department’s management challenges and strategic plan, and our strategic plan. We developed A Practical Guide for Reviewing Government Purchase Card Programs, edited by the Department of Commerce OIG and published and distributed by the President’s Council on Integrity and Efficiency. Abuse of these cards is unacceptable and compromises the public’s trust in government. Our Guide is an effective resource for detecting and preventing this abuse. We conducted extensive work in information technology (IT) security, a critical component of the Department’s operations, particularly in light of the President’s mandate to expand electronic government. We continued our robust investigative work in federal student aid programs which comprise more than half of the Department’s total budget. We commented on final rulemaking pertaining to the Higher Education Act and, as we had with regard to the proposed regulations, we nonconcurred with provisions on incentive compensation. We testified before Congress on the status of the Department’s financial management and on the quality of audits submitted by entities that receive federal funds. The Secretary has made accountability of employees, operations, and programs the primary focus at the Department, and our work fully supports this goal. We will continue our pursuit of improved performance and meaningful results. In the next six months, we will focus audit, inspection, and investigative attention on financial management, IT system security and continuity, federal student aid, and No Child Left Behind. These areas are key priorities and essential to the Department’s mission and goals. We look forward to working with Congress and the Secretary in making a positive difference in the Department’s programs and operations. John P. Higgins, Jr. Acting Inspector General ACTIVITIES AND ACCOMPLISHMENTS The Office of Inspector General (OIG), for the period April 1, 2002 – September 30, 2002, continued its work to improve the programs and operations of the Department of Education (Department or ED) and to protect their integrity. Our work assisted the Department in its efforts to meet the goals contained in The President’s Management Agenda, the Department’s Annual Plan, 2002-2003, OIG’s Strategic Plan, 2001-2005, the Secretary’s Blueprint for Management Excellence, and the Management Challenges of the Department of Education, February 2002. Our significant audits, investigations, and inspections are summarized below. Detailed information is available on our website at http://www.ed.gov/offices/ OIG. Improved Financial Performance Better financial management is vital to the Department’s ability to effectively and efficiently operate and deliver programs. We completed a number of audits, investigations, and inspections in the area of financial management, and testified before the House Subcommittee on Select Education, Committee on Education and the Workforce, on the status of financial management at the Department. CONTROLS OVER We conducted a follow-up audit on purchase cards to determine if the Department PURCHASE CARDS implemented our previous recommendations. We found that the Department had made some progress, but recommended that it develop on-site guidelines, conduct on-site internal control reviews, and reassess the number of cardholders assigned to an approving official. The Department concurred with our recommendations. (“Audit of Purchase Cards at the U.S. Department of Education,” ED-OIG/A17- C0002, April 9, 2002.) Purchase card review guide goes online We developed A Practical Guide for Reviewing Government Purchase Card Programs to assist OIGs and others in reviewing government purchase card programs. Our guide, produced with the Commerce Department OIG and published by the President’s Council on Integrity and Efficiency (PCIE), is a valuable tool in detecting and preventing fraud, waste, and abuse. The PCIE recognized the guide with an Award for Excellence. It is available online at http:// www.ignet.gov/pande/iande.html. 1 Department employees charged in alleged scheme to misuse government-issued credit cards Our investigation led to the indictment and arrest of two former Department employees who allegedly used their government credit cards to buy household furniture and to pay contractors for work that was not performed. The Department paid about $163,000 for claims as a result of this alleged scheme. MONITORING We evaluated the Department’s process for identifying and monitoring high-risk HIGH-RISK contracts that support educational research and improvement programs. We found CONTRACTS that the Department did not always ensure that the terms of these contracts were followed, and therefore could not ensure that contract obligations were met. The Department concurred with our recommendations and is taking corrective action. (“Audit to Evaluate the Department of Education’s Process for Identifying and Monitoring High-Risk Contracts that Support Office of Educational Research and Improvement (OERI) Programs,” ED-OIG/A19-B0009, September 20, 2002.) FINANCIAL Our investigations resulted in a number of prosecutions for fraud against INTEGRITY Department programs. Seven individuals, including three Department employees, INVESTIGATIONS pled guilty for their roles in a wide-ranging conspiracy to defraud the Department of over one million dollars in electronic equipment and false overtime charges. (See Semiannual Report No. 44, page 5, “Telecommunications Case Pleas and Conviction.”) The three Department employees no longer work for the Department. Three indicted co-conspirators, one a Department employee on indefinite suspension, elected to go to trial. The PCIE has recognized this investigation with an Award for Excellence. Our investigation of an assistant financial aid director in Knoxville, Tennessee led to a guilty plea for mail fraud for submission of fraudulent Federal Family Education Loan (FFEL) applications. This individual submitted loan applications in another person’s name, used a false Social Security number, and falsely certified loan checks through three guaranty agencies. We developed this case from information received from an official at the Florida Office of Student Financial Assistance during resolution of conflicts in the National Student Loan Data System. Another OIG investigation led to the indictment of two brothers on 29 counts of student aid fraud, including the use of false Social Security numbers and birth certificates to obtain federal financial aid. The brothers received approximately $54,000 in aid. 2 Assistant United States Attorney Barbara A. Grewe receiving an award from Secretary Rod Paige and Acting Inspector General John Higgins, Jr. for her outstanding performance on the telecommunications fraud investigation. Information Technology Management Information technology (IT) is a critical component of the Department’s operations, particularly in light of the mandate to expand electronic government contained in The President’s Management Agenda. The Department’s more than 100 systems must be capable of ensuring the availability, confidentiality, and integrity of the data they contain. GOVERNMENT We issued our second evaluation of the Department’s information security plans, INFORMATION programs, and practices as required by GISRA. Our review identified a number of SECURITY AND material and significant weaknesses in technical security controls in four of the REFORM ACT Department’s mission-critical systems. We concluded that the Department was not (GISRA) in full compliance with GISRA. The Department agreed with most of our recommendations. (“Department of Education’s Implementation of GISRA, Year 2,” ED-OIG/A11-C0008, September 16, 2002.) GOVERNMENT Our audit of the Department’s implementation of GPEA found that it has not PAPERWORK developed a Department-wide GPEA strategy or designated a manager to direct ELIMINATION GPEA activities. The Department agreed with some of our findings and ACT (GPEA) recommendations. (“Implementation of the Government Paperwork Elimination Act,” ED-OIG/A11-C0009, September 30, 2002.) ENTERPRISE Our audit of the Department’s enterprise architecture found that the Department ARCHITECTURE and Federal Student Aid (FSA) have made progress toward completing an architecture, but need to complete critical elements to use IT systems across the Department in a cost-effective and efficient way. The Department and FSA concurred with the report’s basic findings, but disagreed with some recommendations. (“Audit of Enterprise Architecture,” ED-OIG/A07-C0001, September 30, 2002.) ADVICE AND We shared our expertise by participating on several Department IT steering ASSISTANCE committees and working groups in an observer and advisory capacity. OIG 3 provided observations to the Deputy Secretary, Assistant Secretary for Management, and Chief Information Officer, and identified opportunities for improvement in the Investment Review Board’s IT investment management process. UNAUTHORIZED OIG and the FBI continue to investigate the fraudulent diversion of $1.9 million in TRANSFER OF Impact Aid funds to improper bank accounts. The owner of one of the businesses FUNDS that fraudulently received funds pled guilty. Another individual was arrested for allegedly conspiring to receive stolen government property. Budget and Performance Integration Performance measures and reliable data are necessary to determine whether programs are accomplishing their purpose. The Department relies on program data from third parties for many of its programs, and our work continues to disclose inaccuracies in this information. TITLE I We issued a joint audit report with the U.S. General Accounting Office, the Texas ACCOUNTABILITY State Auditor’s Office, the Pennsylvania Office of the Auditor General, and the DATA ISSUES City of Philadelphia Office of the Controller, on Title I, Part A program performance data. We found that many states are not complying with state assessment requirements and that states are not ensuring that accountability data are reliable. We recommended that the Department enhance its controls for ensuring that states comply with statutory student assessment requirements and that states implement reliable accountability systems. The Department generally concurred with our findings. The PCIE has recognized this audit with an Award for Excellence. (“A Joint Audit Report on the Status of State Student Assessment Systems and the Quality of Title I School Accountability Data,” ED-OIG/S14- C0001, August 31, 2002.) INDIVIDUALS We completed audits of compliance with the funding formula requirements for WITH IDEA in Texas, Missouri, Florida, Idaho, Rhode Island, and Tennessee. We found DISABILITIES that Florida, Tennessee, and Rhode Island incorrectly calculated the base that EDUCATION ACT determines how much funding they should receive. Florida and Tennessee (IDEA) AUDITS generally concurred with our findings. Rhode Island requested that we modify our recommendation. (Texas: ED-OIG/A06-C0001, July 10, 2002; Missouri: ED-OIG/ A06-C0006, July 10, 2002; Florida: ED-OIG/A06-C0004, July 18, 2002; Idaho: ED-OIG/A06-C0003, July 10, 2002; Rhode Island: ED-OIG/A06-C0002, June 27, 2002; Tennessee: ED-OIG/A06-C0005, June 25, 2002.) FRAUD AGAINST An OIG investigation led to a guilty plea by the former executive director of ELEMENTARY National School Services of Puerto Rico for conspiring to commit extortion. Our AND SECONDARY investigation disclosed that the individual paid over $150,000 in return for Puerto PROGRAMS Rico Department of Education (PRDE) contracts substantially funded with Title I funds. The payments were made between late 1994 and April 2001, when National School Services was awarded contracts valued at more than $26 million. Two OIG audit reports previously cited PRDE for improper administration of Title I contracts awarded to National School Services. 4 Another OIG investigation led to the indictment of an Oakdale School District (Oklahoma) employee for fraudulently obtaining over $120,000 in IDEA funds provided by the Department to the State of Oklahoma. Our investigation found that this individual used the Department’s money to buy vehicles and gifts for acquaintances. Our investigation of the former comptroller of the Douglas County, Georgia, school system led to a sentence of 45 years in prison and a fine of $10,000. We found that this person submitted fraudulent documents to obtain money for a fictitious company. A joint OIG/San Jose (California) Police Department investigation led to a guilty plea by the accountant for the Alum Rock Union Elementary School District for embezzling over $700,000 in Department funds. This individual deposited the money in her personal bank account. COMPLIANCE We worked with the Department on a compliance agreement between the ACTIVITY IN Department and the Virgin Islands to address a number of problems in VIRGIN ISLANDS administration of elementary and secondary education programs. Our audits and AND PUERTO work by the Department and the Department of the Interior OIG had previously RICO identified these deficiencies. We also worked with the Department on an extensive corrective action plan for the Puerto Rico Department of Education. The plan addresses high-risk conditions and deficiencies identified in our PRDE Single Audits and extensive OIG audit and investigative work. GUARANTY Our work involving guaranty agencies yielded significant audit and investigative AGENCIES results as discussed in the following summaries. 5 Guaranty agencies’ failure to comply fully with federal and operating fund restrictions continues to result in improper exclusions Our audits of two guaranty agencies found that the agencies did not deposit FFEL funds into the appropriate reserve fund as required by the Higher Education Act. Departmental regulations provide that all earnings attributable to federal funds while held by the guaranty agency or its agent should follow those funds. Our audit at United Student Aid Funds, Inc. (USAF), found that USAF did not deposit about $6,626,000 into the Federal Fund. We recommended that the Department require USAF to transfer the $6,626,000 from its Operating Fund to the Federal Fund, and recover $6,288,000 of this amount to make the Operating Fund whole. USAF did not agree with our findings. (“United Student Aid Funds, Inc.’s Administration of the Federal Family Education Loan Program Federal and Operating Funds,” ED-OIG/A05-B0033, April 23, 2002.) At Oregon Student Assistance Commission (OSAC), we found that OSAC improperly excluded about $1.6 million from the fund balance when it established the Federal Fund, and improperly deposited about $160,000 of supplemental preclaims assistance payments into the Operating Fund instead of the Federal Fund. OSAC did not agree with our finding regarding improper exclusion of the $1.6 million. (“Oregon Student Assistance Commission’s Administration of the Federal Family Education Loan Program Federal and Operating Funds,” ED-OIG/ A09-B0016, May 9, 2002.) Investigative initiatives add value to OIG efforts with guaranty agencies OIG investigations and presentations at guaranty agencies were important as we continue to work with these organizations to improve their integrity and accountability regarding Department funds and programs. Our investigation led to 23 months incarceration and the order to pay $163,670 in restitution for the financial aid director at Manhattan College. The official submitted fraudulent FFEL applications, in his name and others, to guaranty agencies from September 1998 through December 1999, claiming to be a student and requesting over $200,000 in loan proceeds. OIG agents presented four sessions on fraud and abuse to the financial aid community as part of a series of workshops offered by the Department on technical aspects of financial aid. We also participated in partnership meetings with representatives from California State licensing agencies, guaranty agencies, and other ED offices. We discussed closed schools, challenged schools, and coordinating student and citizen complaints among the various agencies. PROGRAM We provided assistance and information to the Office of Management and Budget ASSESSMENT (OMB) in connection with its review of Department programs under the Program RATING TOOL Assessment Rating Tool (PART) initiative. OMB is requiring agencies to have ASSISTANCE performance data that better describe programs funded in those agencies and requested that we review data collected from the Department for its PART 6 assessments. Our recommendations to OMB resulted in modifications to the Department assessments. GRADUATION We completed an inspection of graduation rates for less than two-year RATES FOR LESS postsecondary schools eligible to participate in FSA programs. We found that the THAN TWO-YEAR Department does not have formal procedures for enforcement against institutions POSTSECONDARY that do not submit mandatory graduation rate surveys. The Department concurred INSTITUTIONS with our recommendations to develop policies and procedures to ensure consistent enforcement of Graduation Rate Survey reporting requirements, and to initiate administrative action against non-compliant institutions. (“Graduation Rates for Less than Two-Year Postsecondary Institutions,” ED-OIG/I13-C0001, August 19, 2002.) STATE AGENCY A joint OIG, FBI, and FEMA OIG investigation led to the California Department AND of Education (CDE) agreeing to pay up to $3.3 million to settle fraud allegations. COMMUNITY- CDE used Department grants to fund community-based organizations (CBOs) to BASED provide English as a Second Language and Citizenship training. CDE released ORGANIZATION funds to organizations that it knew lacked documentation to support the CBO RETURN FUNDS claims for funds, did not have proper not-for-profit status, and had falsified student attendance records. This investigation also led to a consent judgment of forfeiture between the United States and Citizens in Action Community Development Corporation (CIACDC) for $639,166. CIACDC was started and controlled by Hermandad Mexicana Nacional Legal Center (HMNLC), to avoid the government’s seizure of the funds. HMNLC is a non-profit CBO that received funds from CDE to provide adult education courses. NONFEDERAL Participants in Department programs are required to submit annual audits AUDIT performed by independent public accountants (IPAs). In accordance with the ACTIVITIES Inspector General Act requirement to assure that work performed by nonfederal auditors complies with government auditing standards, we publish audit guidance specific to Department programs to assist IPAs in performing these audits. We published a new Foreign School Audit Guide, for use by foreign schools enrolling U.S. students receiving loans under the FFEL program. Our new guide will facilitate compliance by foreign schools with the audit requirements of the Higher Education Act and Department regulations. We also performed quality control reviews (QCRs) of audits conducted by IPAs to assess audit quality. We performed 51 QCRs of audits conducted by 48 different IPA firms, or offices of firms with multiple offices. We found that 67 percent were acceptable, 23 percent were technically deficient, and 10 percent were substandard. We also referred four IPAs to the appropriate State Boards of Accountancy and State Societies of Certified Public Accountants for possible disciplinary action for substandard work. Three of these IPAs were referred for work reported in a prior semiannual report. 7 Reduction of Fraud and Error in Student Aid Programs and Deficiencies in Financial Management Student financial aid programs are the Department’s largest dollar value programs. These programs are inherently risky since many recipients do not have a credit history. We made a number of recommendations to help the Department and FSA identify and address weaknesses. INCENTIVE We continue to find violations of the statutory prohibition against incentive COMPENSATION compensation, the practice of institutions paying individuals or organizations based on their success in enrolling students or obtaining financial aid for the school. University of La Verne Our audit of University of La Verne in California found that the school violated the statutory prohibition on incentive payments by implementing a marketing incentive plan in academic year 1999-2000. This plan established a bonus pool based on the revenue gained from enrollments in the university’s School of Continuing Education exceeding a base enrollment quota. We recommended that the university return to lenders $6,528,981 in FFEL funds, and repay the Department interest and special allowance. We also recommended that the university return $395,730 in Pell funds to the Department. The university agreed with our findings, but disagreed with our recommendation to return Title IV funds. (“University of La Verne’s Compliance with the Higher Education Act’s Prohibition on Incentive Payments Based on Success in Securing Enrollments,” ED-OIG/A09-C0004, June 21, 2002.) Baker University At Baker University in Kansas, we found that the university’s contract with the Institute for Professional Development (IPD) to provide recruiting and accounting services included a provision to pay IPD based on the number of students enrolled in its School of Professional and Graduate Studies. IPD in turn paid its recruiters based on the number of students they recruited for the programs. We recommended that Baker return to lenders and the Department $13,935,295 in Title IV funds disbursed to students who were improperly recruited. The university did not agree with our findings and recommendations. (“Baker University School of Professional and Graduate Study's Administration of Title IV Federal Student Aid Programs,” ED-OIG/A07-A0030, September 19, 2002.) Southern Wesleyan University Our audit at Southern Wesleyan University in South Carolina found that the university did not comply with the statutory prohibition on incentive compensation and did not provide the number of instructional hours required to meet the statutory definition of an academic year. We found that the university is liable for $19,451,123 in Title IV funds. The university disagreed with our findings and 8 recommendations. (“Audit of Commissioned Sales and Course Length at Southern Wesleyan University,” ED-OIG/A06-A0024, September 4, 2002.) NOTICE OF We worked with the Department during negotiations on proposed rules regarding PROPOSED FSA programs and provided comments on several provisions. We nonconcurred RULEMAKING with one provision to change the incentive compensation regulations. This (NPRM) provision would allow institutions to pay third parties based on success in securing enrollment, without limitation on the incentive nature of those payments. We do not believe that the existing statutory ban on incentive compensation allows any incentive payments to entities involved in recruiting based on their success in enrolling students. BONUSES FOR Our investigation of a former employee at Miami Institute of Technology led to the ENROLLMENTS sentencing of a former admissions counselor who received a bonus or commission based on the students she enrolled. She was sentenced to two and one-half years probation and ordered to pay restitution of $48,825. WEAKNESSES IN The Higher Education Act requires that a student who does not have a high school ABILITY-TO- diploma or recognized equivalent must pass an independently administered ability- BENEFIT to-benefit (ATB) test to be eligible to receive federal student aid. We issued three PROGRAM audits on ATB issues. Federal Student Aid’s monitoring Our audit found that FSA does not effectively monitor Department-approved ATB test publishers to ensure compliance with applicable laws, regulations, and the terms of agreements with the Secretary. (“Audit of Procedures at Federal Student Aid for Monitoring the Ability-to-Benefit Test Publishers Approved by the U.S. Department of Education: American College Testing, The College Board, CTB/ McGraw-Hill, and Wonderlic, Inc.,” ED-OIG/A03-B0001, August 22, 2002.) We recommended that FSA ensure that test publishers comply with requirements, and improve its processes for identifying and reporting retest errors so institutions have accurate and timely information when making eligibility determinations. We also recommended that FSA either withdraw the Department’s approval of American College Testing’s (ACT) Assessment Test or revise the agreement. FSA agreed with our recommendations and indicated that ACT has discontinued use of its assessment scores for ATB. We also recommended that the Department ensure that the regulations clearly define who is responsible for liabilities to ED regarding Title IV funds that students receive on the basis of an improper ATB test administration. The Department disagreed with this recommendation. American College Testing We found that ACT was not in compliance with its agreement with the Department for the approved use of its Career Programs Assessment Test. We recommended 9 that FSA require ACT to strengthen its management controls and ensure that institutions have accurate and timely information when making eligibility determinations. We also recommended that the Department reconsider its approval of ACT’s Assessment Test for ATB testing if ACT does not implement our recommendations. ACT concurred with most of our recommendations, and stated that it intends to address the issues we raised. (“Audit of American College Testing’s Ability-to-Benefit (ATB) Policies and Procedures for Its Career Programs Assessment Test (CPAt),” ED-OIG/A03-B0024, May 13, 2002.) Lincoln Technical Institute Our audit of Lincoln Technical Institute (LTI) in Pennsylvania found that between July 1, 1997 and November 7, 2000, LTI compromised the test security of ATB tests administered for its students. We recommended that FSA require LTI to repay the Department and the appropriate lenders $224,345 in Title IV funds. We also identified other weaknesses in the school’s ATB testing process. LTI disagreed with our findings and recommendations. (“Audit of the Ability-to- Benefit Testing Process at Lincoln Technical Institute, Inc.,” ED-OIG/A03-B001, May 10, 2002.) OIG investigates ATB scams An OIG investigation led to a guilty plea by a former Indiana beauty school owner for student aid fraud and money laundering. The resulting sentence included 15 months incarceration, two years supervised release after incarceration, and an order to pay the Department $1,091,101. This individual enrolled students in an ineligible program and enrolled students without high school diplomas or GED certificates, or without taking an ability-to-benefit test. One other person was previously sentenced and another awaits sentencing. FEDERAL A significant portion of our investigative work is in federal student aid. Our cases STUDENT AID involved fraud by institution officials and by aid recipients. Institutional fraud can FRAUD be in the form of default and deferment fraud, refund fraud, and ineligible programs receiving funds. Because of OIG investigative efforts, this period six individuals were debarred and 17 suspended from participating in federal programs. Examples of significant prosecutions this period follow. Institutional fraud An OIG investigation led to a six-year prison term and restitution order of $11,659,499 for the leader of a fraud scheme. This person and six associates were charged in January 1997. The leader originally fled the country but was extradited to the United States in November 2001. The leader created a fictitious postsecondary institution, Toldos Yakov Yosef, Brooklyn, New York, for the purpose of collecting Pell Grants and other aid. Another of our investigations led to a guilty plea from a former chief financial aid officer at LeMoyne-Owen College, Memphis, Tennessee. The former aid officer 10 issued approximately $72,000 in refund checks under the names of individuals who were never students at the school. An OIG investigation led to 27 months incarceration and an order to pay restitution of $1,009,190 for the former owner of Unger and Associates (UAI) for misusing client trust funds of over $1 million. This individual was also ordered to surrender the net proceeds, amounting to approximately $300,000, from a recent sale of real estate. UAI contracted with ED and over 200 colleges and universities to collect on defaulted federal student loans and tuition. Between February 1998 and June 1999, UAI used over $1 million in client trust funds for personal and operating expenses instead of remitting them to clients. Recipient fraud Recipient fraud includes falsification of income, identity theft, falsification of eligibility status, and fraudulent loan discharges. We also had several significant cases involving preparers assisting clients in obtaining aid for which they were not eligible. A former Chicago schoolteacher was sentenced to two years probation, fined $2,000, and ordered to pay restitution of $26,150 for falsifying the Free Application for Federal Student Aid (FAFSA). Our investigation disclosed that this person provided false income information on the FAFSA and income tax returns, allowing her son to receive Pell Grants and other aid for which he was ineligible. Our joint investigation with the Social Security Administration OIG and the FBI resulted in an Illinois couple being found guilty of financial aid fraud and Social Security fraud. For the last 18 years, the couple committed fraud that allowed them to receive over $18,504 in federal and state financial aid and $426,000 in Social Security benefits. Our investigation of a financial aid consulting service owner led to his sentencing to 51 months incarceration, and ordered restitution of $1,585,182 to the Department and $1,057,580 to the Illinois Student Assistance Commission. This person prepared more than 500 fraudulent student aid applications for clients who underreported income to make them eligible for federal and state grant funds. He was one of 27 individuals indicted in March 2001. To date, 26 have pled guilty and over $3 million has been recovered through civil settlements and civil fraud filings. Our investigation led to a guilty plea by a teacher’s assistant in Chicago for federal student aid fraud. We found that this person paid a preparer to underreport parental income in her children’s financial aid paperwork. The false income information, submitted to three universities from 1989 through 1999, resulted in receipt of $23,000 in federal student aid her children were ineligible to receive. 11 OIG provides vital support for terrorist investigation OIG agents continue to support the investigation of the September 11, 2001, attacks on the World Trade Center and the Pentagon. Our agents are performing a number of key services, including analysis of electronic data and evaluation of terrorist internet data. We also initiated Project Strike Back to provide investigative and analytical support to the FBI in the nation’s terrorism investigation. These angels were presented to our office by an Oklahoma elementary school class to show their appreciation and support for the volunteers who helped in the various 9/11 recovery efforts. 12 Reporting Requirements (P.L. 95-452) Table Page Section Requirement Number Number 5(a)(1) and Significant Problems, Abuses, and Deficiencies 5(a)(2) Activities and Accomplishments * * 5(a)(3) Uncompleted Corrective Actions Recommendations Described in Previous Semiannual Reports on Which 1 15 Corrective Action Has Not Been Completed 5(a)(4) Matters Referred to Prosecutive Authorities Investigation Services Cumulative Actions 7 24 Statistical Profile 10 26 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 2 16 Activities 5(a)(7) Summary of Significant Audits Activities and Accomplishments * * 5(a)(8) Audit Reports Containing Questioned Costs Inspector General Issued Audit Reports with Questioned Costs 4 21 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 5 21 Funds 5(a)(10) Summary of Unresolved Audit Reports Issued Prior to the Beginning of the Reporting Period Unresolved Reports Issued Prior to April 1, 2002 6 21 5(a)(11) Significant Revised Management Decisions** 5(a)(12) Significant Management Decisions with Which OIG Disagreed** * Information found on pages 1-12 of this report. ** No instances to report. 13 Management Challenges • Correct long standing financial management problems • Strengthen information technology security • Improve internal controls • Improve contract monitoring • Balance compliance monitoring and technical assistance • Meeting its goal of removing the federal student aid 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 14 Table 1: Recommendations Described in Previous Semiannual Reports on Which Corrective Action Has Not Been Completed Report Report Title Total Number of Latest Number/ (Prior Semiannual Report [SAR] Date Monetary Recommendations Target (Date Issued) Number and Page) 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. New Since Last Reporting Period Office of the Chief Financial Officer A17-A0002 Fiscal Year 2000 Annual Financial Statements U.S. Department 09/30/01 * 2 19 02/03/03 (02/28/01) of Education (SAR 42, pp. 1, 2) Federal Student Aid A17-A0003 Fiscal Year 2000 Annual Financial Statements Student Financial 06/30/01 * 2 16 02/03/03 (02/28/01) Assistance (SAR 42, pp. 1, 2) Audits Reported in Previous Semiannual Reports Office of Postsecondary Education A04-90014 Review of Title III Program, HEA, Compliance with GPRA 03/31/01 * 6 1 12/31/02 (06/30/00) Requirements for Implementation of Performance Indicators (SAR 41, pg. 23) Federal Student Aid A01-90005 The Recertification Process for Foreign Schools Needs to Be 03/31/01 * 1 3 10/31/02 (09/29/00) Improved (SAR 41, pg. 23) A17-90018 Fiscal Year 1999 Annual Financial Statements Student Financial 09/30/00 * 1 22 12/31/02 (02/28/00) Assistance (SAR 40, pg. 19) Office of the Chief Financial Officer A17-90019 Fiscal Year 1999 Annual Financial Statements U.S. Department 07/31/00 * 1 23 12/31/02 (02/28/00) of Education (SAR 40, pg. 19) Office of the Chief Information Officer A11-90013 Review of Security Posture, Policies and Plans (SAR 40, pg. 3) 06/30/00 * 3 10 02/03/03 (02/25/00) A11-90018 Review of EDNET Security (SAR 41, pg. 22) 03/31/01 * 2 58 12/15/02 (07/10/00) A11-A0005 Review of Planning and Assessment Activities for Presidential 03/31/01 * 2 8 02/03/03 (09/14/00) Decision Directive 63 on Critical Infrastructure Protection (SAR 41, pg. 22) Office of the Under Secretary A17-70007 Moving Towards a Results-Oriented Organization: A Report on 01/31/00 * ** 8 ** (09/24/98) the Status of ED’s Implementation of the Results Act (SAR 37, pg. 14) * Non-monetary findings only. ** Closure request was not received by the Department before reporting period ended (09/30/02). 15 Table 2: ED/OIG Audit Services Reports on Education Department Programs and Activities (April 1, 2002 to September 30, 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 42 audit reports were issued by ED/OIG auditors. In addition, we issued 12 alternative products, which include 3 action memoranda,1 3 alert memoranda,2 1 information memorandum, and 5 special projects. The 42 reports, 5 special projects, and 1 information memorandum are listed below by respective program office. The 6 action/alert memoranda, which have restricted distribution, are not listed. AUDIT REPORTS Federal Student Aid (FSA) A03-B0001 Audit of Procedures at Federal Student Aid (FSA) for 08/22/02 * * * 4 Monitoring the Ability-to-Benefit (ATB) Test Publishers Approved by the U.S. Department of Education (ED): American College Testing (ACT), The College Board, CTB/McGraw-Hill, and Wonderlic, Inc. (Wonderlic) (OPE also designated as an action office for this report) A03-B0013 Audit of the Ability-to-Benefit (ATB) Testing Process at 05/10/02 $256,946 * * 9 Lincoln Technical Institute, Inc. (LTI), Philadelphia, PA A03-B0024 Audit of American College Testing’s Ability-to-Benefit 05/13/02 * * * 12 (ATB) Policies and Procedures for its Career Programs Assessment Test (CPAt) A04-B0015 Review of Cash Management and Student Financial 09/26/02 $997,313 * * 7 Assistance Refund Procedures at Bennett College (OPE designated as collateral action office for this report) A05-B0019 Audit of Course Length at Trinity Christian College 09/17/02 $111,061 * * 3 (Trinity) A05-B0033 United Student Aid Funds, Inc.’s Administration of the 04/23/02 $6,626,000 * * 4 Federal Family Education Loan Program Federal and Operating Funds A05-B0037 Audit of the Administration of the Student Financial 07/23/02 $4,366 * * 4 Assistance Programs by Aakers Business College (College) during the period October 1, 1998, through September 30, 1999 A05-B0040 Audit of the Administration of Selected Aspects of the 08/07/02 $61,466 * * 3 Student Financial Assistance Programs by Globe College (College) during the period January 1, 1999, through December 31, 1999 A06-A0024 Audit of Commissioned Sales and Course Length at 09/04/02 $19,451,123 * * 5 Southern Wesleyan University A06-B0007 University of San Francisco’s Administration of the 07/24/02 $201,655 $1,189,345 * 5 William D. Ford Federal Direct Loan Program A06-C0019 Audit of Wade College’s (Wade) Compliance with Title IV 06/19/02 $3,746 * * 4 of the Higher Education Act of 1965 (HEA), as amended, and selected regulations governing Federal Student Financial Assistance (SFA) Programs during the period July 1, 2000, through December 31, 2001 16 Table 2: ED/OIG Audit Services Reports on Education Department Programs and Activities (April 1, 2002 to September 30, 2002) (Cont.) Better Report Date Questioned Unsupported Use of Number of Number Report Title Issued Costs** Costs Funds Recommend. A07-A0030 Baker University School of Professional and Graduate 09/19/02 $15,716,275 * * 7 Study’s Administration of Title IV Federal Student Aid Programs A07-A0031 Fontbonne University Options Program’s Administration 09/30/02 $12,441,490 * * 7 of Title IV Federal Student Aid Programs A07-B0002 Audit of the National Student Loan Program’s 09/27/02 $728,183 $1,944,758 * 10 Establishment of the Federal Family Education Loan Program Federal and Operating Funds A09-B0016 Oregon Student Assistance Commission’s Administration 05/09/02 $2,044,821 $1,985,628 * 10 of the Federal Family Education Loan Program Federal and Operating Funds A09-C0004 University of LaVerne’s Compliance with the Higher 06/21/02 $6,924,711 * * 2 Education Act’s Prohibition on Incentive Payments Based on Success in Securing Enrollments A09-C0005 Silicon Valley College’s Administration of the Higher 09/20/02 $436 * * 6 Education Act, Title IV Programs Office of the Chief Financial Officer (OCFO) A07-B0016 The Department’s Management Controls over 09/26/02 * * * 5 Discretionary Grants Need to be Strengthened to Ensure Grant Accountability A07-C0008 Contract Closeout Audit of Office of Educational 09/12/02 $320,195 * * 4 Research and Improvement Contract No. RJ96006501 at Northwest Regional Educational Laboratory A17-C0002 Audit of Purchase Cards at the U.S. Department of 04/09/02 * * * 4 Education A19-B0009 Audit to Evaluate the Department of Education’s Process 09/20/02 $4,853 * * 20 for Identifying and Monitoring High-Risk Contracts that Support Office of Educational Research and Improvement (OERI) Programs (OERI also designated as action office for this report) Office of the Chief Information Officer (OCIO) A07-C0001 Audit of Enterprise Architecture 09/30/02 * * * 4 (FSA also designated as action office for this report) A11-C0008 The Department of Education’s Implementation of the 09/16/02 * * * 26 Government Information Security Reform Act (GISRA) Year 23 A11-C0009 Implementation of the Government Paperwork 09/30/02 * * * 2 Elimination Act 17 Table 2: ED/OIG Audit Services Reports on Education Department Programs and Activities (April 1, 2002 to September 30, 2002) (Cont.) Better Report Date Questioned Unsupported Use of Number of Number Report Title Issued Costs** Costs Funds Recommend. Office of Educational Research and Improvement (OERI) A05-C0011 Audit of the Public Broadcasting Service’s (PBS) 09/10/02 $1,974 $147,456 * 5 Administration of the TeacherLine Grant No. R286A000003-01 (Grant) awarded under the Telecommunications Demonstration Project for Mathematics for the period June 1, 2000, through May 31, 2001 A05-C0020 Audit of the Public Broadcasting Service’s (PBS) 09/10/02 $52 $140,664 * 4 Administration of the Ready-To-Learn Cooperative Agreement No. R295A000002 (Agreement) awarded under the Department of Education’s Ready-To-Learn Television Program for the period September 1, 2000, through August 31, 2001 Office of Elementary and Secondary Education (OESE) A02-B0025 Puerto Rico Department of Education Did Not Administer 09/12/02 $371,748 $1,774,275 * 10 Properly Three Contracts with R.V. Research and Management Group, Inc. A03-B0023 Audit of Caroline Wilder Harris (C.W. Harris) Elementary 09/17/02 * $43,159 * 2 School’s Federal Grant Expenditures for the period July 1, 1999, through June 30, 2001 A05-B0011 Audit of the Title I, Part A, Targeted Assistance Schools 08/02/02 $120,760 $338,571 * 4 Grant (Grant) Administered by the Mount Clemens Community Schools District (District) for the July 1, 1997, through June 30, 1998, Award Year A05-B0038 Audit of the Michigan Department of Education’s (MDE) 09/06/02 * * * 0 Administration of Selected Federal Funds Provided to Charter Schools for the period October 1, 1999, through September 30, 2000 A05-C0012 Audit of East Cleveland City Schools’ (ECCS) 09/18/02 $38,678 $310,959 * 9 Administration of the 21st Century Community Learning Centers (21st Century) Grant at Kirk Middle School (Kirk) for the period June 1, 1998, through December 31, 2001 Office of Postsecondary Education (OPE) A03-B0026 Audit of Delaware State University’s Administration of 07/11/02 * * * 7 the Title III Strengthening HBCU Program A05-B0035 Audit of Robert Morris College’s Administration of the 09/27/02 $20,151 * * 12 Talent Search, Upward Bound, and Student Support Services Programs Chicago, Illinois A07-A0033 Audit of Gaining Early Awareness and Readiness for 06/07/02 * * * 8 Undergraduate Programs Office of Special Education and Rehabilitative Services (OSERS) A02-B0014 Audit of the Puerto Rico Vocational Rehabilitation 06/26/02 * $15,800,000 * 5 Administration (PRVRA) 18 Table 2: ED/OIG Audit Services Reports on Education Department Programs and Activities (April 1, 2002 to September 30, 2002) (Cont.) Better Report Date Questioned Unsupported Use of Number of Number Report Title Issued Costs** Costs Funds Recommend. A06-B0028 Allowability of Office of Special Education and 05/23/02 $17,220 $45,500 * 5 Rehabilitative Services’ Grant Charges by Partners Resource Network, Inc., Beaumont, Texas A06-C0001 Audit of the Individuals with Disabilities Education Act 07/10/02 * * * 0 (IDEA), Part B, Section 611, at the Texas Education Agency (Texas) A06-C0002 Audit of the Individuals with Disabilities Education Act 06/27/02 * * * 1 (IDEA), Part B, Section 611, at the State of Rhode Island’s Elementary and Secondary Education (Rhode Island) A06-C0003 Audit of the Individuals with Disabilities Education Act 07/10/02 * * * 0 (IDEA), Part B, Section 611, at the Idaho State Department of Education (Idaho) A06-C0004 Audit of the Individuals with Disabilities Education Act 07/18/02 * * * 1 (IDEA), Part B, Section 611, at the Florida Department of Education (Florida) A06-C0005 Audit of the Individuals with Disabilities Education Act 06/25/02 * * * 1 (IDEA), Part B, Section 611, at the Tennessee Department of Education (Tennessee) A06-C0006 Audit of the Individuals with Disabilities Education Act 07/10/02 * * * 0 (IDEA), Part B, Section 611, at the Missouri Department of Elementary and Secondary Education (Missouri) ALTERNATE AUDIT SERVICES PRODUCTS Office of the Chief Financial Officer (OCFO) S17-C0010 Review of Third Party Drafts Questioned by the U.S. 09/27/02 * * * 0 General Accounting Office Office of Elementary and Secondary Education (OESE) S14-C0001 A Joint Audit Report on the Status of State Student 08/31/02 * * * 6 Assessment Systems and the Quality of Title I School Accountability Data (joint effort of GAO, ED/OIG, Texas State Auditor’s Office, Pennsylvania Department of the Auditor General, and the Office of the City Controller, Philadelphia) Federal Student Aid (FSA) E07-C0017 Colorado Student Loan Program’s Proposed Fiscal 07/09/02 * * * 0 Separation of the Loan Servicing Unit and Proposed Buyout of Federal Non-liquid Assets (issued to FSA and OPE as Information Memorandum FSA No. 02-01) S07-C0024 Results of the OIG Analysis of the Consistent Answers for 09/30/02 * * * 15 Customers Share-In-Savings Proposals (special project to assist ED with on-going negotiation efforts)3 19 Table 2: ED/OIG Audit Services Reports on Education Department Programs and Activities (April 1, 2002 to September 30, 2002) (Cont.) Better Report Date Questioned Unsupported Use of Number of Number Report Title Issued Costs** Costs Funds Recommend. Office of Postsecondary Education (OPE) A09-C0016 North Central Association of Colleges and Schools’ 09/26/02 * * * 0 (NCACS) Accreditation Standards for Student Achievement and Program Length (Management Information Report to assist ED with its oversight over accrediting agencies and to provide suggestions for enhancement to NCACS) A09-C0017 Accrediting Commission of Career Schools and Colleges 09/27/02 * * * 0 of Technology’s (ACCSCT) Accreditation Standards for Student Achievement and Program Length (Management Information Report to assist ED with its oversight over accrediting agencies and to provide suggestions for enhancement to ACCSCT) * Non-monetary finding only. ** Includes other recommended recoveries. A - Audit S - Special Report E - Action Memorandum 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 website. 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 website unless information is restricted. 3 Restricted distribution. Table 3: Other ED/OIG Reports on Education Department Programs and Activities (April 1, 2002 to September 30, 2002) Report Number Title of Report Date Issued I13-C0025 A Practical Guide for Reviewing Government Purchase Card Programs 06/11/02 I13-C0013 OIG Review of the Department’s Physical Security Assessment Report II 06/13/02 I13-C0020 OIG Review of the OMB PART Tool and Spring Assessments 06/28/02 I13-C0012 Development of Core Competencies for OIG Analysis and Inspection Services 08/08/02 I13-C0001 Graduation Rates for Less Than Two-Year Postsecondary Institutions 08/19/02 I13-C0020 OIG Review of OMB Draft PART Assessments 09/13/02 20 Table 4: Inspector General Issued Audit Reports with Questioned Costs1 Number Questioned Unsupported2 A. For which no management decision has been made before the 44 $122,819,629 $23,941,455 commencement of the reporting period (as adjusted)3 B. Which were issued during the reporting period 26 $90,064,778 $24,510,470 Subtotals (A + B) 70 $212,884,407 $48,451,925 C. For which a management decision was made during the reporting period 17 $9,304,915 $3,337,836 (i) Dollar value of disallowed costs $9,240,307 $3,337,836 (ii) Dollar value of costs not disallowed $64,608 $0 D. For which no management decision has been made by the end of the 53 $203,579,492 $45,114,089 reporting period E. For which no management decision was made within six months of 27 $113,514,714 $20,603,619 issuance 1 None of the audits reported in this table were performed by the Defense Contract Audit Agency. 2 Included in questioned costs. 3 Beginning balance for Unsupported Costs was decreased by $100,000 (adjustment made to our database for audit A07-A0006). Also, beginning balance for Questioned Costs was increased by $2,214 (adjustment made to our database for audit A05-90054). Table 5: Inspector General Issued Audit Reports with Recommendations for Better Use of Funds Number Dollar Value No activity to report Table 6: Unresolved Reports Issued Prior to April 1, 2002 Total Report Report Title Date Monetary Number of Number (Prior Semiannual [SAR] Number and Page) Issued Findings Recommend. 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 Since Last Reporting Period Federal Student Aid A03-A0022 Audit of Commissioned Sales and Course Length at Wesley College 01/15/02 $1,431,560 5 Status: Audit was placed on administrative stay on January 29, 2002. A03-B0022 Audit of Wonderlic’s Ability-to-Benefit Program 02/05/02 * 4 Status: Following discussions with FSA and OPE, OPE has been designated as the action office for this audit. A04-10008 CSX Commercial Services, Inc. (SAR 27, pg. 34) 09/17/93 $19,900,000 9 Status: This audit came off administrative stay. Program office is researching payment history. 21 Table 6: Unresolved Reports Issued Prior to April 1, 2002 (Cont.) Total Report Report Title Date Monetary Number of Number (Prior Semiannual [SAR] Number and Page) Issued Findings Recommend. A05-B0003 Audit of Commissioned Sales and Course Length at Benedictine University 12/13/01 $221,988 5 Status: Audit was placed on administrative stay on March 19, 2002. A06-B0012 Audit of Los Angeles City College’s Compliance with the Title IV, Student 11/14/01 $14,072 3 Financial Assistance, Verification Requirements Status: Program office is working on final audit determination. Office of the Chief Financial Officer A19-B0010 Audit of Controls over Government Travel Cards 03/27/02 $52,963 7 Status: Progress is being made in resolving and closing the audit. Office of Elementary and Secondary Education A03-B0025 Improving Title I Data Integrity for Schools Identified for Improvement 03/27/02 * 4 Status: Action items submitted to OIG on October 1, 2002. Office of Postsecondary Education A07-90034 Department Controls over TRIO Grantee Monitoring 01/04/02 * 9 Status: Waiting for a response from program office. Reported in Previous Semiannual Reports Federal Student Aid A02-70010 Drake Business Schools Corporation - Refunds of Unearned Tuition, Fees and 06/06/00 $72,493 11 Other Institutional Charges (SAR 41, pg. 23) Status: Audit was placed on administrative stay on March 29, 2001. Office of the General Counsel required additional audit work before the final audit determination can be issued. A03-90005 Computer Dynamics Institute Incorporated’s Eligibility to Participate in the Title 09/15/00 $6,410,913 6 IV Programs (SAR 41, pg. 23) Status: Program office informed us that the audit is resolved. It will be removed in the next Semiannual Report. A05-A0030 Audit of Commissioned Sales at Olivet Nazarene University (SAR 43, pg. 11) 05/21/01 $3,299,891 4 Status: Audit was placed on administrative stay on July 26, 2001. A05-B0004 Indiana Wesleyan University, Adult and Professional Studies Administration of 09/28/01 $31,682,782 5 Title IV Programs, Marion, Indiana (SAR 43, pg. 11) Status: Audit was placed on administrative stay on October 24, 2001. A05-B0014 Audit of Course Length at Olivet Nazarene University (SAR 43, pg. 12) 09/28/01 * 4 Status: Audit was placed on administrative stay on October 24, 2001. 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 (SAR 37, pg. 17) 07/17/98 $15,082 4 Status: Audit was placed on administrative stay on June 29, 2000. A06-90010 International Aviation and Travel Academy’s Administration of Title IV Student 03/29/01 $6,637,634 7 Financial Assistance Programs (SAR 42, pg. 22) Status: Audit was placed on administrative stay on September 24, 2001. 22 Table 6: Unresolved Reports Issued Prior to April 1, 2002 (Cont.) Total Report Report Title Date Monetary Number of Number (Prior Semiannual [SAR] Number and Page) Issued Findings Recommend. A06-A0001 Interactive Learning Systems’ Administration of the Title IV Student Financial 07/20/01 $990,828 7 Assistance Programs (SAR 43, pg. 12) Status: This audit is currently being reviewed by FSA staff - Dallas Case Team. A06-A0003 International Business College’s Administration of Title IV Student Financial 03/28/01 $461,035 4 Assistance Programs (SAR 42, pg. 22) Status: FSA is working on final audit determination. A06-A0015 ESS College of Business’ Administration of the Title IV Student Financial 08/29/01 $4,439,651 4 Assistance Programs (SAR 43, pg. 12) Status: FSA is working on final audit determination. A06-B0014 Audit of United Education Institute’s Compliance with the Title IV, Student 09/28/01 $7,285 1 Financial Assistance, Verification Requirements (SAR 43, pg. 12) Status: This audit is being reviewed by the case team. 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. A07-90035 Audit of Commissioned Sales at William Penn University (SAR 43, pg. 12) 05/15/01 $5,023,447 4 Status: Audit was placed on administrative stay on August 1, 2001. A07-B0001 Audit of Course Length at William Penn University (SAR 43, pg. 12) 09/28/01 * 4 Status: Audit was placed on administrative stay on October 24, 2001. A09-70015 Associated Technical College (ATC) Eligibility of Institutions to Participate in 09/09/98 $8,600,000 7 Title IV Programs & Other Issues (SAR 37, pg. 16) Status: FSA is working on final audit determination. N06-90010 Inspection of Parks College’s Compliance with Student Financial Assistance 02/09/00 $169,390 1 Requirements (SAR 40, pg. 18) Status: Discussions are in progress as to the responsible party to resolve this audit. Office of Elementary and Secondary Education A01-90006 Puerto Rico Department of Education Needs Major Improvements in its 09/27/00 $181,305 18 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 Improvements in its 09/27/00 $82,452 17 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 Properly a $9,700,000 03/28/01 $7,841,493 14 Contract with National School Services of Puerto Rico (SAR 42, pg. 21) Status: A Department team is working on the resolution of this audit. 23 Table 6: Unresolved Reports Issued Prior to April 1, 2002 (Cont.) Total Report Report Title Date Monetary Number of Number (Prior Semiannual [SAR] Number and Page) Issued Findings Recommend. A02-50200 The Puerto Rico Department of Education Must Institute a Time Distribution 11/14/97 * 1 System (SAR 36, pg. 13) Status: A Department team is working on the resolution of this audit. A02-B0012 Puerto Rico Department of Education Did Not Administer Properly Title I 09/28/01 $8,412,28 10 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. Office of Postsecondary Education A05-A0026 Audit of Richard J. Daley College’s Administration of Selected Aspects of Its 03/30/01 $1,621,861 2 Strengthening Institutions - Hispanic Serving Institution Program, Chicago, Illinois (SAR 42, pg. 21) Status: Waiting for a response from the program office. Office of Special Education and Rehabilitative Services A04-A0015 The Virgin Islands Government Lacks Adequate Management Controls Over the 07/25/01 $4,702,542 15 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 Education Payroll 07/17/01 * 4 (SAR 43, pg. 11) Status: Audit was placed on administrative stay on January 15, 2002. * Non-monetary findings only. Note - Status comments reflect documents received, comments agreed to, or comments provided by the Department. Table 7: Investigation Services Cumulative Actions (April 1, 2002 to September 30, 2002) Indicted/ Adjudicated Subject/Period Information Convicted Sentenced Civil Matters Value School Cases April 1, 2002 - September 30, 2002 13 17 16 0 $1,760,811 Fiscal Year 2002 Total 30 30 38 0 $16,302,910 Federal Student Aid Recipient Cases April 1, 2002 - September 30, 2002 44 25 28 67 $1,432,557 Fiscal Year 2002 Total 58 50 64 179 $2,847,060 Internal Employee Cases April 1, 2002 - September 30, 2002 3 0 0 0 $0 Fiscal Year 2002 Total 3 4 1 0 $0 24 Table 7: Investigation Services Cumulative Actions (April 1, 2002 to September 30, 2002) (Cont.) Indicted/ Adjudicated Subject/Period Information Convicted Sentenced Civil Matters Value Other Cases April 1, 2002 - September 30, 2002 3 9 7 2 $4,051,050 Fiscal Year 2002 Total 23 22 10 2 $4,075,503 Table 8: Collections from Audits Reports Issued with Recommended Questioned/ Questioned/ Questioned/ Questioned/ Unsupported Unsupported Unsupported Management Write-Offs Collected/ FY Unsupport. /Recomend. Resolved Resolved Decisions 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 $95,0851 $1,556,9252 $36,603,599 2000 21 $72,886,717 17 $66,142,528 $65,834,467 $48,600,0003 $2,034,6374 $15,199,830 2001 23 $82,435,089 11 $7,314,508 $7,012,608 $0 $97,375 $6,915,233 2002 37 $93,115,338 7 $1,329,927 $1,271,983 $0 $32,271 $1,239,712 Total 103 $335,253,338 54 $152,982,606 $117,724,835 $48,695,085 $5,351,899 $63,677,851 1 Total includes adjustment of $95,085 as a result of settlement agreement. 2 Total includes offset of $249,900. 3 Total includes a settlement agreement dated March 27, 2000. 4 Total includes two offsets totaling $130,165 ($90,600 + $39,565) and one deobligation for $77,959 for a total of $208,124. Table 9: Collections from Investigations Number of Fines, Restitutions, Total Amount Investigations with Settlements and Amount Collected Amount Collected Collected (10/01/01 - FY Penalties Judgments (04/01/02 - 09/30/02) (10/01/01 - 03/31/02) 09/30/02) 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 339 $29,217,458 $176,294 $290,176 $466,470 Total 1042 $143,700,292 $336,685 $39,228,494 $39,565,179 25 Table 10: Statistical Profile (April 1, 2002 to September 30, 2002) Six-month Period Ending Fiscal Year Ending 9/30/02 9/30/02 OIG AUDIT REPORTS ISSUED 42 79 Questioned Costs $65,554,308 $68,356,151 Unsupported Costs $24,510,470 $24,759,1871 Recommendations for Better Use of Funds $0 $0 OTHER OIG PRODUCTS 18 41 (Inspections, Action Memoranda, Alert Memoranda, Management Information Reports, Advisory Reports, Special Projects, and Field Pricing Reviews) OIG AUDIT REPORTS RESOLVED BY PROGRAM MANAGERS 37 66 Questioned Costs Sustained $5,902,471 $16,365,914 Unsupported Costs Sustained $3,337,836 $3,338,197 Additional Disallowances Identified by Program Managers $194,530 $215,060 Management Commitment to the Better Use of Funds $0 $0 INVESTIGATIVE CASE ACTIVITY Cases Opened 115 2312 Cases Closed 104 313 Cases Active at End of Period 390 390 Prosecutorial Decisions -Accepted 51 1093 -Declined 19 394 INVESTIGATION RESULTS Indictments/Informations 63 117 Convictions/Pleas 51 110 Fines Ordered $30,025 $54,7755 Restitution Payments Ordered $20,994,482 $23,130,1326 Civil Settlements/Judgments (#) 67 1817 Civil Settlements/Judgments ($) $4,656,496 $6,207,7798 Savings/Recoveries $3,009,231 $3,131,335 Seized/Forfeited Property $0 $2,417,0009 1 A07-A0006 6 Includes issued 10/15/01 was decreased by $100,000. $12,732 not reported last period. 2 Includes 7 Includes 3 cases not reported last period. 9 cases not reported last period. 3 Includes 8 Includes 1 case not reported last period. $172,203 not reported last period. 4 Includes 9 Includes 3 cases not reported last period. $2,304,896 not reported last period. 5 Includes $3,025 not reported last period. 26 U.S. Department of Education Washington, D.C. 20202-1510 Official Business Penalty for Private Use, $300 U.S. DEPARTMENT OF EDUCATION OFFICE OF INSPECTOR GENERAL SEMIANNUAL REPORT TO CONGRESS
Semiannual Report - April 1, 2002 - September 30, 2002
Published by the Department of Education, Office of Inspector General on 2002-09-30.
Below is a raw (and likely hideous) rendition of the original report. (PDF)