oversight

Semiannual Report - October 1, 2017, through March 31, 2018

Published by the Department of Education, Office of Inspector General on 2018-03-31.

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. 76
October 1, 2017–March 31, 2018
Office of Inspector General
Kathleen S. Tighe
Inspector General

May 2018

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, Semiannual
Report to Congress, No. 76.




Please Note:
The Inspector General’s Semiannual Report to Congress, No. 76 is available on the
ED OIG website at http://www2.ed.gov/about/offices/list/oig/sarpages.html.


All images used under license from Shutterstock.com.
                    Message to Congress
On behalf of the U.S. Department of Education                    harm borrowers by negatively affecting their
(Department) Office of Inspector General (OIG), I                credit reports and increasing the amounts they
present this Semiannual Report on the activities and             owed. We also found that FSA did not have
accomplishments of this office from October 1, 2017,             an adequate information system to manage
through March 31, 2018. The audits, investigations, and          borrower defense claim data.
related work highlighted in the report are products
of our mission to identify and stop fraud, waste, and       •	   Our fiscal year (FY) 2017 Federal Information
abuse, and promote accountability, efficiency, and               Security Modernization Act review concluded
effectiveness through our oversight of the Department’s          that the Department’s and FSA’s overall infor-
programs and operations.                                         mation security programs were generally not
                                                                 effective as defined by the reporting metrics.
During this reporting period, we released our                    Although they both made some progress in
recommendations for Congress to consider during                  strengthening their information security in
its reauthorization of the Higher Education Act of 1965.         recent years, weaknesses remained, leaving
We based these recommendations on OIG audits,                    their systems vulnerable to security threats.
reviews, and investigations related to the Federal
student aid programs and program participants,              •	   In FY 2017, although the Department and FSA
as well as a review of current legislation, proposals,           received unmodified financial statement audit
and perspectives offered by members of Congress.                 opinions, the auditors identifi d two significant
During this period, we also issued 16 audits and                 deficiencies in internal control over financial
other reports that contained recommendations to                  reporting. First, the Department and FSA did
improve Department programs and operations. In                   not have a comprehensive framework for risk
addition, we closed 39 investigations involving fraud            management or fully developed internal controls
or corruption, securing more than $18.5 million in               for its modeling of student loan portfolio costs,
restitution, settlements, fines, recoveries, forfeitures,        which can increase the potential for improper
and savings. As a result of this work, criminal actions          reporting and program decisions. Second, the
were taken against a number of people, including                 Department and FSA had persistent informa-
current and former school officials and service providers        tion technology deficiencies in controls over
who cheated students and taxpayers. The following                information security, which increase the risk
are some examples of our audit and other reports and             of unauthorized access to the Department’s
investigations over the last 6 months.                           systems.

  •	   Our audit of the Department’s communication          •	   Our audit found that the California Department
       related to the costs of Federal student loan              of Education’s (California) system of internal
       programs’ income-driven repayment and loan                control did not provide reasonable assurance
       forgiveness programs found that the Department            that reported high school graduation rates
       should have enhanced its communication to                 were accurate and complete, and it did not
       make it more informative and easier to under-             calculate its Adjusted Cohort Graduation Rate
       stand. Due to the weaknesses we identified,               in accordance with Federal requirements. As a
       decision makers and the public may not be                 result, both California and the Department are
       aware of the risk that, for future loan cohorts,          at risk of using inaccurate and incomplete data
       the Federal government and taxpayers may                  when describing and reporting on California’s
       lend more money overall than is repaid from               progress toward raising graduation rates, and
       borrowers.                                                their data may be unreliable as an academic
                                                                 indicator to measure student achievement and
  •	   Our review of Federal Student Aid’s (FSA) policies        school performance.
       and procedures related to its borrower defense
       loan discharge process identified weaknesses         •	   Our audit to assess the adequacy of the Institute
       in its procedures. These weaknesses could                 of Education Sciences’ (IES) State Longitudinal
       Data Systems (SLDS) grant requirements and            Plan for FY 2018–2022—a five-year roadmap for how
       monitoring of States grantees found that the          we intend to meet our goals and achieve our mission
       grant requirements were adequate to ensure            in providing effective and objective oversight of the
       the protection of personally identifiable infor-      Department’s program and operations. This Semiannual
       mation housed in State SLDS systems; however,         Report aligns with our Strategic Plan as we present
       IES had inadequate controls for monitoring its        the results of our work by programs and operational
       grantees’ adherence to State system security          areas: (1) Federal student aid and higher education
       requirements. As a result, SLDS grantees may          programs; (2) elementary, secondary, and adult
       be unable to prevent or detect unauthorized           education programs; (3) Departmental management
       access and disclosure of personally identifiable      and internal operations; and (4) other OIG efforts. We
       information in their SLDSs.                           believe that this format provides a better opportunity
                                                             for the OIG to highlight how we are meeting the goals
  •	   Our investigations led to criminal actions against    outlined in our Strategic Plan by the work we are
       a number of K–12 school officials, including the      doing in program and operational areas. It will also
       former business manager of Missouri’s Grandview       allow our customers and stakeholders the ability to
       R-2 School District, who was sentenced to prison      more readily identify OIG work related to their specific
       for stealing $1.6 million; the former superin-        areas of interest.
       tendent of Oklahoma’s Grant-Goodland Public
       Schools whom a jury found guilty of conspiracy        In closing, 2018 marks the 40th anniversary of the
       to embezzle about $1.2 million from the school        Inspector General Act of 1978—the statute that
       district; and the founder of Southwest Learning       empowers the Inspectors General to curb waste,
       Centers in New Mexico, who pled guilty to             fraud, and abuse and promote economy and efficiency
       running a 15-year scheme aimed at stealing            in government operations. It also marks the 10th
       millions from the schools.                            anniversary of the Council of the Inspectors General
                                                             on Integrity and Efficiency—the independent
  •	   Our investigations into student aid fraud rings       entity established by Congress to address integrity,
       resulted in criminal actions taken against partici-   economy, and effectiveness issues that transcend
       pants in rings that targeted more than $12 million    individual government agencies. The Inspector
       in Federal funds. This includes guilty pleas by a     General community will be commemorating these
       mother-daughter team who drove around their           milestones throughout the year, highlighting our
       Mississippi neighborhood recruiting people            commitment to better government and to helping
       to participate in their fraud ring that targeted      the public better understand our role and mission.
       more than $2.5 million in Federal student aid.        That mission is accountability—accountability to help
  •	   A private investigator who fraudulently used          ensure that the Department is meeting expectations
       then-presidential candidate Donald Trump’s            and conditions that Congress requires for Federal
       personally identifiable information, including        programs and recipients of Federal funds and that the
       his Social Security number, in an attempt to          Department is safeguarding the billions of taxpayer
       illegally obtain his Federal tax information from     dollars that fund these programs. It is an important
       the Internal Revenue Service, pled guilty to false    mission and one that I am honored to have had the
       representation. The man unlawfully used the           opportunity to be a part of for almost three decades. I
       Internal Revenue Service Data Retrieval Tool          look forward to continuing in this effort and to working
       available on the Free Application for Federal         with the Department, members of Congress, and my
       Student Aid website in an unsuccessful attempt        colleagues in the inspector general community to
       to obtain the President’s tax information.            provide our nation’s taxpayers with assurance that
                                                             the Federal government is using their hard-earned
In this report, you will find more information on            money effectively and efficiently.
these efforts, as well as summaries of other audits
issued and investigative actions taken over the last
6 months. You will note that the presentation of our
work differs from previous Semiannual Reports to
                                                             Kathleen S. Tighe
Congress. Earlier this year, we issued our Strategic
                                                             Inspector General
                                         Contents




 1   Federal Student Aid Programs and Operations


16   Elementary, Secondary, and Adult Education Programs and Operations


30   Department Management and Operations


40   Other OIG Efforts


48   Required Reporting


71   Acronyms and Abbreviations
      Federal Student Aid
Programs and Operations
T
         he Federal student financial aid programs have long
         been a major focus of our audit and investigative
         work. These programs are inherently risky because
         of their complexity, the amount of funds involved,
the number of program participants, and the characteristics
of student populations. U.S. Department of Education
(Department) Office of Inspector General (OIG) efforts in
this area seek not only to protect Federal student aid funds
from fraud, waste, and abuse, but also to protect the interests
of the next generation of our nation’s leaders—America’s
students.
                             Office of Inspector General Semiannual Report  3




Audits and Reviews
The Department disburses about $122.5 billion in Federal student aid annually and
manages an outstanding loan portfolio of $1.3 trillion. This makes the Department
one of the largest financial institutions in the country. As such, effective oversight and
monitoring of its programs, operations, and program participants are critical. Within
the Department, the Office of Postsecondary Education and Federal Student Aid’s
(FSA) are responsible for administering and overseeing the student aid programs.
The Office of Postsecondary Education develops Federal postsecondary education
policies, oversees the accrediting agency recognition process, and provides
guidance to schools. FSA disburses student aid, authorizes schools to participate
in the student aid programs, works with other participants to deliver services that
help students and families finance education beyond high school, and enforces
compliance with FSA program requirements. During this reporting period, OIG work
identified actions that FSA should take to better protect the interests of students.
Summaries of these reports follow.

The Department’s Communication Regarding the Costs
of Income-Driven Repayment Plans and Loan Forgiveness
Programs
We conducted an audit to determine whether the Department’s communication
related to the costs of Federal student loan programs’ income-driven repayment
plans and loan forgiveness programs was informative to decision makers and the
public. Our review covered cost information for the income-driven repayment
plans, including Pay as You Earn and Revised Pay as You Earn, and the Public Service
Loan Forgiveness and Teacher Loan Forgiveness programs that the Department
communicated in budget and financial documents from February 2015 through
November 2016. Based on our review and assessment of these publications, we
determined that the Department should have enhanced its communication
regarding cost information related to the Federal student loan programs’ income-
driven repayment plans and loan forgiveness programs to make it more informative
and easier to understand. Specifically, the Department could have provided more
detailed information on specific income-driven repayment plans, such as Pay as You
Earn and Revised Pay as You Earn, and its loan forgiveness programs to fully inform
4  Office of Inspector General Semiannual Report




decision makers and the public (including advocacy groups) about current and future
program management and financial implications of these plans and programs.
Decision makers and others may not be aware of the growth in the participation
in these income-driven repayment plans and loan forgiveness programs and the
resulting additional costs. They also may not be aware of the risk that, for future
loan cohorts, the Federal government and taxpayers may lend more money overall
than is repaid from borrowers.

As stated in our report, borrowers have been signing up for income-driven repayment
plans at a substantial rate. We calculated that the portion of total Direct Loan volume
being repaid through income-driven repayment plans has increased 625 percent
from the fiscal year (FY) 2011 loan cohort ($7.1 billion) to the FY 2015 loan cohort
($51.5 billion). For income-driven repayment plans, the Federal government is
expected to lend more money than borrowers repay. From the FY 2011 through
FY 2015 loan cohorts, the total positive subsidy cost (net cash outflow) for student
loans being repaid through income-driven repayment plans has increased 748 percent
(from $1.4 billion to $11.5 billion). On other types of repayment plans, borrowers
are expected to repay more money than the Federal government lends. From the
FY 2012 to FY 2015 loan cohorts, the data show the total costs for all loans (income-
driven repayment and all other repayment plans) approaching an overall positive
subsidy cost, as shown in the following figure.




Further increases in borrowers using income-driven repayment plans could result
in the Federal government and taxpayers lending more money overall than is being
repaid by borrowers in future cohorts. The financial documents that we reviewed
did not provide any information on the rate at which borrowers elect to repay loans
through an income-driven repayment plan, the corresponding increased costs
resulting from more borrowers selecting income-driven repayment plans, or the
trend toward a positive subsidy cost for future loan cohorts.
                            Office of Inspector General Semiannual Report  5




To address the issues identifi d, we recommended that the Department enhance
its communication regarding cost information related to the Federal student loan
program’s income-driven repayment plans and loan forgiveness programs to make
it more informative to decision makers and the public by (1) publishing additional
information regarding historical costs and future estimated costs, as well as
describing the assumptions, methodology, and limitations underlying the calculation
of estimated costs, (2) ensuring that the information can easily be understood by
a nontechnical audience, and (3) providing a balanced analytical assessment of
the costs, benefits, and long-term implications of the income-driven repayment
plans and loan forgiveness programs. We also recommended that the Department
establish a formal process to obtain feedback from external users on the usefulness
of its communication. The Department did not explicitly state whether it agreed
with our finding and recommendations. Income-Driven Repayment Plans Audit

Review of FSA’s Borrower Defense to Repayment Loan
Discharge Process	
Our review determined that FSA needed to improve its policies and procedures
over the Federal student loan borrower defense loan discharge process and that
it had an inadequate information system to manage borrower defense claim data.

    •	   First, although we found that FSA established policies and procedures
         related to the intake and discharge of borrower defense claims in 2015 and
         refined the claims intake policies and procedures throughout our review
         period, and also established policies and procedures related to the review of
         borrower defense claims in 2016 and introduced new policies and procedures
         throughout our review period, we identified weaknesses in four specific
         areas that could harm borrowers. Specifically, we found weaknesses with
         the following FSA procedures: (1) consistently documenting the review
         and approval of the legal memoranda related to borrower defense claims,
         (2) reviewing borrower defense claims, (3) processing claims approved for
         loan discharge and flagged for denial, and (4) establishing timeframes for
         the claims intake, claims review, loan discharge, and claims denial processes.
         These weaknesses could harm borrowers by negatively affecting their credit
         reports and increasing the amounts owed by borrowers.

    •	   Second, since FSA had not received borrower defense claims in significant
         numbers before 2015, FSA did not have an established information system
         to manage a large volume of claims. The information system that FSA has
         developed to date is not adequate to manage the claims it has received
         since 2015. FSA could not readily retrieve borrower defense claim outcomes
         from its current information system because data were not readily available
         for use without a labor-intensive, manual data retrieval process. Further,
         FSA had no controls to prevent or detect problems with the integrity of the
         data contained in the more than a thousand spreadsheets FSA relied on
         to track the status of borrower defense claims. Because FSA did not have
         ready access to current and complete information on borrower defense
         claims, FSA cannot ensure that the borrower defense process meets its
         objectives, management may be unable to respond to risks that may arise,
         and management may be unable to make well-informed business decisions.
6  Office of Inspector General Semiannual Report




Based on our findings, we made 10 recommendations focused on improving
FSA’s policies and procedures over the Federal student loan borrower defense
loan discharge process and implementing an effective information system for the
process. FSA stated that it did not believe that its policies and procedures resulted
in harm to borrowers, but generally agreed with our recommendations. Borrower
Defense Review

Department Actions Related to Certain Provisions of the
Gainful Employment and Borrower Defense Regulations
In October, the OIG responded to a request from Senator Patty Murray (D-WA)
asking that the OIG review the Department’s actions related to certain provisions
of the gainful employment and borrower defense regulations. Specifically, she
requested the OIG’s views on the regulations and how the Department’s proposed
changes to those regulations could affect the integrity and efficiency of the student
financial aid programs. In our response, we highlighted the OIG’s history and work
in these areas, actions the Department had taken, and, based on our body of
work, our concerns with the Department’s recent actions. We noted that we had
disagreed with the Department’s two decisions on the regulations in 2017. First,
on gainful employment, we did not agree with the Department’s decision to delay
a provision requiring schools to provide consumer protection disclosures directly
to students before they enroll and Federal student aid funds are committed or
disbursed. Because schools are still required to prepare and post the disclosures on
their websites and are engaged with students during the enrollment process, we
saw minimal burden to schools to ensure that students actually receive disclosures
before financially committing to a school. Second, on borrower defense, we did
not agree with the Department’s delay of financial responsibility provisions that
provided tools to improve the Department’s oversight options for schools at risk
of closure. The response also highlighted the OIG’s ongoing and planned work
involving the Federal student aid programs. OIG Response

OIG Recommendations for Reauthorization of the Higher
Education Act
During this reporting period, the OIG submitted to Congress its recommendations
for Congress to consider during its reauthorization of the Higher Education Act
of 1965, as amended (HEA). The recommendations presented were based on OIG
audits, reviews, and investigations related to the Federal student aid programs
and program participants, as well as a review of current legislation, proposals, and
perspectives offered by members of Congress. The OIG recommendations covered
topics of school accountability, definition of a credit hour, cost of attendance, multiple
disbursements, refunds and return of Title IV of the HEA, financial responsibility,
information security, debt relief companies, accrediting agencies, the Direct
Loan program, and FSA as a performance-based organization. As stated in the
recommendations, the HEA, higher education regulations, and Departmental
operations must promote innovation, access, outcomes, and affordability. The key
is to achieve these goals while maintaining enforceable accountability provisions
designed to protect America’s taxpayers and students. OIG HEA Recommendations
                            Office of Inspector General Semiannual Report  7




Investigations
Identifying and investigating fraud in the Federal student fi ancial assistance
programs has always been a top OIG priority. The results of our efforts have led to
prison sentences for unscrupulous school officials and others who stole or criminally
misused Federal student aid funds, significant civil fraud actions against entities
participating in the Federal student aid programs, and hundreds of millions of dollars
returned to the Federal government in fines, restitutions, and civil settlements.

Investigations of Schools and School Officials
The following are summaries of OIG investigations involving Federal student aid
fraud and other fraud involving schools and school officials.

Former Caldwell University Associate Dean, Owner of ED4Mil, and a
Subcontractor Pled Guilty for Roles in $24 Million GI Bill Fraud Scam
(New Jersey)
The former associate dean of the Office of External Partnerships for Caldwell
University, the owner of ED4Mil, and an ED4Mil subcontractor employee each pled
guilty to their role in a fraud scheme that defrauded veterans and scammed more
than $24 million in tuition benefits under the Post 9/11 GI Bill. The former associate
dean helped the ED4Mil owner get approval from Caldwell University to develop and
administer a series of noncredit online courses for veterans in Caldwell University’s
name. The courses, however, were not approved by the U.S. Department of Veterans
Affairs, nor were they developed, taught, or administered by Caldwell University
faculty. Instead, they were developed, taught, and administered by an unapproved
subcontractor and online correspondence school that ED4Mil hired. Even though
the university contributed no content or value to the courses, it charged the Post
9/11 GI Bill between 10 and 30 times the price that the online correspondence
school charged. Thousands of veterans enrolled in the online courses believing they
were taking courses from Caldwell University. In his guilty plea, the ED4Mil owner
agreed to a 5-year prison term and to forfeit more than $702,000 in cash proceeds,
artwork, and stock. Press Release

Six Former Center for Employment Training Employees Indicted in a Multimillion
Dollar Fraud Scheme (Illinois)
Six former employees of the Center for Employment Training in Chicago were indicted
for conspiring to steal millions of dollars from the Federal student aid programs.
From 2005 to 2013, the six employees allegedly applied for and obtained Federal
student aid for students who were ineligible to receive the funds because they
had not graduated from high school or earned a high school diploma equivalent.
They allegedly created and submitted to the Department fake Free Applications
for Federal Student Aid (FAFSA) and other phony information making it appear as
though the students were eligible. As a result of their alleged criminal efforts, the
school received millions in Federal student aid to which it was not entitled. Press
Release
8  Office of Inspector General Semiannual Report




Former Baruch College Official Pled Guilty to Theft (New York)
A former Baruch College athletics official, who also served as basketball coach during
his tenure at the school, pled guilty to stealing more than $700,000 intended for
the school’s athletic facilities. The former official rented the school’s gym to outside
parties, ostensibly on behalf of Baruch College. In instructions to the renting parties,
however, the former official directed that payments be made directly to him or to
entities that he controlled, unbeknownst to the renters or the school. The former
official used the bulk of the funds on personal expenses, such as renovations on
his home. Press Release

Former Financial Aid Director at Columbia University’s Teachers College and
Four Students Arrested for Fraud (New York)
The former Director of Financial Aid at Columbia University’s Teachers College and
four students were charged for their roles in a bribery and kickback scam that targeted
more than $1.4 million in stipends, scholarships, and student loans. From 2008 through
2017, the former director allegedly approved excessive “cost of attendance” figures
                                                               for the students that did
                                                               not comport with their
                                                               actual needs or costs of
                                                               living, which increased
                                                               the amount of financial
                                                               aid the students were
                                                               eligible to receive. She
                                                               also allegedly approved
                                                               stipends for the students,
                                                               creating fraudulent
                                                               r e qu e s t f o r ms f o r
                                                               financial awards, which
                                                               gave the appearance
                                                               that professors or other
                                                               school administrators
had requested the stipends for the students. When the students received the
money, they allegedly kicked back hundreds of thousands of dollars to the former
director. Press Release

Former Pontifical Catholic University Director Sentenced to Prison for Theft
(Puerto Rico)
The former purchasing director at Pontifical Catholic University in Puerto Rico
was sentenced to prison for theft from a federally funded institution. The former
director used the school’s credit card for unauthorized personal expenses, including
household utility bills, school tuition, and vacations to destinations including Disney
World, New York, France, and Canada. To conceal her crime, the former director
altered and created fictitious credit card statements where she hid her personal
charges by increasing the amounts of other legitimate charges to the card, or by
deleting the charges altogether before submitting the statements to the school’s
finance department for payment. In addition, because the credit card’s limit was
originally $80,000, the former director forged her supervisor’s signature on letters
to the credit card company requesting limit increases. This enabled her to charge
more than $655,400 to the school’s card. The former director was sentenced to
                            Office of Inspector General Semiannual Report  9




serve 1 year in prison and 3 years of supervised release and was ordered to pay
more than $155,400 in restitution.

Former Owner of Alden’s School of Cosmetology Sentenced for Theft and
Fraud (Louisiana)
The former owner and chief executive officer of Alden’s School of Cosmetology and
Alden’s School of Barbering was sentenced to prison for theft, fraud, and money
laundering. The former chief executive officer misrepresented that certain students
attending the schools were enrolled in programs eligible for Federal student aid
when in fact they were not, certified hours that students never completed, and
transferred criminally derived property between numerous bank accounts. As a
result of these criminal actions, the former chief executive officer and the schools
received more than $100,000 in Federal student aid. The former school owner was
sentenced to serve 30 months in prison and 2 years of supervised release and was
ordered to pay more than $276,000 in restitution and fines. Press Release

Owner of Regina’s College of Beauty Pled Guilty to Conspiracy Charges
(North Carolina)
In our last Semiannual Report, we shared that the vice president of the now-
defunct Regina’s College of Beauty—a for-profit cosmetology school that operated
campuses in North Carolina and Georgia—pled guilty to conspiracy and student
financial aid fraud charges. During this reporting period, the owner of the school
pled guilty for her role in the scheme. The owner and the vice president failed to
remit to students or to the Department students’ credit balance overages totaling
more than $89,000—money that they used for their personal benefit.

Former Owner of Tramy Beauty School Sentenced for Fraud (California)
The former owner of Tramy Beauty School, who had been charged with 43 counts
of fraud and theft, was sentenced to 3 years in prison and was ordered to pay more
than $425,000 in restitution. One of the multiple fraud schemes she orchestrated
involved Federal student aid: the former owner enrolled multiple individuals in
classes at the school without their knowledge and then fraudulently collected Pell
Grant money disbursed in the victims’ names. In the restitution order, the former
school owner was required to pay the Department more than $37,500.

City University of New York Medgar Evers Lecturer Indicted on Charges of
Fraud and Corruption (New York)
A full-time, tenured lecturer at the City University of New York Medgar Evers College
was indicted on charges of fraud, corruption, and obstruction related to his allegedly
selling sham certificates of completion of health care courses to students that the
students then used to obtain employment in the health care field, including at
New York City hospitals. From 2013 through 2017, the lecturer allegedly provided
students with the sham certificates in exchange for fees up to $1,000, money he
kept for himself.

Operator of Mobile Native Hawaiian Health, Inc., Indicted on Fraud Charges
(Hawaii)
The operator of Mobile Native Hawaiian Health, Inc., a nonprofit company that
provided direct healthcare services to underserved areas of Hawaii, was indicted on
10  Office of Inspector General Semiannual Report




55 counts of fraud for running multiple scams, including a scam involving Federal
student aid. In this scam, the operator allegedly told people that her company was
a nonprofit focused on education to help students and then used the names and
personal information of multiple students to fraudulently apply for admissions to
and receive Federal student aid from various schools. The operator allegedly posed
as the students to communicate with the schools in order to transfer the students’
financial aid to bank accounts she controlled. She then used the money for personal
expenses, including construction of her home, personal bills, and retail purchases.

Investigations of Fraud Rings
Below are summaries of actions taken over the last 6 months against people who
participated in Federal student aid fraud rings. Fraud rings are large, loosely affiliated
groups of criminals who seek to exploit distance education programs in order to
fraudulently obtain Federal student aid. The cases below are just a sample of the
large number of actions taken against fraud ring participants during this reporting
period.

Leader of $2.5 Million Fraud Ring and Her Mother Pled Guilty (Mississippi)
A fraud ringleader and her mother pled guilty to their roles in a fraud ring that
sought to obtain more than $2.5 million in Federal student aid. The two women
drove around the city of Greenwood, Mississippi, recruiting people to participate in
the scam. They obtained the personally identifiable information of the recruits and
then used that information to apply for admissions to and receive Federal student
aid from online college programs, knowing that none of them planned to attend
classes. The student aid refund balances were sent to addresses controlled by the
ringleader and her mother. The two then gave a portion of the refund balance to
the recruits for the use of their identities.

Leaders Pled Guilty for Roles in Fraud Ring that Tried to Obtain about
$5.2 Million (Arizona)
Leaders of a fraud ring that tried to obtain about $5.2 million in Federal student
aid pled guilty for their roles in the scam. The ring used the personally identifiable
information of at least 483 people that they used to apply for admissions to and
receive Federal student aid from one or more schools in the Maricopa Community
College District. The ringleaders prepared and submitted fraudulent application
forms, used an unsecured Wi-Fi router to assist with the process, and impersonated
applicants when delivering documentation in support of the scheme. Of the
$5.2 million in Federal student aid that the ring targeted, they were able to obtain
more than $1.6 million.

Leaders of Fraud Ring that Targeted $1.8 Million Pled Guilty (Ohio)
Three women were indicted, two of whom pled guilty to orchestrating a fraud
ring based in Ohio that targeted more than $1.8 million in Federal student aid. The
women used the identities of hundreds of people, including prison inmates and
other stolen identities that they used to apply for admissions to and receive Federal
student aid from several community colleges, including schools in the Maricopa
Community College District in Arizona. They completed the coursework to make
it appear that the inmates and others were regular students and had the student
aid awards directed to bank accounts they controlled. Press Release
                          Office of Inspector General Semiannual Report  11




Actions Taken Against Members of a Fraud Ring that Targeted More Than
$1.3 Million (Colorado)
In previous Semiannual Reports to Congress, we highlighted our investigation
involving a Colorado-based fraud ring that sought to obtain more than $1.3 million
in Federal student aid. During this reporting period, two members of the ring were
sentenced for their roles in the scheme, while a third was found guilty by a jury.
From 2010 through 2012, the ring used the stolen identities of prison inmates to
apply for admission to and receive Federal student aid from various community
colleges in Colorado and Arizona. To obtain the data, ring members visited State
Department of Corrections websites in Arizona, Colorado, Florida, Illinois, and Ohio
where they retrieved the names, dates of birth, and release dates of State inmates.
With this information, one of the ring members obtained the Social Security number
of inmates through her employment at a bank. The ring then used this information
to file fraudulent FAFSAs with the schools, seeking to obtain more than $1.3 million
in aid. The two ring members were sentenced to prison for 24 and 57 months,
respectively, followed by 3 years of supervised release. They were also each ordered
to pay more than $562,400 in restitution. Press Release

Actions Taken Against Members of Criminal Enterprise Composed Mostly of
Former Prison Inmates (Colorado)
In our last Semiannual Report to Congress, we highlighted our investigations of
9 people, most of whom were connected through their various periods of incarceration
and some of their family members, who were indicted on charges that included
racketeering, conspiracy, and student aid fraud. During this reporting period,
3 of the 9 members were sentenced for their roles in the fraud. The ring used the
personally identifiable information of people to apply for and receive more than
$488,500 in student aid, most of which they stole from unwitting victims, including
from the business clients of one of the participant’s on-site cleaning company, and
stolen wallets. Another participant used her position and access at the Department
of Motor Vehicles to supply additional information needed to complete fraudulent
admissions and student aid applications, and another member used her position
in a bank to assist the ring. The former Department of Motor Vehicles employee
pled guilty and was sentenced to serve 60 days in jail and 10 years of probation
with restitution to be ordered at a later date. The former bank employee pled guilty
and was sentenced to 60 days in jail and 5 years of probation and was ordered to
pay about $50,000 in restitution. Another ring member was sentenced to 3 years
of probation and was ordered to pay more than $5,700 in restitution.

Family Members Among Those Sentenced for Roles in $358,700 Fraud Rings
(Texas)
In our last Semiannual Report to Congress, we highlighted our investigation of
family members and others involved in fraud rings that sought to fraudulently
obtain more than $358,000 in Federal student aid. During this reporting period,
the mother and her daughter were sentenced to prison and her son was found
guilty by a jury for their roles in the fraud rings. With the use of their personally
identifiable information and that obtained from other individuals, members of the
rings fraudulently applied for admissions to and received Federal student aid from
LeTourneau University and Kilgore College knowing that none of the participants
planned to attend classes. The mother was sentenced to serve 15 months in prison
12  Office of Inspector General Semiannual Report




and 3 years of supervised release and was ordered to pay more than $212,700 in
restitution and her daughter was sentenced to serve 8 months in prison and 3 years
of supervised release and was ordered to pay more than $107,300 in restitution. Two
additional participants were sentenced to 4–5 years of probation and were ordered
to pay between $10,600 and $12,400 in restitution. Press Release

Three Members of $280,000 Fraud Ring Sentenced (Illinois)
Three members of a fraud ring were sentenced for their roles in a scam that targeted
more than $280,000 in Federal student aid. The ring used the identities of prison
inmates to apply for admissions to and receive Federal student aid from the College
of DuPage, knowing that none of the inmates would be attending any classes. One of
the ring members was sentenced to serve 9 years in prison and 1 year of supervised
release and was ordered to pay $4,500 in restitution. His two co-conspirators were
sentenced to probation and each ordered to pay $4,500 in restitution.

Leader of $117,000 Fraud Ring Sentenced (Virginia)
A man who led a fraud ring that targeted Federal student aid schools that included
the University of Phoenix and American Public University was sentenced to serve
61 months in prison and was ordered to pay more than $117,000 in restitution
for fraud. From 2009 through 2016, the man obtained the personally identifiable
information of 70 people—some of whom knowingly provided their information
while others were the victims of identity theft—which he used to enroll them in
online courses at the schools solely for the purpose of obtaining Federal student aid.
As a result of his efforts, the ring fraudulently obtained about $117,000 in student
aid. Press Release

Investigations of Other Student Aid Fraud Cases
The following are summaries of the results of additional OIG investigations into
abuse or misuse of Federal student aid.

Former State Department Employee Sentenced for Theft (Virginia)
A former employee in the U.S. Department of State’s bureau of Diplomatic Security
was sentenced for defrauding the Federal government of about $200,000 in funds
paid under the Federal Employees’ Compensation Act, workers’ compensation for
Federal employees. While receiving workers’ compensation, the former employee
made false statements on various government forms about his income, omitting
that he was the president and majority owner of a company that received more
than $2 million in government contracts and salary. In his guilty plea agreement, the
former Federal employee agreed to pay $3,650 to the U.S. Department of Education
because he made false statements about his income that allowed him to receive
Federal Pell Grants that he was not entitled to receive. The former employee was
sentenced to serve 12 months of home confinement followed by 12 months of
probation and was ordered to pay more than $202,000 in restitution.

Former Tulane University Student Sentenced in $185,000 Fraud Scam
(Louisiana)
A former Tulane University student was sentenced to prison for aggravated identity
theft and theft of government funds. The former student used the identities of
30 people—some of whom knowingly provided their information while others
                           Office of Inspector General Semiannual Report  13




were the victims of identity theft—to fraudulently apply for admissions to and
receive more than $185,000 in Federal student aid from the school. The man paid
some people $100 for use of their information in the scam. The man was sentenced
to serve 44 months in prison followed by 2 years of supervised release and was
ordered to pay more than $185,00 in restitution. Press Release

Woman Indicted in $152,900 Fraud (Virginia)
A woman was indicted in Virginia on charges of tax evasion and fraud, including
an effort to defraud the Department. The woman submitted a personal check on
a closed bank account to the Department’s Direct Loan Servicing Center totaling
more than $152,900 in an attempt to pay off er student debt.

Grand Rapids Man Pled Guilty for $150,000 Fraud Scam (Michigan)
A man pled guilty to fraudulently obtaining more than $150,000 in Federal student
aid. The man obtained the identities of others and posed as those people to apply
for admission to and receive Federal student aid from various online programs
at local community colleges, including Grand Rapids Community College and
Kalamazoo Valley Community College. He also used the phony identifications to
file bogus tax returns. Press Release

Former Cornell University Student Pled Guilty to $130,000 Fraud (New York)
A former Cornell University student pled guilty to fraudulently obtaining more
than $130,000 in Federal student aid. From 2008 through 2014, the woman forged
various documents, including academic transcripts and letters of recommendation
to attend various universities, including fraudulent admissions and student aid
application forms that she submitted to Cornell. As a result of the phony forms, the
woman received more than $130,000 in student aid to attend the school, as well as
tens of thousands of dollars in grant assistance. Press Release

Former Department of the Interior Employee Convicted on Charges of Fraud
and Identity Theft (Kentucky)
A former Department of the Interior employee was convicted by a jury on charges
of fraud and identity theft. The former employee submitted about 40 false loan
applications to 10 lending institutions in the names of her children, her sister, and
her niece to obtain student loans without their knowledge or consent. She forged
signatures on applications forms and falsified pay stubs to show false amounts of
income. As a result of her fraudulent efforts, the former employee received more
than $101,000 in student aid.

Five Charged in Phony Debt Elimination Scheme (New Jersey)
Five people were charged with using phony money orders, cashier checks, and
other fabricated documents that they used to fraudulently discharge hundreds of
thousands of dollars in fi ancial obligations, including student loans. The participants
allegedly submitted to various financial institutions phony money orders and cashier
checks, sometimes in amounts larger than the debt owed so they could eliminate
the debt and obtain extra money that they used for their personal benefit. One
of the participants sought to fraudulently discharge more than $52,000 in student
loans, so she sent phony money orders and cashier checks totaling more than
$67,000 to the Department. The Department rejected the payment. Press Release
14  Office of Inspector General Semiannual Report




OTHER ACTIVITIES
Participation on Committees, Work Groups, and Task Forces
   •	   Department of Education Policy Committees. OIG staff participate in an advisory capacity on these
        committees, which were established to discuss policy issues related to negotiated rulemaking for
        student loan regulations and for teacher preparation regulations.

   •	   Federal Bureau of Investigation Cyber Crime Investigations Task Force. The OIG is a formal
        member of this task force of Federal, State, and local law enforcement agencies conducting cybercrime
        investigations nationwide, with agents physically located in Washington, DC, and Boston, MA. OIG
        agents are currently assisting with investigations in Alabama, Connecticut, Florida, Georgia, Louisiana,
        and Texas associated with this task force.

Reviews of Legislation, Regulations, Directives, and Memoranda
   •	   S.1771, Departments of Labor, Health and Human Services, and Education, and Related Agencies
        Appropriations Act, 2018. The OIG provided technical information regarding Sec. 313 of the legislation
        specifically related to the 18-month timeframe.

   •	   H.R.4508, the PROSPER Act. The OIG provided technical information regarding specific provisions
        of the legislation, including Title I, Title II, and Title IV.

   •	   Borrower Defense Regulations. Drawing on the results of our audit “FSA’s Processes for Identifying
        At-Risk Title IV Schools and Mitigating Potential Harm to Students and Taxpayers” (ED-OIG/A0900001),
        the OIG provided comments on the Department’s development of a notice of proposed rulemaking.

   •	   Data exchange with Internal Review Service. The OIG provided technical comments on a proposal
        to amend the Internal Revenue Code to improve and simplify FAFSA processing.
Office of Inspector General Semiannual Report  15
Elementary, Secondary, and
  Adult Education Programs
            and Operations
T
        he Department administers more than 100 programs that involve 55 States
        and territorial educational agencies, nearly 18,200 public school districts,
        132,000 schools, and numerous other grantees and subgrantees. Effective
        oversight of and accountability in how these entities spend the Department
funding they receive is vital. Through our audit work, we identify problems and
propose solutions to help ensure that the Department’s programs and operations
are meeting the requirements established by law and that federally funded education
services are reaching the intended recipients—America’s students. Through our
criminal investigations, we help to protect public education funds for eligible
students by identifying those who abuse or misuse Department funds and helping
hold them accountable for their unlawful actions.
                            Office of Inspector General Semiannual Report  19




Audits
In the area of elementary, secondary, and adult education programs and operations,
the OIG issued five audit reports, each summarized below. The first audit examined
the New York State Education Department and selected local educational agencies’
compliance with the Every Student Succeeds Act (ESSA) amendments to the McKinney-
Vento Homeless Assistance Act which authorizes the Education for Homeless Children
and Youth Program. Under this program, the Department provides grants to States
to ensure that homeless children and youths have equal access to the same free,
appropriate public education available to other children. In 2015, the ESSA included
new requirements for State and local educational agencies to review and undertake
steps to revise laws, regulations, practices, or policies that may act as barriers to the
identification, enrollment, attendance, or success in school of homeless children
and youths. The second audit examined the Puerto Rico Department of Education’s
use and awarding of Adult Education program funds and the reliability of program
performance data. Authorized under the Adult Education and Family Literacy Act,
the Department awards grants to States to fund local adult education and literacy
services, including workplace literacy services, family literacy services, English literacy
programs, and English language/civics education programs. This audit sought to
determine whether Puerto Rico ensured that Adult Education funds were used
and awarded in accordance with applicable laws and regulations, and whether
Puerto Rico submitted accurate, complete, and reliable performance data to the
Department, as required. The three additional audits were conducted as a part of
three audit series. Those series and audits are as follows.

    •	   Calculating and Reporting Graduation Rates. Calculating and reporting
         graduation rates is a requirement of the Every Student Succeeds Act, and
         is considered an academic indicator to measure student achievement
         and school performance. This audit series seeks to determine whether
         State educational agencies (SEAs) have implemented a system of internal
         controls over calculating and reporting graduation rates sufficient to provide
         reasonable assurance that reported graduation rates were accurate and
         complete. During this reporting period, we completed our second audit
         in this series examining internal controls at the California Department
20  Office of Inspector General Semiannual Report




         of Education. We shared the findings of our previous audit involving the
         Alabama Department of Education in our last Semiannual Report to Congress.

    •	   Followup on Previous Title I Audits. In this audit series, we look to
         determine whether previously audited entities completed corrective actions
         to remediate prior audit findings, and if not, why and whether risks still exist
         because they did not so do. During this reporting period, we completed
         our audit of Michigan’s Detroit Public Schools Community District, the
         third audit in this series. We shared the findings of our two previous audits
         (Harvey Public School District 152 in Illinois and Wyandanch Union Free
         School District in New York) in our last Semiannual Report to Congress.

    •	   Protection of Personally Identifiable Information in Statewide
         Longitudinal Data Systems. In this series of audits, we assessed the
         adequacy of the Institute of Education Sciences’ (IES) Statewide Longitudinal
         Data System (SLDS) grant requirements and monitoring of States to ensure
         internal controls are in place to prevent, detect, and report unauthorized
         access and disclosure of personally identifiable information in SLDSs, and
         determined whether selected States have internal controls in place to
         prevent, detect, report, and respond to unauthorized access and disclosure
         of personally identifiable information in their SLDSs. During this reporting
         period, we completed the fourth audit in this series that examined IES’s
         oversight over SLDS grantees’ systems of internal controls. The previous
         audits in this series (Indiana, Oregon, and Virginia) were highlighted in
         previous Semiannual Reports to Congress.

Summaries of work completed during this reporting period involving K–12 and
adult education programs follow.

New York State’s and Selected Districts’ Implementation of
Selected Every Student Succeeds Act Requirements under
the McKinney-Vento Homeless Assistance Act
Our audit determined that both the New York State Education Department (New
York) and the local educational agencies (LEAs) reviewed (New York City Department
of Education, Uniondale Union Free School District, and Lackawanna City School
District) could improve their internal controls to help ensure homeless student data
are accurate and complete, that LEAs are complying with ESSA requirements, and
that they are reporting all unaccompanied youths.

First, although New York generally provided effective oversight of the LEAs and
coordinated with other entities to implement selected ESSA requirements related to
identifying and educating homeless children and youths, we found that it had not
yet completed updating its policies and procedures, did not require LEAs to submit
final documentation in response to monitoring findings, and was not ensuring that
LEAs were reporting all unaccompanied youths. As such, we determined that New
York needed to improve its oversight of LEA data reporting, documenting its policies
and procedures, following up to ensure that findings from monitoring reviews are
appropriately resolved, and providing technical assistance related to the reporting
of homeless student data for unaccompanied youths. Second, although the three
                           Office of Inspector General Semiannual Report  21




LEAs reviewed generally implemented selected ESSA requirements related to
coordinating services and identifying, educating, and reporting on homeless children
and youth, they did not ensure that their policies were in line with current practices.
Specifically, we found that New York City’s and Lackawanna’s homeless education
policies were outdated and had not been revised to include the ESSA requirements,
and Uniondale had not documented its data entry policies and procedures and the
roles and responsibilities of officials responsible for informing parents or guardians
of homeless students of the educational and related opportunities they are entitled
to under the McKinney-Vento Act. The LEAs should update and document their
policies and procedures to strengthen their internal controls to help ensure that
they are complying with the ESSA requirements and reporting reliable homeless
student data.

We made a number of recommendations to address the weaknesses identified,
including that New York include a review of LEA supporting documentation for
the homeless student data it reported in all of its monitoring reviews and include
a review of the LEAs’ processes for verifying the accuracy of the data. We also
recommended that New York City and Lackawanna review and revise their education
of homeless students policies so they comply with the ESSA and State requirements
and that Uniondale document its policies and procedures for entering homeless
student data in its student database system. New York agreed with our findings
and recommendations. New York Audit

Puerto Rico Department of Education’s Reliability of
Program Performance Data and Use of Adult Education
Program Funds
We found that the Puerto Rico Department of Education (Puerto Rico) can improve
its oversight of the Adult Education program to ensure that it (1) submits complete,
supported, and accurate performance data to the Department, (2) uses funds in
compliance with applicable laws and regulations, and (3) obtains and reviews
single audit reports of subgrantees. Specifically, we found that for the time period
reviewed, we found the following.

    •	   Puerto Rico did not always submit complete, supported, and accurate
         program performance data to the Department; used incomplete data to
         prepare and submit to the Department its program performance report; and
         did not maintain adequate support for non-Federal matching contributions.
         As a result, the Department does not have reasonable assurance that all the
         performance data Puerto Rico submitted to the Department were reliable
         for decision making and the Department’s ability to effectively monitor
         Puerto Rico’s performance is limited.

    •	   Puerto Rico did not provide sufficient documentation to demonstrate
         compliance with the approval process for 8 (27 percent) of 29 personal
         services contracts we judgmentally selected for review with related
         payments totaling $75,767; did not provide semiannual certifications for
         employees who worked full time on the Adult Education program; and did
         not provide sufficient documentation to support nonpayroll payments of
         $21,714. Without sufficient supporting documentation, Puerto Rico cannot
22  Office of Inspector General Semiannual Report




         provide assurance that it used all Adult Education program funds in
         accordance with applicable laws and regulations.

    •	   Puerto Rico did not always obtain and review Office of Management
         and Budget Circular A-133 single audit reports for at least 6 of 12 Adult
         Education program subgrantees that required a single audit. A review
         of the subgrantees’ single audit reports is key to assisting Puerto Rico
         in assessing the risk related to subgrantees’ use of Adult Education
         program funds.

We made 9 recommendations to address the weaknesses identified, including
that Puerto Rico (1) establish monitoring procedures to provide assurance that
all the required performance data that are collected and reported are effectively
assessed for completeness and accuracy and that supporting documentation
is maintained for the reported data; (2) return monies spent without required
approval or inadequately documented; and (3) revise existing monitoring checklists
to include steps to determine whether Adult Education program subgrantees
exceeded the threshold for obtaining an Office of Management and Budget
Circular A-133 single audit, and obtain and review the required single audit
reports for all subgrantees exceeding the threshold. Puerto Rico did not agree
with our findings or recommendations. Puerto Rico Audit

Calculating and Reporting Graduation Rates in California
For the time period reviewed, we found that the California Department of
Education’s (California) system of internal control did not provide reasonable
assurance that reported graduation rates were accurate and complete. Specifically,
our audit determined that California did not oversee or monitor local entities’
internal controls over the reliability of Adjusted Cohort Graduation Rate (ACGR)
data. This weakness occurred because California did not develop and implement
a process to ensure accuracy and completeness of ACGR data or to monitor the
local entities’ internal controls related to ACGR. As a result, both California and the
Department are at risk of using inaccurate and incomplete data when describing
and reporting on California’s progress towards raising graduation rates, and
California’s graduation rate accountability as an academic indicator to measure
student achievement and school performance. We also determined that California
did not calculate its ACGR in accordance with Federal requirements. Specifically,
California removed students from the cohort who transferred to programs that
did not lead to a regular high school diploma and included students as graduates
who did not earn a regular high school diploma. We concluded that correcting
for these errors would have decreased California’s school year 2013–14 ACGR by
about 2 percentage points.

Based on our findings, we made a number of recommendations, including
that California (1) ensure that local entities have internal controls regarding the
accuracy and completeness of ACGR data and verify that they are following its
guidance on data certification, (2) revise its procedures for calculating the ACGR
so the calculation is consistent with Federal requirements, and (3) review prior
year cohorts that were inaccurately reported to the Department and correct the
ACGR for those years or note that the ACGR was not accurate. Although California
disagreed with parts of our findings and some of our recommendations, it
                           Office of Inspector General Semiannual Report  23




provided information regarding its plans to address many of the concerns raised
in the report. California Audit

Followup on Previous Title I Audit—Detroit Public Schools
Community District
In 2008, we issued an audit that found that Detroit Public Schools had significant
weaknesses in its internal controls over accounting for and using Title I funds. The
school district used almost $54 million in Title I funds for (1) contract costs that were
unallowable or inadequately documented; (2) personnel costs that were unallowable;
(3) personnel costs that were not supported by adequate and timely time and
effort certifications, personnel activity reports, or employee insurance cost data;
and (4) nonpersonnel costs that were unallowable or inadequately documented.
We determined that the school district’s noncompliance occurred because it did
not have adequate policies and procedures to review Title I contracts, invoices,
employee insurance benefit costs, and adjust journal entries to ensure they were
adequately documented, reasonable, and allowable. Additionally, the Michigan
Department of Education (Michigan) did not provide adequate oversight of Federal
grant funds distributed to the school district. Based on our findings, we made
21 recommendations, including that the school district either provide support for
or return to the Department about $54 million. In 2013, the Department issued a
determination letter stating that the school district had taken steps to address the
audit findings and recommendations. Specifically, the school district had (1) created
a procurement checklist of the steps to be completed in the procurement process
and documentation that must be maintained when creating a contract or purchase
order, (2) revised its time and effort policies and procedures to ensure that time and
effort certifications and personnel activity reports are retained, and (3) provided
employees training on allowable uses of funds. During this reporting period, we
concluded our review of actions taken in response to our 2008 audit findings and
recommendations and concluded the Detroit Public Schools Community District,
the successor to the former Detroit Public Schools district, had not taken actions
sufficient to provide reasonable assurance that previously reported audit findings
would not reoccur.

Specifically, we found that Detroit Public Schools had made progress towards
implementing policies and procedures that were redesigned to provide reasonable
assurance that previously reported audit findings would not reoccur. The redesigned
personnel policies described the time and effort reporting and approving processes,
included examples of the documents that employees must complete to receive
compensation, and included instructions for completing required documents. The
redesigned nonpersonnel policies also described steps that employees must complete
when creating a purchase order or entering into a contract and the documentation
(such as an approved requisition and proof that the vendor has not been suspended
or debarred) required to demonstrate that the procedures were followed. Although
these redesigned policies and procedures were logical, understandable, and, if
followed, should have been sufficient to minimize the risk of previously reported audit
findings reoccurring, Detroit Public Schools Community District had not effectively
implemented all of them, including procedures for approving and documenting
personnel, employee travel, and consultant services costs. As a result, Detroit Public
Schools Community District increased the risk that (1) employees could receive pay
24  Office of Inspector General Semiannual Report




for which they were not entitled, (2) it would charge the Title I program for travel
costs that were not needed for the performance of the Title I program, and (3) it
would pay consultants for hours that they did not actually work.

We made 10 recommendations to address the issues identifi d, including that
Detroit Public Schools Community District strengthen its policies, procedures, and
processes for approving and documenting personnel costs, approving for payment
and documenting the costs incurred for employee travel, and approving for payment
and documenting the costs incurred for services provided by consultants. We also
recommended that Michigan ensure that Detroit Public Schools Community District
effectively implements the strengthened policies, procedures, and processes. Michigan
agreed with our findings and recommendations and explained how it and Detroit
Public Schools Community District planned to implement our recommendations.
Detroit Audit

Protection of Personally Identifiable
Information in State Longitudinal
Data Systems—Institute of
Education Sciences
The Department’s Institute of Education Sciences
(IES) provides grants to SEAs to develop SLDSs that
collect and maintain detailed, high-quality, student-
and staff-level data that are linked across entities
and provide a complete academic and performance
history for each student. The grants also provide
money for making these data accessible through
report and analysis tools. Due to the sheer volume
of personally identifiable information included in
these systems, it is critical that SEAs have established and implemented internal
controls to protect these vital data. Our previous audits in this series focused on
SEAs (Indiana, Oregon, and Virginia) and identified internal control weaknesses at
each SEA that increased the risk that these grantees would be unable to prevent or
detect unauthorized access and disclosure of personally identifiable information
in their SLDSs.

In this audit, we sought to assess the adequacy of the IES SLDS grant requirements
and monitoring of States to ensure internal controls are in place to prevent, detect,
and report unauthorized access and disclosure of personally identifiable information
in SLDSs.

We found that IES’s grant requirements were adequate to ensure the protection of
personally identifiable information. Specifically, both the IES SLDS grant requests for
applications and the approved grant applications stated that the grantees would
meet applicable Federal and State laws or regulations concerning the confidentiality
of individual records. Applicants were also required to demonstrate that they met
or would meet technical requirements concerning data quality, with the grant
requests for applications stating that a successful data system must ensure the
integrity, security, and quality of data. We found that the SEAs audited addressed
these requirements in the approved grant applications by identifying and noting
                          Office of Inspector General Semiannual Report  25




that they would comply with specific State requirements pertaining to data and
system security. However, we found that IES had inadequate controls for monitoring
its grantees’ adherence to State system security requirements. Specifically, IES
did not ensure that the grantees audited met the minimum State system security
requirements of their respective States as required by the SLDS grant assurances
that they provided as a condition of receiving grant funds.

Since IES did not do so while the SLDS grants were active, and at the time of our
audits did not yet have assurances that the States had taken steps to protect the
confidentiality of individual student records, the grantees’ SLDSs may still be
vulnerable to a breach.

Until IES incorporates monitoring procedures to oversee compliance with State
system security requirements, it will not be fully aware of whether grantees’ SLDSs
meet State standards. As such, personally identifiable information in these SLDSs
may be at an increased risk to unauthorized access and disclosure.

To address our finding, we recommended that IES modify the SLDS program
monitoring policies and procedures to include a review of SLDS grantees’ compliance
with State laws and regulations regarding system security and the protection of
personally identifiable information, emphasize the importance of data security with
SLDS grantees, and modify the SLDS program risk assessment and the risk-based
monitoring process to include consideration of system security compliance issues.
IES generally concurred with our finding and provided a corrective action plan in
response to our recommendations. IES SLDS Audit


Investigations
OIG investigations in the elementary, secondary, and adult education areas include
criminal investigations involving bribery, embezzlement, and other criminal activity,
often involving State and local education officials, vendors, and contractors who
have abused their positions of trust for personal gain. Examples of some of these
investigations follow.

Investigations of School Officials and Contractors
The following are highlights of OIG investigations involving K–12 school officials
and contractors.

Former Puerto Rico Department of Sports and Recreation Official Pled Guilty
for Role in $9.8 Million Kickback, Fraud, and Money Laundering Scheme (Puerto
Rico)
In our last Semiannual Report, we highlighted the indictment of the former secretary
of the Puerto Rico Department of Sports and Recreation, his assistant, and five
others for their alleged roles in a kickback, fraud, and money laundering conspiracy
involving more than $9.8 million in fraudulently awarded contracts. During this
reporting period, the former special assistant to the secretary pled guilty to his
role in the scheme. The former secretary allegedly used his position to enter into
contracts with three Puerto Rico Department of Education and Puerto Rico Public
Housing Department vendors in exchange for kickbacks. The former secretary
26  Office of Inspector General Semiannual Report




allegedly awarded federally funded contracts without a competitive bidding
evaluation process and awarded contracts for services at inflated prices. Federal
funds fraudulently obtained through this scheme were allegedly used to operate and
promote boxing events, television shows, travel, political campaigns, and business
ventures. According to the indictment, the former secretary also allegedly entered
into a lease agreement with one of his co-conspirators for a facility at an inflated
price and used the overpayments for kickbacks.

Former Grandview R-2 School District Official Sentenced for Stealing
$1.6 Million (Missouri)
The former business manager for the Grandview R-2 School District was sentenced
for embezzling about $1.6 million from the district. For 20 years, due to her position
with the school, she had access to the school’s accounts, from which she made
unauthorized payments to herself. She then falsified the school district’s records
to conceal her crimes. In some cases, she concealed the embezzlement by inflating
the reported wages of other school district employees, causing those coworkers to
pay more than $13,300 in income taxes that they did not owe. The former official
was sentenced to serve 63 months in prison and was ordered to pay more than
$1.8 million in restitution. Press Release

Jury Finds Former Grant-Goodland Public School Superintendent Guilty of
Stealing about $1.2 Million (Oklahoma)
A Federal jury found the former superintendent of the Grant-Goodland Public School
system to be guilty of conspiracy to embezzle about $1.2 million from the school
district. From 2010 through 2016, the former superintendent, with assistance from a
school employee, created phony invoices, purchase orders, and payment requests
in the names of legitimate school district vendors, prepared and presented checks
to the school board for payment of those purchases and services that were never
provided, converted the checks to himself, and pocketed the money.

Former Grand Prairie Independent School District Official Sentenced for Theft
Involving More Than $600,000 (Texas)
The former chief financial officer of the Grand Prairie Independent School District was
sentenced to prison for stealing more than $600,000 from the school district. From
2014 through 2015, the former chief financial officer used her position to embezzle
the money. She ordered the money withdrawn from district bank accounts and had
it delivered by armored truck to the district’s offices. She told finance department
employees that the money was for special cash awards for teachers for school
supplements and for settlements in lawsuits, none of which was true. The former
official was sentenced to serve 37 months in prison and 2 years of supervised release
and was ordered to pay more than $633,300 in restitution.

Former Garland Independent School District Director Sentenced on Conspiracy
Charges (Texas)
The former executive director of human resources for the Garland Independent
School District was sentenced on charges of conspiracy to commit false statements
in connection with immigration documents. From 2007 through 2013, the former
director conspired with outside recruiters to recruit and hire foreign teachers whom
the school district did not necessarily need in exchange for kickbacks. He falsely
                           Office of Inspector General Semiannual Report  27




certified that all U.S. workers who applied for certain school district positions were
rejected for lawful job-related reasons in order to hire the foreign teachers. The
former official was sentenced to serve 24 months of in prison and was ordered to
pay more than $317,400 in restitution. Press Release

Investigations of Charter Schools and Charter School
Officials
The following are summaries of OIG criminal investigations involving charter schools
and charter school officials.

Founder of Southwest Learning Centers Charter Schools Pled Guilty to 15-Year
Fraud Scheme (New Mexico)
The founder of Southwest Learning Centers, a group of public charter schools
he established in Albuquerque, pled guilty to running a 15-year scheme aimed
at defrauding millions of dollars from the schools. Starting in 2000, the founder
devised a series of schemes to defraud the schools for his personal benefit, including
purchasing buildings under the name of one company and charging the schools
exorbitant rates for rental space, making more than $700,000 in profits, and charging
students for online courses, diverting more than $1 million of those payments to
bank accounts he controlled, instead of the schools. He also created and submitted
fraudulent proposals and invoices from a bogus business he created for services
never produced or provided, and used most of the money for his personal benefit,
including $199,000 to pay down a personal line of credit, $50,000 to his personal
bank account, $12,000 for personal items, and $4,000 at a casino in Las Vegas. Press
Release

Founder of Now-Defunct Latin Academy Charter School Sentenced for
Embezzling More Than $800,000 (Georgia)
The founder of the Latin Academy Charter School, Latin Grammar School, and Latin
Preparatory Schools pled guilty and was sentenced for stealing more than $810,000
from the schools—the largest theft in the history of Georgia charter schools. He wired
money from the schools’ bank accounts into his personal bank account and used
the money at adult entertainment establishments; he also made cash withdrawals
and spent thousands of dollars at car dealerships and on travel. The founder was
sentenced to service 10 years in prison, to be followed by 10 years of probation,
and was ordered to pay about $810,000 in restitution. He was also ordered never
to hold a position of trust or in a fiduciary capacity, work with children, consult with
schools, or work for a nonprofit entity.

Family Foundations Academy Charter School Co-Director Sentenced
(Delaware)
In our last Semiannual Report to Congress, we reported that the founder of the
Family Foundations Academy charter school was sentenced for abusing the school’s
credit cards. During this reporting period, the school’s former co-director was
sentenced for embezzling more than $161,000 from the school. The former official
was sentenced to serve 18 months in prison followed by 3 years of probation and
was ordered to pay more than $162,000 in restitution.
28  Office of Inspector General Semiannual Report




Former Principal of Academy of Dover Charter School Pled Guilty to Theft
(Delaware)
The former principal of the Academy of Dover charter school pled guilty to embezzling
more than $145,400 from the school and the State. The former principal charged
personal expenses to four unauthorized credit cards he opened in the name of the
school. He also abused the State of Delaware’s voucher program and its procurement
card system by requesting reimbursement for school expenses never procured.
Instead, he used the money for personal expenses such as electronics, gardening
and camping equipment, automobile costs, a dog house, personal travel, and home
improvement items. Press Release

Investigations of Supplemental Educational Services
Providers
The following are summaries of OIG criminal investigations involving the fraud,
theft, and other misuse of Supplemental Educational Services funds—monies that
should have gone toward tutoring and other academic enrichment activities for
disadvantaged students to help improve achievement in reading, language arts,
and math.

Owners of Brilliance Academy Sentenced to Prison, Ordered to Pay More than
$11.3 Million for Orchestrating Massive Fraud Scam (Illinois)
In recent Semiannual Reports to Congress, we described our investigation into
Brilliance Academy and its wholly owned subsidiary Babbage Net School, tutoring
companies that received Supplemental Educational Services funds. The father and
son owners of the companies orchestrated an $11 million fraud scheme that bilked
more than 100 school districts around the country. They misrepresented the services
that the companies provided, gave substandard educational materials to students,
falsely inflated invoices for tutoring services, and distributed false student programs
and improvement reports to the schools that paid the companies. In addition, the
two paid bribes to school officials and others in exchange for their participation
in the scam. During this reporting period, the father and son owners were each
sentenced to serve about 6 years in prison followed by 3 years of supervised release
and were ordered to pay more than $11.3 million in restitution. Press Release
                                                     Office of Inspector General Semiannual Report  29




OTHER ACTIVITIES
Participation on Committees, Work Groups, and Task Forces
Federal and State Law Enforcement-Related Groups

    •	   Association of Government Accountants Partnership for Management and Accountability. The
         OIG participates in this partnership that works to open lines of communication among Federal, State,
         and local governmental organizations with the goal of improving performance and accountability.

    •	   Intergovernmental Audit Forums. OIG staff chair and serve on a number of intergovernmental
         audit forums, which bring together Federal, State, and local government audit executives who work
         to improve audit education and training and exchange information and ideas regarding the full range
         of professional activities undertaken by government audit officials.

Review of Legislation, Regulations, Directives, and Memoranda
    •	   H.R.4887 Grant Reporting Efficiency and Agreements Transparency (GREAT) Act of 2018. The
         OIG recommended a revision to section 6402(c)(4) to include assuring the accuracy and completeness
         of submitted data.
Department Management
        and Operations
E
        ffective and efficient business operations are critical to ensure that the
        Department effectively manages and safeguards its programs and protects
        its assets. Our reviews in this area seek to help the Department accomplish
        its objectives by ensuring its compliance with applicable laws, policies,
and regulations and the effective, efficient, and fair use of taxpayer dollars with
which it has been entrusted.
                          Office of Inspector General Semiannual Report  33




Audits and Reviews
OIG work completed over the last 6 months in this area includes statutory audits
involving the Department’s information technology security and financial management,
compliance-focused reviews of risks associated with the Department’s use of
government purchase cards, and its compliance with requirements of the Digital
Accountability and Transparency Act. Summaries of this work follows.

Information Technology Security
The E-Government Act of 2002 recognized the importance of information security
to the economic and national security interests of the United States. Title III of the
E-Government Act, the Federal Information Security Management Act of 2002, as
amended by the Federal Information Security Modernization Act of 2014 (FISMA),
requires each Federal agency to develop, document, and implement an agency-
wide program to provide security for the information and information systems
that support the operations and assets of the agency, including those provided or
managed by another agency, contractor, or other source. It also requires inspectors
general to perform independent evaluations of the eff ctiveness of their agency’s
information security programs.

Our FISMA review incorporated the FY 2017 Inspector General FISMA Reporting
Metrics, prepared by the Council of the Inspectors General on Integrity and Efficiency
(CIGIE), the Office of Management and Budget, and the U.S. Department of Homeland
Security, in consultation with the Federal Chief Information Officer Council. The
metrics were grouped into seven “metric domains” and organized around the five
Cybersecurity Framework Security Functions outlined in the National Institute
of Standards and Technology’s Framework for Improving Critical Infrastructure
Cybersecurity. The five security functions and their associated FY 2017 FISMA Metric
Domains were Identify (Risk Management), Protect (Configuration Management,
Identity and Access Management, and Security and Privacy Training), Detect
(Information Security Continuous Monitoring), Respond (Incident Response), and
Recovery (Contingency Planning). Using this framework, the inspectors general
assessed the effectiveness of each security function using maturity level scoring.
The scoring distribution is based on five maturity levels: (1) Ad-hoc, (2) Defined,
(3) Consistently Implemented, (4) Managed and Measurable, and (5) Optimized.
34  Office of Inspector General Semiannual Report




Level 1, Ad-hoc, is the lowest maturity level and Level 5, Optimized, is the highest
maturity level. For a security function to be considered effective, agencies’ security
programs must score at or above Level 4, Managed and Measurable.

FY 2017 FISMA Review
As guided by the maturity model used in the FY 2017 Inspector General FISMA
Metrics, we found that although the Department and FSA made progress in
strengthening their information security programs, weaknesses in the Department’s
and FSA’s information systems still exist, leaving those systems vulnerable to security
threats. Specifically, our review concluded that the Department’s and FSA’s overall
information security programs were not effective in all five security functions—
Identify, Protect, Detect, Respond, and Recover. We also identified findings in
all seven metric domains: (1) Risk Management, (2) Configuration Management,
(3) Identity and Access Management, (4) Security Training, (5) Information Security
Continuous Monitoring, (6) Incident Response, and (7) Contingency Planning. At the
metric domains level, we determined that the Department’s and FSA’s programs
were consistent with maturity level 2 of Defined for Configuration Management,
Identity and Access Management, Security Training, Information Security Continuous
Monitoring, Incident Response, and Contingency Planning. We determined the
programs were consistent with the maturity level 3 of Consistently Implemented
for Risk Management. The FY 2017 maturity model was more comprehensive and
attributes were assessed differently than the previous years’ maturity model indicator
scoring. As a result, certain Department functions were assessed at a lower level.
Despite the lower overall scoring due to changes in the maturity model, we found
several areas where the Department and FSA made improvements in developing and
strengthening their security programs since FY 2016. This included improvements
in risk management, configuration management, information security continuous
monitoring, and incident response programs.

To address the issues identified, we made 37 recommendations, 4 of which were repeat
recommendations, all aimed at assisting the Department and FSA with increasing
the effectiveness of their information security programs so that they fully comply
with all applicable requirements of FISMA, the Office of Management and Budget,
the Department of Homeland Security, and the National Institute of Standards and
Technology. During our FY 2016 FISMA audit, we made 15 recommendations to the
Department and FSA to address the 11 findings that we identified. As of October 2017,
the Department and FSA reported that they have completed corrective actions
for 10 of the 15 recommendations. However, despite their reporting completed
corrective actions, we continue to identify repeat findings and recommendations in
both the Information Security Continuous Monitoring and Incident Response metric
domains. Although the Department and FSA may have taken action on specific
findings, systemic issues persist in these metric domains on an enterprise level.
The Department and FSA anticipate completing corrective action for all FY 2016
recommendations this fiscal year, with many scheduled for completion by the end
of 2017. For FY 2017, the Department concurred with 31 of our recommendations,
partially concurred with 5 others, and did not concur with one. FISMA Report
                            Office of Inspector General Semiannual Report  35




Financial Management
One of the purposes of the Chief Financial Officers Act of 1990 is to improve agency
systems of accounting, financial management, and internal controls to ensure the
reporting of reliable financial information and to deter fraud, waste, and abuse
of government resources. This law requires an annual audit of agency financial
statements, which is intended to help improve an agency’s financial management
and controls over financial reporting. A summary of our FY 2017 financial statements
audits follows.	

FY 2017 Financial Statements Audits
The OIG’s contracted auditors found that the FY 2017 financial statements for the	
 Department and FSA were presented fairly in all material respects, in accordance
with generally accepted accounting principles. However, the auditors identified two
significant deficiencies in internal control over financial reporting. First, the auditors
found significant deficiencies in controls over modeling activities of student loan
portfolio costs, as neither the Department nor FSA had a fully developed framework
for model risk management and governance, or fully developed internal controls
over its critical modeling activities, including model development, risk assessment,
operation, and validation. Without a fully effective risk management and control
structure over its modeling activities, estimation errors or modeling risks may go
undetected, increasing the potential for improper reporting and program decisions.
Second, the auditors found persistent information technology control deficiencies
that need to be mitigated. Although the Department and FSA have made gradual
progress to address these issues in recent years, the FY 2017 financial statements
audit continued to identify information technology control deficiencies, including
compliance monitoring; personnel management; and management of various
application-level security, configuration management, and access controls. These
deficiencies can increase the risk of unauthorized access to the Department’s systems
used to capture, process, and report financial transactions and balances, affecting
the reliability and security of the data and information.

The auditors also found an instance of noncompliance involving a provision of the
Debt Collection Improvement Act of 1996, as amended by the Digital Accountability
and Transparency Act of 2014, which requires Federal agencies to notify the Secretary
of the Treasury of debts that are more than 120 days delinquent. The auditors
found that neither the Department nor FSA complied with the 120-day notification
requirement. The reports included a number of recommendations to address the
findings. The Department and FSA agreed with the auditors’ reports. Department
Audit Report, FSA Audit Report

FY 2017 Closing Package Financial Statements
The contracted auditors found that the Department’s FY 2017 Closing Package
Financial Statements were presented in accordance with generally accepted
accounting principles. The auditors identified no material weakness in internal
control over financial reporting and no instances of reportable noncompliance with
Federal law. The Department concurred with the auditors’ report. Closing Package
Financial Statements
36  Office of Inspector General Semiannual Report




Compliance Reviews
During this reporting period, we issued reports on two statutory compliance-
focused reviews. The first is our required review involving risks associated with
the Department’s use of government purchase cards, and the second involves the
Department’s implementation of the Digital Accountability and Transparency Act.
A summary of these reviews follows.

Purchase Card Risk Assessment
The objective of this statutory review was to determine whether the Department
made purchase card transactions that were potentially illegal, improper, or erroneous.
We performed this review in conjunction with a government-wide project initiated
by the CIGIE Information Technology Committee, to determine risks associated with
government purchase card transactions. We found no instances of purchase card
transactions that appeared to be illegal, improper, or erroneous for the transactions
included in our review. However, we did identify areas where the Department
could improve its internal controls over purchase card use. Specifically, we found
instances where purchase cardholders did not always follow Department policy, to
include obtaining or maintaining adequate documentation to support purchases.
As a result, there is greater likelihood that cardholders may make inappropriate
purchases, potentially resulting in an increased risk of fraud and misuse of funds.
We made several recommendations aimed at strengthening controls over purchase
card use, to include ensuring that the Department’s web-based training program
includes an emphasis on documentation requirements and that the exam given as
part of the training also emphasizes these requirements. The Department concurred
with our finding and our recommendations. Purchase Card Report

Digital Accountability and Transparency Act of 2014
The Digital Accountability and Transparency Act of 2014 (DATA Act) requires Federal
agencies to report financial and payment data to the USASpending.gov website. It
also requires the OIG of each agency to report to Congress on the completeness,
timeliness, quality, and accuracy of the agency’s spending data. For the time
period of our review, we found that the Department generally met the DATA
Act reporting requirements. It had adequate controls over its DATA Act source
systems and submission processes; its summary and award-level data submitted
was timely, and generally accurate, of quality, and complete; and it reported its
data in accordance with established government-wide financial data standards.
However, we did identify two areas needing improvement. First, the Department’s
validation and reconciliation processes did not initially ensure that award-level
transactions that should not be included in the submitted and certified data were
appropriately excluded. Second, we found that linkages between award-level
data in the Department’s systems and the data extracted from external award
systems by the U.S. Department of the Treasury DATA Act Broker were not always
complete and that selected reported data elements were not always consistent
with the data contained in the authoritative source system. Incomplete linkages
and data inconsistencies may increase the possibility of reporting errors and reduce
the transparency and reporting capabilities of financial and award data, including
nonfinancial award attributes, contrary to what is required by the DATA Act. Based on
our finding, we made two recommendations.. Specifically, the Department should
update its procedures to ensure it has a process that will identify transactions that
                                         Office of Inspector General Semiannual Report  37




               do not need to be included in DATA Act submissions. Second, the Department
               should continue to coordinate with the U.S. Department of the Treasury to ensure
               that all linkages are complete and data inconsistencies are appropriately addressed.
               The Department concurred with our recommendations and provided responsible
               corrective actions. DATA Act Report

               Management Information Report
               During this reporting period, we issued a management information report on the
               subject of unauthorized release of nonpublic information. The report provided the
               Department with actions it could take to improve its ability to protect against the
               unauthorized release of nonpublic information, and to take appropriate administrative




“
               actions when an unauthorized release occurs. A summary of the report follows.

    The Depar tment had                          Unauthorized Release of Nonpublic Information
                                                 At the request of the Department, the OIG evaluated
    little policy or guidance                    three incidents in which there appeared to be
                                                 unauthorized releases of nonpublic information.
    regarding the unauthorized                   This included a May 2017 Washington Post article
                                                 that included information from the President’s
    disclosure of nonpublic                      FY 2018 Budget Request for the Department that
    Department documents                         appeared to be issued before the information was
                                                 officially publicly released; a June 2017 article in
    to external sources.                         Politico that indicated the Department’s intention
                                                 to delay the effective date of the borrower defense
                                                 regulations; and an October 2017 notification
               from the Department regarding the unauthorized release of the draft notice of a
               proposed rulemaking document, “Assistance to States for the Education of Children
               with Disabilities: Preschool Grants for Children.” Our limited review found that the
               Department had little policy or guidance regarding the unauthorized disclosure
               of nonpublic Department documents to external sources, with the exception of
               the disclosure of personally identifiable information, proprietary information from
               companies, and security information. The disclosure of the budget request information
               could have fallen under Department policy regarding “sensitive but unclassified”
               information, resulting in disciplinary action up to removal from employment;
               however, any disciplinary action would be mitigated by the lack of proper markings
               and the lack of Department policy putting staff on notice concerning the protection
               of the information.

               The OIG made 6 suggestions to assist the Department in protecting against the
               unauthorized release of nonpublic information and with taking appropriate
               administrative action when allegations are substantiated. This included a suggestion
               that the Department develop interim policy requiring Department employees to
               clearly mark nonpublic documents with markings that indicate the information
               is not for public release, and that it create a directive to address prohibitions on
               the unauthorized release of sensitive or nonpublic information, define controlled
               unclassified information, and the need to properly mark documents. Management
               Information Report
38  Office of Inspector General Semiannual Report




Investigations
The following is a summary of OIG investigations related to abuse of a Departmental
data system.

Private Investigator Who Attempted to Illegally Obtain the
President’s Federal Tax Information Pled Guilty (Louisiana)
A private investigator who fraudulently used then-presidential candidate Donald
Trump’s personal identifying information, including his Social Security number, in
an attempt to illegally obtain his Federal tax information from the Internal Revenue
Service, pled guilty to false representation. The man admitted that he used the
President’s information to begin an online FAFSA. After beginning the FAFSA, he
obtained a Federal Student Identification number that allows students and parents
to identify themselves electronically to access their FAFSA. Once he obtained
the identification number, he unlawfully used the Internal Revenue Service Data
Retrieval Tool available on the FAFSA website in an unsuccessful attempt to obtain
the President’s tax information from Internal Revenue Service servicers. Press Release
                                                     Office of Inspector General Semiannual Report  39




OTHER ACTIVITIES
Participation on Committees, Work Groups, and Task Forces
Department

   •	   Department of Education Senior Assessment Team. The OIG participates in an advisory capacity
        on this team that provides oversight of the Department’s assessment of internal controls and related
        reports. The team also provides input to the Department’s Senior Management Council concerning the
        overall assessment of the Department’s internal control structure, as required by the Federal Managers’
        Financial Integrity Act of 1982 and Office of Management and Budget Circular A-123, “Management’s
        Responsibility for Internal Control.”

   •	   Department of Education Investment Review Board and Planning and Investment Review
        Working Group. The OIG participates in an advisory capacity in these groups that review technology
        investments and the strategic direction of the information technology portfolio.

   •	   Department Human Capital Policy Working Group. The OIG participates in this group that meets
        monthly to discuss issues, proposals, and plans related to human capital management.

Review of Legislation, Regulations, Directives, and Memoranda
   •	   H.R.1224, the National Institute of Standards and Technology Cybersecurity Framework,
        Assessment, and Auditing Act of 2017. The OIG made several recommendations aimed at eliminating
        duplication with existing laws and ensuring the independence of the evaluation of information security
        by an inspector general or independent external auditor.

   •	   S.2413, bill to provide for the appropriate use of bridge contracts in Federal procurement. The
        OIG noted the bill’s potential conflict with OIG independence, with respect to contracts the OIG enters
        into to fulfill the OIG’s mission according to the Inspector General Act.

   •	   Draft Bill, Stopping Improper Payments to Deceased People Act. The OIG provided technical
        comments, including sharing the data with OIGs and exempting the data from the Computer Matching
        Act.

   •	   Draft Bill, Payment Integrity Information Act of 2018. The OIG commented on a draft bill, the Payment
        Integrity Information Act, which consolidates several existing improper payments laws into one statute.
        The OIG noted significant concerns with the bill greatly expanding the scope and complexity of OIGs’
        annual compliance reviews and restricting OIGs’ ability to plan our work in the areas identified by OIGs
        as significant management challenges and areas of higher risk. We also provided technical comments.

   •	    Draft CIGIE Guidelines, Guidelines to Address Government Accountability Office Recommendation
        on Annual OIG Improper Payments Elimination and Recovery Act (IPERA) Reports. The OIG made
        several recommendations aimed at promoting consistency among OIGs in their annual compliance
        reviews and to clarify that an agency that fails to comply with any one or more of the IPERA compliance
        requirements is not compliant with the statute.
Other OIG Efforts
I
n this section of our Semiannual Report, you will find information on other efforts
completed during this reporting period specific to the OIG. This includes our
required non-Federal audit-related work, other required reports, and noteworthy
activities. Below you will find summaries of this work.
                            Office of Inspector General Semiannual Report  43




Non-Federal Audit Activities
The Inspector General Act of 1978, as amended, requires that inspectors general
take appropriate steps to ensure that any work performed by non-Federal auditors
complies with Government Auditing Standards. To fulfill these requirements, we
perform a number of activities, including conducting quality control reviews of
non-Federal audits, providing technical assistance, and issuing audit guides to
help independent public accountants performing audits of participants in the
Department’s programs.

Quality Control Reviews
The Office of Management and Budget’s “Uniform Administrative Requirements,
Cost Principles, and Audit Requirements for Federal Awards” requires entities such
as State and local governments, universities, and nonprofit organizations that spend
$750,000 or more in Federal funds in one year to obtain an audit, referred to as a
“single audit.” Additionally, for-profit institutions and their servicers that participate
in the Federal student aid programs and for-profit lenders and their servicers
that participate in specific Federal student aid programs are required to undergo
annual audits performed by independent public accountants in accordance with
audit guides that the OIG issues. These audits assure the Federal government that
recipients of Federal funds comply with laws, regulations, and other requirements
that are material to Federal awards. To help assess the quality of the thousands of
single audits performed each year, we conduct quality control reviews of a sample
of audits. The CIGIE issued the following guidance regarding the classification of
quality control review results.

    •	   Pass—audit documentation contains no quality deficiencies or only minor
         quality deficiencies that do not require corrective action for the audit under
         review or future audits.

    •	   Pass with Deficiencies—audit documentation contains quality deficiencies
         that should be brought to the attention of the auditor (and auditee, as
         appropriate) for correction in future audits.

    •	   Fail—audit documentation contains quality deficiencies that affect the
         reliability of the audit results or audit documentation does not support
44  Office of Inspector General Semiannual Report




         the opinions contained in the audit report and require correction for the
         audit under review.

During this reporting period, we completed 30 quality control reviews of engagements
conducted by 22 independent public accountants. We concluded that 5 (17 percent)
were Pass, 12 (40 percent) were Pass with Deficiencies, and 13 (43 percent) were Fail.

When a quality control review receives a rating of Fail, the independent public
accountant must resolve the deficiencies identified. If the independent public
accountant does not adequately resolve the deficiencies, we may find the audit
report is not reliable and we will recommend the report be rejected. During this
reporting period, we recommended that Federal Student Aid reject the audit
reports of four institutions. Federal Student Aid rejected two of those audit reports.
Furthermore, we referred five independent public accountants to the American
Institute of Certified Public Accountants and to the appropriate State Boards of
Accountancy for possible disciplinary action. We made these referrals due to the
independent public accountants’ unacceptable audit work.

Technical Assistance
The OIG’s Non-Federal Audit Team is dedicated to improving the quality of non-
Federal audits through technical assistance and outreach to independent public
accountants and others, including auditee officials and Department program officials.
Technical assistance involves providing advice about standards, audit guides and
guidance, and other criteria and systems pertaining to non-Federal audits.

During this reporting period, the OIG conducted two training sessions focused on the
newly issued audit guide, Guide for Audits of Proprietary Schools and for Compliance
Attestation Engagements of Third-Party Servicers Administering Title IV Programs. The
training was provided to financial aid professionals at the 2017 Federal Student Aid
Training Conference and to the auditor community through a web event co-sponsored
by the AICPA’s Government Audit Quality Center. Other topics covered included
the importance of selecting a qualified auditor and common quality control review
deficiencies. OIG staff gave a presentation on the audit guide to Federal Student
Aid’s Compliance Audit and Method of Payment divisions. In addition, the Director
of the Non-Federal Audit Team met with the Post Audit Group from the Office of
the Chief Financial Officer for a lunch and learn session, discussing audit quality
issues and ways to engage the audit community.

The OIG is in the process of developing a reporting system to better track audit
deficiencies identified through quality control reviews. This type of tracking will allow
us to focus our resources on training and outreach activities to address common
audit quality issues. It will also enable the OIG to evaluate whether its technical
assistance is effective in reducing the amount of repeat deficiencies.


Other OIG Reports
During this reporting period, the OIG issued three reports specific to the OIG mission
and goals, as well as the required Management Challenges report. Summaries of
these efforts follow.
                           Office of Inspector General Semiannual Report  45




OIG Strategic Plan (FY 2018–2022)
During this reporting period, the OIG issued its Five-Year Strategic Plan, a statutorily
required report that describes the focus and direction of OIG operations over the
next 5 years, establishes our organizational goals, and outlines the strategies we
will employ to reach those goals and the measures we will use to evaluate our
performance. Strategic Plan

        FY 2018 Management Challenges
        In October, the OIG issued its FY 2018 Management Challenges Report, a
        statutorily required report that highlights the most serious management
        challenges the Department faces and actions the Department needs to take
        to address them. To identify these challenges, the OIG routinely examines
        past audit, inspection, and investigative work and reports issued by the
        Government Accountability Office, including reports issued to management
        where corrective actions have yet to be taken; assesses ongoing audit,
        inspection, and investigative work to identify significant vulnerabilities; and
        analyzes new programs and activities that could post significant challenges
        because of their breadth and scope. For FY 2018, the OIG identified four
        management challenges: (1) improper payments; (2) information technology
        security; (3) oversight and monitoring; and (4) data quality and reporting.
        Management Challenges Report

        FY 2018 Annual Plan
        In December, the OIG issued its FY 2018 Annual Plan, which presents the major
        initiatives and priorities that we intend to undertake to assist the Department
        in fulfilling its responsibilities to America’s taxpayers and students. It details
        the assignment areas and resources the OIG plans to devote to evaluating
        the efficiency, effectiveness, and integrity of Department programs and
        operations. It incorporates suggestions from Department leaders, the Office
        of Management and Budget, and members of Congress. Annual Plan

        FY 2017 Small Business Innovation Research Report
        In October, the OIG issued its statutory report on OIG investigations involving
        the Small Business Innovation Research program. The National Defense
        Authorization Act for FY 2012 requires the inspector general of a Federal agency
        that participates in the program to submit an annual report describing its
        investigations involving those programs. The Department participates in the
        Small Business Innovation Research program, although it is a relatively small
        program within the agency. As reported, for FY 2017, zero cases involving the
        Small Business Innovation Research were referred to the OIG. SBIR Report
46  Office of Inspector General Semiannual Report




OTHER ACTIVITIES
Participation on Committees, Work Groups, and Task Forces
Federal Government

    •	   Fraud Reduction and Data Analytics Working Group. The Fraud Reduction and Data Analytics Act
         of 2015 required the Office of Management and Budget to establish a work group composed of the
         Controller of the Office of Management and Budget, the Chief Financial Officer of each agency, and
         another party selected by the Director of the Office of Management and Budget. Inspector General
         Tighe serves on this work group which is charged with sharing and developing data analytics techniques,
         financial and administrative controls, and best practices and techniques for detecting, preventing, and
         responding to fraud.

    •	   Government Accountability Office Domestic Working Group. Inspector General Tighe serves on
         this working group focused on advancing accountability in Federal, State, and local government.

Inspector General Community

    •	   Council of the Inspectors General on Integrity and Efficiency (CIGIE). OIG staff play an active role
         in CIGIE efforts. Formerly the chair of CIGIE’s Information Technology Committee, Inspector General
         Tighe is now the at-large member of CIGIE’s Executive Council. Inspector General Tighe is also a
         member of CIGIE’s Audit Committee, and the Suspension and Debarment Working Group, which is a
         subcommittee of the Investigations Committee.

    •	   OIG staff serve on the CIGIE Data Analytics Working Group of the Information Technology
         Committee, and participate in the CIGIE Council of Counsels to the Inspectors General. OIG
         staff are also members of CIGIE’s Assistant Inspector General for Investigations Subcommittee, the
         Cyber Security Working Group, the Grant Reform Working Group, the OIG Human Resources Directors’
         Roundtable, and the New Media Working Group. OIG staff lso participate in the following.
                                                     Office of Inspector General Semiannual Report  47




           •	   Financial Statement Audit Network. OIG staff have a leading role in this Government-wide
                working group that identifies and resolves key issues concerning audits of agency financial
                statements and provides a forum for coordination with the Government Accountability Office
                and the Treasury on the annual audit of the Government’s financial statements.

           •	   CIGIE/Government Accountability Office Annual Financial Statement Audit Conference.
                OIG staff work on the planning committee for the annual conference that covers current issues
                related to financial statement audits and standards.

   •	   Interagency Working Group for Certification and Accreditation. The OIG participates in this group
        that exchanges information relating to Federal forensic science programs that share intergovernmental
        responsibilities to support the mission of the National Science and Technology Council’s Subcommittee
        on Forensic Science.

   •	   Interagency Fraud and Risk Data Mining Group. The OIG participates in this group that shares best
        practices in data mining and evaluates data mining and risk modeling tools and techniques that detect
        patterns indicating possible fraud and emerging risks.

Reviews of Legislation, Regulations, Directives, and Memorandum
   •	   S.2178, the Inspector General Recommendation Transparency Act of 2018. The OIG commented
        that it generally supported efforts to making the recommendations in its work transparent and available
        to the public and noted its concern with how several of the bill’s provisions would be implemented.

   •	   H.R.4917, the Inspector General Subpoena Authority Act. The OIG commented that it supported
        the bill.
Required Reporting
50  Office of Inspector General Semiannual Report



Required Tables and Appendices
The following provides acronyms, definitions, and other information relevant to the tables that follow.

Acronyms and Abbreviations Used in the Required Tables
AARTS		         Audit Accountability and Resolution Tracking System
FFEL		          Family Federal Education Loan
FSA		           Federal Student Aid
HEA		           Higher Education Act of 1965, as amended
IES		           Institute of Education Sciences
IG Act		        Inspector General Act of 1978, as amended
OCFO		          Office of the Chief Financial Officer
OCIO		          Office of the Chief Information Officer
OCO		           Office of Communications and Outreach
OCTAE		         Office of Career, Technical, and Adult Education
ODS		           Office of the Deputy Secretary
OESE		          Office of Elementary and Secondary Education
OPE		           Office of Postsecondary Education
OSDFS		         Office of Safe and Drug Free Schools
OSERS		         Office of Special Education and Rehabilitative Services
OUS		           Office of the Under Secretary
Recs		          Recommendations
RMS		           Risk Management Service
SAR		           Semiannual Report to Congress


Definitions
Attestation Reports. Attestation reports convey the results of attestation engagements performed within
the context of their stated scope and objectives. Attestation engagements can cover a broad range of financial
and nonfinancial subjects and can be part of a financial audit or a performance audit. Attestation engagements
are conducted in accordance with American Institute of Certified Public Accountants attestation standards, as
well as the related Statements on Standards for Attestation Engagements.
Audit Closure Memoranda/Letters. These are used to notify the audited entity of OIG’s decision to terminate
the audit without issuing an audit report.
Inspection Reports. Inspections are analyses, evaluations, reviews, or studies of the Department’s programs.
The purpose of an inspection is to provide Department decision makers with factual and analytical information,
which may include an assessment of the efficiency and effectiveness of their operations and vulnerabilities
created by their existing policies or procedures. Inspections may be conducted on any Department program,
policy, activity, or operation. Typically, an inspection results in a written report containing findings and related
recommendations. Inspections are performed in accordance with quality standards for inspections approved
by the Council of Inspectors General for Integrity and Efficiency.
Management Information Reports. Management information reports are used to provide the Department
with information and suggestions when a process other than an audit, attestation, or inspection is used to
develop the report. For example, OIG staff may compile information from previous OIG audits and other activities
to identify overarching issues related to a program or operational area and use a management information
report to communicate the issues and suggested actions to the Department.
Special Project Reports. Special projects include OIG work that is not classified as an audit, attestation,
inspection, or any other type of alternative product. Depending on the nature and work involved, the special
                                                       Office of Inspector General Semiannual Report  51


project may result in a report issued outside the OIG. Information presented in the special project report varies
based on the reason for the special project (for example, response to congressional inquiry or other evaluation
and analysis). The report may contain suggestions.
Questioned Costs. As defined by the Inspector General Act of 1978, as amended (IG Act), questioned costs
are identified during an audit, inspection, or evaluation because of (1) an alleged violation of a law, regulation,
contract, grant, cooperative agreement, or other agreement or document governing the expenditure of funds;
(2) such cost not being supported by adequate documentation; or (3) the expenditure of funds for the intended
purpose being unnecessary or unreasonable. OIG considers that category (3) of this definition would include
other recommended recoveries of funds, such as recovery of outstanding funds or revenue earned on Federal
funds or interest due the Department.
Unsupported Costs. As defined by the IG Act, unsupported costs are costs that, at the time of the audit,
inspection, or evaluation, were not supported by adequate documentation. These amounts are also included
as questioned costs.

OIG Product Website Availability Policy
OIG final issued products are generally considered to be public documents, accessible on OIG’s website unless
sensitive in nature or otherwise subject to Freedom of Information Act exemption. Consistent with the Freedom
of Information Act, and to the extent practical, the OIG redacts exempt information from the product so that
nonexempt information contained in the product may be made available on the OIG website.
52  Office of Inspector General Semiannual Report


Required Reporting
The following pages presents summary tables and tables containing statistical and other data as required by
the IG Act, the Inspector General Empowerment Act of 2016, and the National Defense Authorization Act for
Fiscal Year 2008.

                                                                                                 Table    Page
      Section                                        Requirement
                                                                                                Number   Number

          -            Statistical Summary of Audit and Other Report Accomplishments              1        54
                       (October 1, 2017, through March 31, 2018)

          -            Statistical Summary of Investigations Accomplishments                      2        55
                       (October 1, 2017, through March 31, 2018)

 Section 5(a)(1)       Significant Problems, Abuses, and Deficiencies Related to the              3        56
 and 5(a)(2) of the    Administration of Programs and Operations
 IG Act

 Section 5(a)(3) of    Significant Recommendations Described in Previous Semiannual Reports       4        57
 the IG Act            to Congress on which Corrective Action Has Not Been Completed
                       (October 1, 2017, through March 31, 2018)

 Section 5(a)(4) of    Matters Referred to Prosecutive Authorities                                2        55
 the IG Act            (October 1, 2017, through March 31, 2018)

 5(a)(5) and 6(c)(2)   Summary of Instances in Which Information or Assistance Was Refused or     11       70
 of the IG Act         Not Provided

 Section 5(a)(6) of    Listing of Reports                                                         5        58
 the IG Act
                       Audit and Other Reports on Department Programs and Activities
                       (October 1, 2017, through March 31, 2018)

 Section 5(a)(8) of    Questioned Costs                                                           6        60
 the IG Act
                       Audit and Other Reports with Questioned or Unsupported Costs

 Section 5(a)(9) of    Better Use of Funds                                                        7        61
 the IG Act
                       Audit and Other Reports with Recommendations for Better Use of Funds

 Section 5(a)(10) of   Unresolved Reports                                                         8        62
 the IG Act
                       Unresolved Audit and Other Reports Issued Before March 31, 2018

 Section 5(a)(10)(B)   Summary of Audit Reports for Which No Agency Comment Was Returned          11       70
 of the IG Act         to the OIG Within 60 days of Issuance

 Section 5(a)(10)(C)   Outstanding Unimplemented Recommendations Before Reporting                 8        62
 of the IG Act         Period, with Aggregate Potential Cost Savings

 Section 5(a)(11) of   Significant Revised Management Decisions                                   11       70
 the IG Act

 Section 5(a)(12) of   Significant Management Decisions with Which the OIG Disagreed              11       70
 the IG Act
                                                              Office of Inspector General Semiannual Report  53




                                                                                                    Table         Page
     Section                                         Requirement
                                                                                                   Number        Number

Section 5(a)(13) of   Unmet Intermediate Target Dates Established by the Department Under             11           70
the IG Act            the Federal Financial Management Improvement Act of 1996

Section 5(a)(14)-     Peer Review Results                                                             10           69
(16) of the IG Act

Section 5(a)(17) of   Investigative Reports Issued                                                     2           55
the IG Act
                      Number of Persons Referred to the U.S. Department of Justice                   (All four
                                                                                                  requirements
                      Number of Persons Referred to State and Local Prosecuting Authorities
                                                                                                    included)
                      Indictments and Criminal Informations that Resulted from Prior Referrals
                      to Prosecuting Authorities

Section 5(a)(18) of   Description of the Metrics Used for Developing the Investigative Data for        2           55
the IG Act            the Statistical Tables Under 5(a)(17)

Section 5(a)(19) of   Report on Each Investigation Conducted by the OIG Involving a Senior             9           69
the IG Act            Government Employee (GS-15 or Above) Where the Allegations of
                      Misconduct Were Substantiated

Section 5(a)(22)      Description of Investigations Involving Senior Government Employees             11           70
(B) of the IG Act     (GS-15 or Above) that Were Closed but Not Disclosed to the Public

Section 5(a)(20) of   Description of Instances of Whistleblower Retaliation                           11           70
the IG Act

Section 5(a)(21) of   Description of Attempt by Agency to Interfere with OIG Independence             11           70
the IG Act

Section 5(a)(22)(A)   Description of Audits Closed but Not Disclosed to the Public                    11           70
of the IG Act

Section 845 of the    Contract-Related Audit Products with Significant Findings                       11           70
National Defense
Authorization
Act for Fiscal Year
2008
54  Office of Inspector General Semiannual Report


Table 1. Statistical Summary of Audit and Other Report
Accomplishments (October 1, 2017, through March 31, 2018)

                                                            October 1, 2017–
                               Accomplishment
                                                             March 31, 2018


 Audit Reports Issued                                            11

 Inspection Reports Issued                                        1

 Other Products Issued                                            4

 Questioned Costs (Including Unsupported Costs)                $97,481

 Recommendations for Better Use of Funds                         $0

 Reports Resolved By Program Managers                             8

 Questioned Costs (Including Unsupported Costs) Sustained     $173,164

 Unsupported Costs Sustained                                     $0

 Additional Disallowances Identifi d by Program Managers      $825,782

 Management Commitment to the Better Use of Funds                $0
                                                             Office of Inspector General Semiannual Report  55


Table 2. Statistical Summary of Investigative Accomplishments
(October 1, 2017, through March 31, 2018)

                                                                                                          October 1, 2016–
         Accomplishment                                    Description of the Metric
                                                                                                           March 31, 2017


Investigative Cases Opened             Number of cases that were opened as full investigations or                    37
                                       converted from a complaint or preliminary inquiry to a full
                                       investigation during the reporting period.

Investigative Cases Closed             Number of investigations that were closed during the reporting                39
                                       period.

Cases Active at the End of the         Number of investigations not closed before the end of the                    255
Reporting Period                       reporting period.

Investigative Reports Issued           Number of Reports of Investigation issued during the reporting                60
                                       period.

Number of Persons Referred             Number of individuals and organizations formally referred                      5
to State and Local Prosecuting         to State or local prosecuting authorities for prosecutorial
Authorities                            decisions during the reporting period.

Number of Persons Referred to the      Number of individuals and organizations formally referred to                  17
U.S. Department of Justice             the U.S. Department of Justice for prosecutorial decisions.

Indictments and Criminal                                                                                             30
Informations that Result from Prior    Number of individuals who were indicted or for whom a
Referrals to Prosecuting Authorities   criminal information was fi ed during the reporting period.


Convictions/Pleas                      Number of criminal convictions, pleas of guilty or nolo                       38
                                       contendere, or acceptance of pretrial diversions that occurred
                                       during the reporting period.

Fines Ordered                          Sum of all fines ordered during the reporting period.                    $28,458

Restitution Payments Ordered           Sum of all restitution ordered during the reporting period.           $16,146,373

Civil Settlements/Judgments            Number of civil settlements completed or judgments ordered                     2
(number)                               during the reporting period.

Civil Settlements/Judgments            Sum of all completed settlements or judgments ordered during            $600,200
(amount)                               the reporting period.

Recoveries                             Sum of all administrative recoveries ordered by the Department         $1,489,155
                                       or voluntary repayments made during the reporting period.

Forfeitures/Seizures                   Sum of all forfeitures/seizures ordered during the reporting            $262,162
                                       period.

Estimated Savings                      Sum of all administrative savings or cost avoidances that result              $0
                                       in a savings to, or better use of funds for, a program or victim
                                       during the reporting period. These are calculated by using the
                                       prior 12 month period of funds obtained or requested and then
                                       projecting that amount 12 months forward.

Suspensions Referred to                Number of suspensions referred to the Department during the                    0
Department                             reporting period.

Debarments Referred to                 Number of debarments referred to the Department during the                     1
Department                             reporting period.
56  Office of Inspector General Semiannual Report


Table 3. Significant Problems, Abuses, or Deficiencies Related to
the Administration of Programs and Operations

           Issue                                                        Description


 Final Independent          The financial statement audits for the Department and FSA identified two significant
 Auditor’s Report Fiscal    deficiencies in internal control over financial reporting and one instance of reportable
 Year 2017 and 2016         noncompliance. The two significant deficiencies were as follows.
 Financial Statement
                                 (1) Controls over the Department’s processes for model design and development, risk
 Audits—U.S. Department
                                 assessment, model operation and validation, and oversight, as the Department did
 of Education and Federal
                                 not have a comprehensive framework for risk management or fully developed internal
 Student Aid
                                 controls for its modeling activities, which could impact the reliability of its estimates used
                                 for financial reporting, budgetary formulation, and management analysis
                                 (2) Persistent information technology control deficiencies, including security
                                 management, access controls, and configuration management, which can increase the
                                 risk of unauthorized access to the Department’s systems used to capture, process, and
                                 report financial transactions and balances, affecting the reliability and security of the data
                                 and information.
                            The instance of noncompliance involved a provision of the Debt Collection Improvement
                            Act of 1996, as amended by the Digital Accountability and Transparency Act of 2014, which
                            requires Federal agencies to notify the Secretary of the Treasury of debts that are more than
                            120 days delinquent. The auditors found that neither the Department nor FSA complied with
                            the 120-day notification requirement. Click on these links to see the reports, which include a
                            description of recommendations and other details. Department Audit Report, FSA Audit Report

                            The fi cal year 2017 FISMA audit identified a number of significant problems and deficiencies,
                            all of which leave Department and FSA systems vulnerable to security threats and cyber
                            attacks and expose data and user accounts to malicious exploits. Some of the problems and
 U.S. Department of
                            deficiencies identified included: (1) the Department was not using appropriate application
 Education’s Federal
                            connection protocols; (2) the Department was unable to prevent unauthorized devices from
 Information Security
                            connecting to its network; (3) the Department and FSA not adhering to the required Federal
 Modernization Act
                            background investigations process for granting and monitoring access to its external users;
 (FISMA) Audit for Fiscal
                            (4) FSA not having an effective process for identifying, managing, or tracking activity of
 Year 2017
                            privileged account users accounts; and (5) inconsistent and ineffective implementation of
                            two-factor authentication. Click on this link to see the report, which includes a description of
                            recommendations and other details. FISMA Report
                                                          Office of Inspector General Semiannual Report  57


Table 4. Significant Recommendations Described in Previous
Semiannual Reports to Congress on Which Corrective Action Has
Not Been Completed (October 1, 2017, through March 31, 2018)
This table is limited to OIG internal audit reports of Departmental operations because that is the only type of
audit in which the Department tracks each related recommendation through completion of corrective action.

                                                                                            Number of
            Report                                                 Date of    Number of                   Projected
                         Report Title (Prior SAR       Date                                 Significant
 Office    Type and                                              Management   Significant                  Action
                          Number and Page)            Issued                                   Recs
           Number                                                 Decision    Recs Open                     Date
                                                                                            Completed

 FSA      Audit        Final Independent Auditors’    11/14/16     1/26/17        13            0          4/12/19
          A17Q0002     Report Fiscal Years 2016 and
          New          2015 Financial Statements
                       Federal Student Aid (Budget
                       Service also designated
                       as an action official)
                       (SAR 74, page 57)

 OCFO     Audit        Final Independent Auditors’    11/14/16     2/14/17        9             4          9/14/18
          A17Q0001     Report Fiscal Years 2016 and
          New          2015 Financial Statements
                       U.S. Department of
                       Education (OCIO and Budget
                       Service also designated
                       as action officials)
                       (SAR 74, page 57)

 ODS      Audit        Management Certifications      2/11/16      5/9/16         1             4          2/15/19
          A06O0001     of Data Reliability
                       (SAR 72, page 57)

 ODS      Audit        Nationwide Assessment          9/29/16      1/10/17        1             4          9/30/18
          A02M0012     of Charter and Education
          New          Management Organizations
                       (SAR 73, page 52)
58  Office of Inspector General Semiannual Report


Table 5. Audit and Other Reports on Department Programs and
Activities (October 1, 2017, through March 31, 2018)
                                                                                              Questioned
               Report                                                                            Costs
                                                                                   Date                          Number of
    Office    Type and                        Report Title                                     (Includes
                                                                                  Issued                           Recs
              Number                                                                         Unsupported
                                                                                                 Costs)

    FSA      Audit         Closure of OIG’s Evaluation of Federal Student Aid’s   1/23/18           -                 -
             Closure       Acquisition Function
             Letter
             A04O0015

    FSA      Audit         Final Independent Auditors’ Report Fiscal Years        11/13/17          -                10
             A17R0002      2017 and 2016 Financial Statements Federal
                           Student Aid (Budget Service is also designated as
                           an action official)

    FSA      Management    Federal Student Aid’s Borrower Defense to              12/8/17           -                10
             Information   Repayment Loan Discharge Process
             I04R00031

    IES      Audit         Protection of Personally Identifiable Information in   3/15/18           -                 3
             A02O0008      Statewide Longitudinal Data Systems

    OCFO     Audit         The Department’s Communication Regarding the           1/31/18           -                 3
             A09Q0003      Costs of Income-Driven Repayment Plans and Loan
                           Forgiveness Programs (The report is addressed to
                           ODS)

    OCFO     Audit         Final Independent Auditors’ Report Fiscal              11/13/17          -                 9
             A17R0001      Years 2017 and 2016 Financial Statements U.S.
                           Department of Education (Budget Service and
                           OCIO are also designated as action officials)

    OCFO     Audit         Final Independent Auditors’ Report Fiscal Year         11/15/17          -                 -
             A17R0003      2017 Closing Package Financial Statements U.S.
                           Department of Education

    OCFO     Inspection    Review and Analysis of the Department’s Purchase       3/2/18            -                 4
             S19R00041     Card Transactions


    OCIO     Audit         The U.S. Department of Education’s Federal             10/31/17          -                35
             A11R0001      Information Security Modernization Act of 2014
                           Report For Fiscal Year 2017 (The report was
                           addressed to ODS and FSA is also designated as an
                           action official)

    OCIO     Audit         The Department’s Compliance Under the DATA Act         11/7/17           -                 2
             A19R0005


    OCTAE    Audit         Puerto Rico Department of Education’s Reliability      2/22/18        $97,481              9
             A04O0004      of Program Performance Data and Use of Adult
                           Education Program Funds



1
 Two reports issued during the SAR 76 reporting period had incorrect control number designations: management information
report I04R0003 should have had an “X” instead of an “I” beginning its control number; inspection report S19R0004 should have
had an “I” instead of an “S” beginning its control number.
                                                          Office of Inspector General Semiannual Report  59




                                                                                        Questioned
           Report                                                                          Costs
                                                                             Date                     Number of
Office    Type and                        Report Title                                   (Includes
                                                                            Issued                      Recs
          Number                                                                       Unsupported
                                                                                           Costs)

ODS      Management    Unauthorized Release of Non-Public Information       3/29/18         -        6 suggestions
         Information
         X42S0001

OESE     Audit         Calculating and Reporting Graduation Rates in        1/11/18         -              6
         A02Q0005      California


OESE     Audit         New York State’s and Selected Districts’             3/29/18         -              9
         A03Q0005      Implementation of Selected Every Student
                       Succeeds Act Requirements under the McKinney-
                       Vento Homeless Assistance Act

OESE     Audit         Detroit Public Schools Community District: Status    3/28/18         -             10
         A05R0001      of Corrective Actions on Previously Reported Title
                       I-Relevant Control Weaknesses

OSERS    Audit         Closure of OIG Audit of the Administration of        11/17/17        -              -
         Closure       Vocational Rehabilitation Grants in Puerto Rico
         Letter
         A04R0001

Total    16 reports                             -                              -         $97,481        110 (and
                                                                                                     6 suggestions)
60  Office of Inspector General Semiannual Report


Table 6. Audit and Other Reports with Questioned or
Unsupported Costs
None of the products reported in this table were performed by the Defense Contract Audit Agency. The OIG
did not issue any inspection or evaluation reports identifying questioned or unsupported costs during this
reporting period.

                                                                Questioned Costs
                   Requirement                      Number   (Includes Unsupported   Unsupported Costs
                                                                     Costs)

 A. For which no management decision has been         2          $712,854,289               $0
     made before the commencement of the
     reporting period

 B. Which were issued during the reporting period     1             $97,481                 $0
       Subtotals (A + B)                              3           $712,951,770              $0

 C. For which a management decision was made
     during the reporting period                      1            $173,164                 $0
       (i) Dollar value of disallowed costs                        $173,164
       (ii) Dollar value of costs not disallowed                      $0

 D. For which no management decision was made         2          $712,778,606               $0
     by the end of the reporting period
                                                           Office of Inspector General Semiannual Report  61


Table 7. Audit and Other Reports with Recommendations for Better
Use of Funds
None of the products reported in this table were performed by the Defense Contract Audit Agency. The OIG
did not issue any inspection or evaluation reports identifying better use of funds during this reporting period.

                               Requirement                                  Number           Dollar Value


 A. For which no management decision was made before the commencement         0                  $0
     of the reporting period


 B. Which were issued during the reporting period                             0                  $0
       Subtotals (A + B)                                                      0                  $0

 C. For which a management decision was made during the reporting period:
       Dollar value of recommendations that management agreed to              0                  $0
       Dollar value of recommendations that management did not agreed to      0                  $0


 D. For which no management decision has been made by the end of the          0                  $0
    reporting period
62  Office of Inspector General Semiannual Report


Table 8. Unresolved Reports and Unimplemented Recommendations
Before March 31, 2018
The Department tracks audit resolution and the implementation of corrective actions related to OIG recommendations
in its Audit Accountability and Resolution Tracking System. The Office of the Chief Financial Officer maintains
this system, which includes input from OIG and responsible program officials. The Audit Accountability and
Resolution Tracking System includes recommendation-level detail for all internal reports where the Department
is directly responsible for implementing corrective action. The system includes less detailed information on
the status of individual recommendations made to external auditees, such as State educational agencies, local
educational agencies, institutions of higher education, other grantees and other participants in the Federal
student aid programs, and contractors. We generally do not estimate monetary benefits in our internal audits
of the Department’s management of its programs and operations, other than to identify better uses of funds.

We consider an audit resolved when the OIG and agency management or contracting officials agree on actions
to be taken on reported findings and recommendations.

The Department commented on all reports within 60 days of issuance.

                                                                                                                Dollar
                                                                                                              Value of
           Report Title and       Summary of Report and Status of              Date      Audit     Number    Aggregate
 Office
              Number                 Audit/Recommendations                    Issued    Resolved   of Recs    Potential
                                                                                                                 Cost
                                                                                                               Savings

 FSA      Technical Career     The audit found that although the school       5/19/08     Yes        13        $6,458
          Institute’s          met requirements for institutional,
          Administration of    program, and student eligibility and for
          the Federal Pell     award calculations, it improperly paid FFEL
          Grant and Federal    lenders to pay off ts students’ loans and
          Family Education     prevent default, and it had internal control
          Loan Program         deficiencies in its administration of the
                               Title IV programs.
          A02H0007
                               Current Status: FSA informed us that the
                               audit is resolved, but they are currently
                               working to complete the audit.

 FSA      Special Allowance    The audit found that although its billings     8/3/09      Yes        3       $22,378,905
          Payments to Sallie   for the special allowance payments under
          Mae’s Subsidiary,    the 9.5 percent floor complied with laws,
          Nellie Mae, for      Sallie Mae’s billing for Nellie Mae did not
          Loans Funded         comply with other requirements for the
          by Tax-Exempt        9.5 percent floor calculation.
          Obligations
                               Current Status: FSA informed us that
          A03I0006             the audit is currently under the appeal
                               process.

 FSA      Saint Mary-of-the-   The audit found that the school had been       3/29/12     Yes        19      $42,362,291
          Woods College’s      ineligible to participate in Federal student
          Administration       aid programs since 2005 because at
          of the Title IV      least half of its students were enrolled in
          Programs             ineligible correspondence courses.
          A05K0012             Current Status: FSA informed us that
                               the audit is currently under the appeal
                               process.
                                                             Office of Inspector General Semiannual Report  63


                                                                                                                  Dollar
                                                                                                                Value of
          Report Title and       Summary of Report and Status of               Date      Audit       Number    Aggregate
Office
             Number                 Audit/Recommendations                     Issued    Resolved     of Recs    Potential
                                                                                                                   Cost
                                                                                                                 Savings

FSA      Metropolitan         The audit found that the school did not         5/15/12      Yes         22       $232,918
         Community            establish that students had high school
         College’s            diplomas or their equivalent or passed
         Administration of    an approved Ability-to-Benefit test that
         Title IV Programs    was properly administered, resulting in
                              improper disbursements; did not ensure
         A07K0003
                              that students whose records we reviewed
                              were meeting the satisfactory academic
                              progress requirement; disbursed funds
                              to ineligible students; did not properly
                              administer its Federal Work Study
                              program; and did not properly calculate
                              return of Title IV funds.
                              Current Status: FSA informed us that the
                              audit is resolved, but all corrective actions
                              have not been completed.

FSA      Colorado Technical   The audit found that the school did             9/21/12      Yes         8        $173,164
         University’s         not comply with Federal requirements
         Administration of    regarding student eligibility for Title IV
         Title IV Programs    funds, the identification of withdrawn
                              students, and authorizations to retain
         A09K0008
                              credit balances.
                              Current Status: FSA informed us the
                              audit is resolved, but is within the entity’s
                              45-day appeal period.

FSA      SOLEX College’s      The audit found that the school                 9/30/15      Yes         6       $1,795,500
         Administration of    improperly disbursed Federal student
         Selected Aspects     aid to students who were enrolled
         of the Title IV      in programs that were not qualified
         Programs             to participate in Federal student aid
                              programs under the HEA.
         A05O0007
                              Current Status: FSA informed us that the
                              audit is resolved, but they are currently
                              working to complete the audit.

FSA      Western Governors    The audit found that more than 50 percent       9/20/17      No          9       $712,681,125
         University Was       of the school’s regular students were
                                                                                        Proposed
         Not Eligible to      enrolled in at least one correspondence
                                                                                        resolution
         Participate in the   course during award year 2013-2014;
                                                                                           date:
         Title IV Programs    therefore, the school became ineligible
                                                                                        Anticipate
                              to participate in the Title IV program as of
         A05M0009                                                                       resolution
                              June 30, 2014.
                                                                                        within the
         New
                              Current Status: FSA informed us that it is                 next 60
                              working to resolve this audit.                               days
64  Office of Inspector General Semiannual Report


                                                                                                                    Dollar
                                                                                                                  Value of
           Report Title and           Summary of Report and Status of              Date      Audit     Number    Aggregate
 Office
              Number                     Audit/Recommendations                    Issued    Resolved   of Recs    Potential
                                                                                                                     Cost
                                                                                                                   Savings

 IES      The Institute of         The audit found that IES did not effectively   3/18/17     Yes        11         $0
          Education Sciences’      implement Department requirements
          Contractor               for the contractor personnel security
          Personnel Security       screening process.
          Clearance Process
                                   Current Status: IES informed us that the
          A19R0002                 audit is currently in the Department’s
                                   audit closure process.

 OCFO     Audit of the             The audit found that it did not serve the      1/14/04     Yes        4       $1,018,212
          University of Illinois   number of participants it was funded
          at Chicago’s Gaining     to serve and that its partnership did not
          Early Awareness          provide the required matching funds.
          and Readiness for
                                   Current Status: OCFO informed us that
          Undergraduate
                                   the audit is resolved, but all corrective
          Programs
                                   actions have not been completed.
          Project (OPE also
          designated as
          action official)
          A05D0017

 OCFO     The North Carolina       The audit found that the North Carolina        7/13/15     Yes        6        $47,508
          Department of            Department of Public Instruction could
          Public Instruction’s     improve its administration of its Race to
          Administration of        the Top grant by strengthening its system
          its Race to the Top      of internal control over contracting and by
          Grant (OESE also         more closely monitoring the fi cal activity
          designated as an         of participating local educational agencies
          action official)         and charter schools to ensure that they
                                   complied with all applicable Federal
          A05O0005
                                   requirements.
                                   Current Status: OCFO informed us that
                                   the audit is currently in the Department’s
                                   audit closure process.
                                                             Office of Inspector General Semiannual Report  65


                                                                                                                   Dollar
                                                                                                                 Value of
          Report Title and         Summary of Report and Status of              Date      Audit       Number    Aggregate
Office
             Number                   Audit/Recommendations                    Issued    Resolved     of Recs    Potential
                                                                                                                    Cost
                                                                                                                  Savings

OCFO     Massachusetts          The audit found that the Massachusetts         1/25/16      Yes         5          $0
         Department             Department of Elementary and Secondary
         of Elementary          Education’s oversight of local education
         and Secondary          agency single audit resolution was not
         Education’s            sufficient, as it did not always work
         Oversight of           collaboratively or communicate effectively
         Local Educational      with local educational agencies that
         Agency Single Audit    had audit findings to ensure that they
         Resolution             took timely and appropriate corrective
                                action; did not have internal controls
         A09P0001
                                that were sufficient to ensure that it
                                provided adequate oversight of the local
                                educational agency audit resolution
                                process; and did not appear to make local
                                educational agency audit resolution a
                                high priority.
                                Current Status: OCFO informed us that
                                the audit is resolved, but all corrective
                                actions have not been completed.

OCFO     The Tennessee          The audit found that, for the specific areas   3/30/16      Yes         11       $242,816
         Department             reviewed, the Tennessee Department
         of Education’s         of Education generally administered
         Administration of      its Race to the Top grant in accordance
         a Race to the Top      with program requirements and its
         Grant                  approved grant application. However, it
                                did not ensure that one of the two local
         A05O0004
                                educational agencies included in our
                                review developed and implemented fiscal
                                control and fund accounting procedures
                                that provided reasonable assurance that
                                the local educational agency accounted
                                for and spent Race to the Top funds in
                                accordance with Federal requirements
                                and the approved grant application.
                                Current Status: OCFO informed us that
                                the audit is resolved, but all corrective
                                actions have not been completed.

OCFO     Protection             The audit found internal control               7/12/16      No          3          $0
         of Personally          weaknesses in the State’s system that
                                                                                         Proposed
         Identifiable           contains students’ personally identifiable
                                                                                         resolution
         Information in the     information that increases the risk that the
                                                                                            date
         Commonwealth           State will be unable to prevent or detect
                                                                                         unknown
         of Virginia’s          unauthorized access and disclosure of
         Longitudinal Data      personally identifiable information.
         System
                                Current Status: OCFO informed us that it
         (Note: Audit was       is working to resolve this audit.
         transferred from IES
         to OCFO.)
         A02P0006
66  Office of Inspector General Semiannual Report


                                                                                                                   Dollar
                                                                                                                 Value of
           Report Title and         Summary of Report and Status of             Date      Audit       Number    Aggregate
 Office
              Number                   Audit/Recommendations                   Issued    Resolved     of Recs    Potential
                                                                                                                    Cost
                                                                                                                  Savings

 OCFO     Protection             The audit found that the Oregon’s             9/27/16      No          3          $0
          of Personally          statewide longitudinal data system had
                                                                                         Proposed
          Identifiable           a lack of documented internal controls in
                                                                                         resolution
          Information in         the system that increases the risk that the
                                                                                            date
          Oregon’s Statewide     State will be unable to prevent or detect
                                                                                         unknown
          Longitudinal Data      unauthorized access and disclosure of
          System                 personally identifiable information.
          (Note: Audit was       Current Status: OCFO informed us that it
          transferred from IES   is working to resolve this audit.
          to OCFO.)
          A02P0007

 OCFO     Illinois State Board   The audit found that the Illinois State       11/7/16      Yes         7          $0
          of Education’s         Board of Education did not provide
          Oversight of           effective oversight to ensure that local
          Local Educational      educational agencies took timely and
          Agency Single Audit    appropriate action to correct single audit
          Resolution             fi dings.
          A02P0008               Current Status: OCFO informed us that
                                 the audit is resolved, but all corrective
                                 actions have not been completed.

 OCFO     U.S. Department        The audit found that the Department did       5/12/17      Yes         10         $0
          of Education’s         not comply with IPERA. The Department
          Compliance             did not comply with IPERA for FY 2016
          with Improper          because it did not meet two of IPERA’s six
          Payment Reporting      compliance requirements.
          Requirements
                                 Current Status: OCFO informed us that
          for Fiscal Year
                                 the audit is resolved, but all corrective
          2016 (FSA is also
                                 actions have not been completed.
          designated as an
          action official)
          A04Q0011
          New

 OCFO     Protection             The audit found that Indiana did not          7/10/17      No          4          $0
          of Personally          provide adequate oversight of the
                                                                                          Proposed
          Identifiable           Management and Performance Hub
                                                                                         resolution
          Information in         during the development of the Indiana
                                                                                            date
          Indiana’s Statewide    Network and Knowledge system to ensure
                                                                                         unknown
          Longitudinal Data      that the system meet the minimum
          System (IES is also    security requirements found in the Indiana
          designated as an       Code and the Indiana Office of Technology
          action official)       Information Security Framework.
          A06Q0001               Current Status: OCFO informed us that it
                                 is working to resolve this audit.
          New
                                                              Office of Inspector General Semiannual Report  67


                                                                                                                   Dollar
                                                                                                                 Value of
          Report Title and         Summary of Report and Status of             Date       Audit       Number    Aggregate
Office
             Number                   Audit/Recommendations                   Issued     Resolved     of Recs    Potential
                                                                                                                    Cost
                                                                                                                  Savings

OCIO     The U.S.               The audit found that although the             11/10/16      Yes         15          $0
         Department of          Department and FSA made some progress
         Education’s Federal    in strengthening their information security
         Information            since FY 2015, weaknesses remained,
         Security               leaving their systems vulnerable to
         Modernization Act      security threats.
         of 2014 Report For
                                Current Status: OCIO informed us that
         Fiscal Year 2016
                                the audit is currently in the Department’s
         (Report addressed
                                audit closure process.
         to ODS and OUS)
         A11Q0001

OESE     Puerto Rico            The audit found that Puerto Rico lacked       1/24/11       Yes         11      $15,169,109
         Department of          sufficient controls to ensure compliance
         Education’s Award      with State and Federal laws in awarding
         and Administration     personal service contracts and in ensuring
         of Personal Services   that those services were allowable and
         Contracts (OCTAE       adequately supported.
         (formerly OVAE),
                                Current Status: OESE informed us that
         OSDFS, and RMS
                                the audit is resolved, but all corrective
         also designated as
                                actions have not been completed.
         action officials)
         A04J0005

OESE     Audit of the           The audit found that improvements             9/12/16       Yes         10          $0
         Department’s           were needed within the Department’s
         Oversight of the       Office of School Support and Rural
         Rural Education        Programs’ monitoring of Rural Education
         Achievement            Achievement Program grantees’
         Program (OCO also      performance and use of funds. Despite
         designated as an       the need for improvements in monitoring,
         action official)       we concluded that the Department’s rural
                                education coordination efforts appear to
         A19P0006
                                be effective.
                                Current Status: OESE informed us that
                                the audit is currently in the Department’s
                                audit closure process.

OESE     Harvey Public          The audit found that the Harvey Public        5/18/17       No          5           $0
         School District 152:   School District 152 did not always
                                                                                          Proposed
         Status of Corrective   follow the policies that it designed to
                                                                                         resolution
         Actions on             remediate previously reported fi dings
                                                                                            date:
         Previously Reported    of inadequate inventory management
                                                                                         November
         Title I-Relevant       and did not design procedures to provide
                                                                                            2018
         Control Weaknesses     reasonable assurance that it submitted
                                accurate periodic expenditure reports to
         A05Q0003
                                the State.
         New
                                Current Status: OESE informed us that it
                                is working to resolve this audit.
68  Office of Inspector General Semiannual Report


                                                                                                                  Dollar
                                                                                                                Value of
           Report Title and        Summary of Report and Status of             Date      Audit       Number    Aggregate
 Office
              Number                  Audit/Recommendations                   Issued    Resolved     of Recs    Potential
                                                                                                                   Cost
                                                                                                                 Savings

 OESE     Calculating           The audit found that the Alabama State        6/14/17      No          6          $0
          and Reporting         Department of Education’s system
                                                                                         Proposed
          Graduation Rates in   of internal control did not provide
                                                                                        resolution
          Alabama               reasonable assurance that reported
                                                                                           date:
                                graduation rates were accurate and
          A02P0010                                                                      November
                                complete for the time period covered by
                                                                                           2018
          New                   our audit.
                                Current Status: OESE informed us that it
                                is working to resolve this audit.

 OESE     Idaho State           The audit found that the Idaho                9/28/17      Yes         2          $0
          Department            Department of Education needs to ensure
          of Education’s        full and prompt implementation of
          Oversight of Online   corrective actions identified in audits and
          Charter Schools       improve its Federal program oversight.
          (OSERS is also
                                Current Status: OESE and OSERS
          designated as an
                                informed us that the audit is currently in
          action official)
                                the Department’s audit closure process.
          A04N0010
          New
                                                             Office of Inspector General Semiannual Report  69


Table 9. Report on Each Investigation Conducted by the OIG
Involving a Senior Government Employee (GS-15 or Above) Where
the Allegations of Misconduct Were Substantiated
                                                         Description

An OIG investigation found that the former executive director of the White House Initiative on American Indian and Alaskan
Native Education engaged in criminal conduct while on Government work time and/or while using Government transit
benefits. The official appeared to engage in voyeuristic acts by recording video or taking photographs up unknowing women’s
skirts. The official resigned before the OIG investigation was complete. He subsequently pled guilty to attempted voyeurism
in Superior Court of the District of Columbia and was sentenced to 90 days incarceration (suspended) and 1 year of supervised
release. Investigation Report




Table 10. Peer Review Results
                                                         Description

No peer review reports were issued during this reporting period. As reported in SAR 72, the last peer review of OIG Audit
Services was completed in 2015. We received a rating of pass with no outstanding recommendations. As reported in SAR 71,
the last peer review of the OIG Investigation Services was completed in 2015. We received a rating of pass with no outstanding
recommendations. In 2016 and reported in SAR 72, our peer review of the U.S. Department of Labor OIG resulted in a rating of
pass.
There were no outstanding recommendations.
70  Office of Inspector General Semiannual Report


Table 11. Other Reporting Requirements

                                      Requirement                                           Results



 Summary of Instances where Information was Refused or Not Provided                     Nothing to Report


 Summary of Audit Reports for Which No Agency Comment Was Returned to the OIG
                                                                                        Nothing to Report
 within 60 Day of Issuance


 Significant Revised Management Decisions                                               Nothing to Report



 Significant Management Decisions with which the OIG Disagreed                          Nothing to Report


 Unmet Intermediate Target Dates Established by the Department Under the Federal
                                                                                        Nothing to Report
 Financial Management Improvement Act of 1996

 Description of Investigations Involving Senior Government Employees (GS-15 or Above)
                                                                                        Nothing to Report
 that Were Closed But Not Disclosed to the Public


 Description of Instances of Whistleblower Retaliation                                  Nothing to Report



 Description of Attempt by the Agency to Interfere with OIG Independence                Nothing to Report



 Audits Closed But Not Disclosed to the Public                                          Nothing to Report



 Contract-Related Audit Products With Significant Findings                              Nothing to Report
                                             Office of Inspector General Semiannual Report  71


Acronyms and Abbreviations
ACGR			        Adjusted Cohort Graduation Rate	

CIGIE			       Council of the Inspectors General on Integrity and Efficiency

DATA Act		     Digital Accountability and Transparency Act of 2014

Department		   U.S. Department of Education

ESSA			        Every Student Succeeds Act

FAFSA			       Free Application for Federal Student Aid

FISMA			       Federal Information Security Modernization Act of 2014

FSA			         Federal Student Aid

FY			          fiscal year

HEA			         Higher Education Act of 1965, as amended

IES			         Institute of Education Sciences

IPERA			       Improper Payments Elimination and Recovery Act

LEA			         local educational agency

OIG			         Office of Inspector General

SEA			         State educational agency

SLDS			        State Longitudinal Data Systems

Treasury		     U.S. Department of the Treasury
72  Office of Inspector General Semiannual Report
FY 2018 Management Challenges
The Reports Consolidation Act of 2000 requires the OIG to identify and summarize
the most significant management challenges facing the Department each year.
Below are the management challenges that the OIG identified for FY 2018.

   1.	 Improper Payments, meeting requirements and intensifying efforts to
       prevent, identify, and recapture improper payments.

   2.	 Information Technology Security, including management, operational,
       and technical security controls to adequately protect the confidentiality,
       integrity, and availability of its systems and data.

   3.	 Oversight and Monitoring, including Federal student aid program participants
       and grantees.

   4.	 Data Quality and Reporting, specifically program data reporting requirements
       to ensure that accurate, reliable, and complete data are reported.

For a copy of our FY 2018 Management Challenges report, visit our website at
http://www2.ed.gov/about/offices/list/oig/managementchallenges.html.
Anyone knowing of fraud, waste, or abuse involving U.S. Department of Education
funds or programs should contact the Office of Inspector General Hotline:

http://oighotline.ed.gov

We encourage you to use the automated complaint form on our website; however,
you may call toll-free or write the Office of Inspector General.

        Inspector General Hotline
        1-800-MISUSED
        (1-800-647-8733)

        Inspector General Hotline
        U.S. Department of Education
        Office of Inspector General
        400 Maryland Ave., S.W.
        Washington, D.C. 20202

You may make a report anonymously.

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

http://www.ed.gov/oig