oversight

Grants Management: Improving the Timeliness of Grant Closeouts by Federal Agencies and Other Grants Management Challenges

Published by the Government Accountability Office on 2012-07-25.

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

                            United States Government Accountability Office

GAO                         Testimony
                            Before the Subcommittee on Federal
                            Financial Management, Government
                            Information, Federal Services, and
                            International Security, U.S. Senate
                            GRANTS MANAGEMENT
For Release on Delivery
Expected at 2:30 p.m. EDT
Wednesday, July 25, 2012



                            Improving the Timeliness of
                            Grant Closeouts by Federal
                            Agencies and Other Grants
                            Management Challenges
                            Statement of Stanley J. Czerwinski,
                            Director, Strategic Issues




GAO-12-704T
                                                July 25, 2012

                                                GRANTS MANAGEMENT
                                                Improving the Timeliness of Grant Closeouts by
                                                Federal Agencies and Other Grants Management
                                                Challenges
Highlights of GAO-12-704T, a testimony
before the Subcommittee on Federal Financial
Management, Government Information,
Federal Services, and International Security,
Committee on Homeland Security and
Governmental Affairs, U.S. Senate

Why GAO Did This Study                          What GAO Found
As the federal government confronts             Closeout is an important final point of grants accountability. It helps to ensure
long-term fiscal challenges, it is critical     that grantees have met all financial and reporting requirements. It also allows
to improve the efficiency of federal            federal agencies to identify and redirect unused funds to other projects and
grants processes, such as grant                 priorities as authorized or to return unspent balances to the Department of the
closeout procedures that allow for the          Treasury (Treasury). At the end of fiscal year 2011, GAO identified more than
return of unspent balances to the               $794 million in funding remaining in expired grant accounts (accounts that were
Treasury. In 2008, GAO reported that            more than 3 months past the grant end date and had no activity for 9 months or
about $1 billion in undisbursed funding         more) in the Payment Management System (PMS). GAO found that undisbursed
remained in expired grant accounts in
                                                balances remained in some grant accounts several years past their expiration
the largest civilian payment system for
                                                date: $110.9 million in undisbursed funding remained unspent more than 5 years
grants—PMS. For this statement, GAO
provides information from its April 2012
                                                past the grant end date, including $9.5 million that remained unspent for 10 years
report updating its 2008 analysis. GAO          or more. Nevertheless, the more than $794 million in undisbursed balances
also describes federal grant spending           remaining in PMS represents an improvement in closing out expired grant
over the last three decades and                 accounts with undisbursed balances in PMS compared to the approximately $1
discusses other grant management                billion GAO found in 2008. This improvement is notable given that the overall
challenges identified in its past work          amount of grant disbursements through PMS increased by about 23 percent from
and that of others.                             2006 to 2011.
This testimony addresses (1) the                When agencies made concerted efforts to address timely grant closeout, they
amount of undisbursed funding                   and their inspectors general and auditors reported that they were able to improve
remaining in expired grant accounts;            the timeliness of grant closeouts and decrease the amount of undisbursed
(2) actions OMB and agencies have               funding in expired grant accounts. GAO found that raising the visibility of the
taken to track undisbursed balances;            problem within federal agencies can also lead to improvements in grant
(3) GAO recommendations to improve              closeouts. However, GAO’s review of agencies’ annual performance reports for
grant closeout; (4) recent and historical       fiscal years 2009 to 2011 found that systematic, agencywide information on
funding levels for federal grants; and          undisbursed balances in grant accounts eligible for closeout is still largely
(5) GAO’s ongoing and future work on            lacking.
grants management issues.
                                                The challenge presented by undisbursed balances in expired grant accounts is
                                                just one of a number of grants management challenges identified in past GAO
What GAO Recommends                             work. Addressing these challenges is critical to increasing the efficient and
                                                effective use of federal grant funds, which represent a significant component of
For grant closeout, GAO’s April 2012            overall federal spending. According to the Office of Management and Budget
report recommended OMB revise                   (OMB), federal outlays for grants to state and local governments, including
future guidance to better target                Medicaid, increased from $91 billion in fiscal year 1980 (about $221 billion in
undisbursed balances and instruct               2011 constant dollars) to more than $606 billion in fiscal year 2011, accounting
agencies to take action to close out
                                                for approximately 17 percent of total federal outlays. During this 30-year period
grants that are past their end date or
                                                there has been a shift in grant spending, increasing the percentage of grant
have no undisbursed balances
remaining. OMB staff said they                  funding of Medicaid while decreasing the percentage of funding of non-Medicaid-
generally agreed with and will consider         related grant programs.
the recommendations.                            GAO work on grants over the last decade has identified a range of issues related
                                                to the management of grant programs, including the streamlining of grants
                                                management processes, the measurement of grant performance, grant lessons
                                                learned from implementing the American Recovery and Reinvestment Act of
                                                2009, and internal control weaknesses. GAO will be looking at each of these
View GAO-12-704T. For more information,         grants management issue areas in future work for this Subcommittee.
contact Stanley J. Czerwinski at (202) 512-
6806 or czerwinskis@gao.gov or Beryl H.
Davis at (202) 512-2623 or davisbh@gao.gov.
                                                                                        United States Government Accountability Office
Chairman Carper, Ranking Member Brown, and Members of the
Subcommittee:

I appreciate the opportunity to discuss with you today the findings from
our recent report for you on the timeliness of grant closeout by federal
agencies, as well as some of the new and ongoing work we are doing for
this Subcommittee on other key grants management challenges. 1
Closeout is an important final point of grants accountability that helps to
ensure that grantees have met all financial and reporting requirements. It
also allows federal agencies to identify and redirect unused funds to other
projects and priorities as authorized, or to return unspent balances to the
Department of the Treasury (Treasury). (See appendix I for an illustration
of how and when federal agencies may redirect unused funds.) In a 2008
report to this Subcommittee, we found that timely grant closeout was a
long-standing issue at federal agencies and that roughly $1 billion in
undisbursed funding remained in the largest civilian payment system for
grants. 2 Assessing grants management practices, such as ensuring that
agencies follow proper closeout procedures, is critical to increasing the
efficient and effective use of federal grant funds, which represent a
significant component of federal spending. In fiscal year 2011, federal
grants outlays to state and local governments, including Medicaid,
accounted for approximately 17 percent of total federal outlays. 3
Challenges involving grants management have been a repeated theme in
our work over the last decade, and at your request, I will also briefly
discuss some of the work we are doing for this Subcommittee on this
important area.

My testimony today is drawn from our recent report to you on the
timeliness of grant closeout as well as federal grants funding data from
the Office of Management and Budget (OMB). It will address (1) the
amount of undisbursed funding remaining in expired grant accounts; (2)
actions OMB and agencies have taken to track undisbursed balances in
grants eligible for closeout; (3) GAO recommendations on how to improve


1
 GAO, Grants Management: Action Needed to Improve the Timeliness of Grant Closeouts
by Federal Agencies, GAO-12-360 (Washington, D.C.: Apr. 16, 2012).
2
 GAO, Grants Management: Attention Needed to Address Undisbursed Balances in
Expired Grant Accounts, GAO-08-432 (Washington, D.C.: Aug. 29, 2008).
3
 Federal grant outlays include the federal share of Medicaid funds that are sent to the
states. Medicaid is the largest federal grant program.




Page 1                                                                         GAO-12-704T
grant closeout from our recent report; (4) recent and historical funding
levels for federal grants; and (5) our ongoing and future work on grants
management challenges.

To conduct our work on grant closeout, we analyzed data from the
quarterly closeout reports provided to users of the Payment Management
System (PMS), the largest civilian payment system for grants, which is
administered by the Department of Health and Human Services’ (HHS)
Program Support Center (PSC). PMS closeout reports list all grant
accounts that remain open more than 3 months past the grant end date
and for which there has been no disbursement in the preceding 9 months.
We analyzed data from “dormant account reports” provided to users of a
second payment system, the Automated Standard Application for
Payments (ASAP) system, 4 which reports accounts for federal grants that
remain inactive for 2 years or more. We also conducted a web-based
search for audit reports we have issued and those issued by federal
inspectors general. We interviewed agency officials, including officials
from OMB, and reviewed OMB circulars and other guidance related to
grants management and performance reporting. We reviewed
performance reports for the 24 agencies required to issue audited
financial statements under the Chief Financial Officers Act of 1990 (CFO
Act) for information reported on undisbursed balances in grants eligible
for closeout. More detailed information on our scope and methodology for
the grants closeout work can found in our published report. 5 To determine
the level of federal grants funding and its changes over the last three
decades, we used OMB data for fiscal years 1980–2011. 6 For a more
accurate comparison of grant spending from year-to-year, we converted
each fiscal year’s outlays to constant 2011 dollars.

We conducted our performance audit on grant closeout from May 2011 to
April 2012 in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit to



4
 The Automated Standard Application for Payments (ASAP) system is administered jointly
by the Department of the Treasury (Treasury) and the Federal Reserve Bank of
Richmond.
5
GAO-12-360, pp. 35-44.
6
 See Office of Management and Budget, Fiscal Year 2013, Historical Tables, Budget of
the U.S. Government. Specifically, Table 12.3, Federal Outlays for Grants to State and
Local Governments, by Function, Agency, and Program: 1940–2013.




Page 2                                                                      GAO-12-704T
                       obtain sufficient, appropriate evidence to provide a reasonable basis for
                       our findings and conclusions based on our audit objectives. We believe
                       that the evidence obtained provides a reasonable basis for our findings
                       and conclusions based on our audit objectives. In addition, we are
                       providing information on grants funding levels for the past three decades.


                       We found that as of September 30, 2011, more than $794 million in
Undisbursed Balances   undisbursed balances remained in PMS in 10,548 expired grant
in Expired Grant       accounts. These are accounts that were more than 3 months past the
                       grant end date, had no activity for 9 months or more, and therefore should
Accounts Have          be considered for grant closeout. This is an improvement from 2008,
Declined but More      when we reported that at the end of calendar year 2006, roughly $1 billion
Action Is Needed       in undisbursed funding remained in expired PMS grant accounts. These
                       expired grant accounts do not include accounts associated with grant
                       programs for which the duration of the grant is not limited to a specific
                       time period, such as payments to states for the Medical Assistance
                       Program, known as Medicaid, and Temporary Assistance for Needy
                       Families. This improvement is notable given that the overall amount of
                       grant disbursements through PMS increased by about 23 percent from
                       2006 to 2011. However, more work needs to be done to further improve
                       the timeliness of grant closeout and reduce undisbursed balances. We
                       have highlighted three areas in need of particular attention.

                       First, we found that undisbursed balances remained in grant accounts
                       several years past their expiration date. We found that 991 expired grant
                       accounts containing a total of $110.9 million in undisbursed funding were
                       more than 5 years past the grant end date at the end of fiscal year 2011.
                       Of these, 115 expired grant accounts containing roughly $9.5 million in
                       undisbursed funding remained open more than 10 years past the grant
                       end date. Federal regulations generally require that grantees retain
                       financial records and other documents pertinent to a grant for a period of
                       3 years from the date of submission of the final report. Over time, the risk
                       increases that grantees will not have retained the financial documents
                       and other grant information that federal agencies need to properly
                       reconcile financial information and make the necessary adjustments to
                       grant award amounts and amounts of federal funds paid to recipients.
                       This could potentially result in the payment of unnecessary and
                       unallowable costs.

                       Second, we found that a small percentage of grant accounts (a little more
                       than 1 percent) with undisbursed balances of $1 million or more
                       accounted for more than a third of the total undisbursed funds in expired


                       Page 3                                                            GAO-12-704T
grant accounts. Overall, 123 accounts from eight different federal
agencies had more than $1 million in undisbursed balances at the end of
fiscal year 2011 for a combined total of roughly $316 million in
undisbursed balances. Accounts with undisbursed balances remaining
after the grant end date can indicate a potential grant management
problem. Data showing that some grantees have not expended large
amounts of funding, such as $1 million or more, by the specified grant
end date raise concern that the grantees may not have fully met the
program objectives for the intended beneficiaries within the agreed-upon
time frames.

Third, we found more than 28,000 expired grant accounts in PMS with no
undisbursed balances remaining that had not been closed out as of the
end of fiscal year 2011. According to data provided by PSC, PMS users
were charged a total of roughly $173,000 per month to maintain the more
than 28,000 expired grant accounts with zero-dollar balances listed on the
year-end closeout report. This would represent roughly $2 million in fees
if agencies were billed for these accounts for the entire year. While the
fees are small relative to the size of the original grant awards, they can
accumulate over time. If the grant has otherwise been administratively
and financially closed out, then agencies are paying fees to maintain
grant accounts that are no longer needed. However, the presence of
expired grant accounts with no undisbursed funds remaining raises
concerns that administrative and financial closeout—the final point of
accountability for these grants, which includes such important tasks as
the submission of financial and performance reports—may not have been
completed.

In addition to data from PMS, we also reviewed data from the ASAP
system and found that as of September 30, 2011, $126.2 million in
undisbursed balances remained in 1,094 dormant grant accounts.
Agencies can use the information in these reports to help identify
accounts in need of attention and unspent funds available for
deobligation. For example, agencies may want to focus attention on
accounts where there has been no activity for a prolonged period. We
found roughly $11 million in 179 accounts that had been inactive for 5
years or more.




Page 4                                                         GAO-12-704T
                         We have found that when agencies made concerted efforts to address
Raising the Visibility   timely grant closeout, they, their inspectors general, and auditors reported
of Grant Closeout Can    that they were able to improve the timeliness of grant closeouts and
                         decrease the amount of undisbursed funding in expired grant accounts.
Lead to                  Agencies’ approaches generally focused on elevating timely grant
Improvements             closeouts to a higher agency management priority and on improving
                         overall closeout processing. For example, in response to past audit
                         reports, HHS officials reported increasing monitoring of grant closeout.
                         Since fiscal year 2006, the HHS independent auditor had routinely
                         reported on concerns with management controls over grant closeout,
                         including a backlog of HHS grant accounts in PMS that were already
                         beyond what the auditor considered a reasonable time frame for
                         closeout. 7 In fiscal year 2011, the independent auditor noted significant
                         improvements in the closeout of grants in PMS. While we found that
                         roughly three-fourths of all undisbursed balances in expired PMS grant
                         accounts were from grants issued by HHS, we also found that the total
                         undisbursed balances in these accounts represented the lowest
                         percentage (2.7 percent) for any federal department included on the
                         September 30, 2011, closeout report. 8 In comments on our draft report,
                         HHS reported that it had identified $116 million in undisbursed balances
                         in PMS available for deobligation through a special initiative begun in
                         2011 and is updating existing department policies and procedures to
                         improve the grant closeout process going forward.

                         In 2008, we recommended that OMB instruct all executive departments
                         and independent agencies to annually track the amount of undisbursed
                         balances in expired grant accounts and report on the status and


                         7
                          Independent auditors are independent accounting experts who conduct impartial audits
                         of the financial statements of public and private organizations to ensure there are no
                         misstatements, and assess whether organizations’ systems to detect and prevent fraud
                         (internal controls) are effective. Independent auditors also provide consulting non-audit
                         services in areas such as information technology.
                         8
                          We excluded grant accounts from our analysis that did not have a defined end date,
                         including large Medicaid formula grants for the Medical Assistance Program. The purpose
                         of the PMS closeout report is to alert awarding agencies of accounts in PMS that remain
                         open after their posted end date. If a grant does not have a defined end date then HHS
                         staff consider the PMS closeout report merely as a reminder to the awarding agency of
                         the open account. We did not exclude grant accounts for similar programs that were
                         identified in the Catalog of Federal Domestic Assistance as Recovery-Act-related,
                         because, to achieve the purposes of the Act, Congress explicitly directed federal
                         departments and agencies to expend the funds made available in this Act as quickly as
                         possible consistent with prudent management.




                         Page 5                                                                        GAO-12-704T
                         resolution of the undisbursed funding in their annual performance reports.
                         At the time, OMB supported the intent of our recommendations, but its
                         comments did not indicate a commitment to implement our
                         recommendations. Starting in 2010, OMB has issued guidance to track
                         and report on undisbursed balances in expired grant accounts to only
                         certain federal departments and entities covered by the Commerce,
                         Justice, Science, and Related Agencies Appropriations Act, as required
                         by law. However, in its instructions, OMB equated “expired grant
                         accounts” with expired appropriation accounts. Based on this definition,
                         OMB’s guidance included grant accounts that were still available for
                         disbursement and was not limited only to those grant accounts eligible for
                         closeout. In our review of CFO Act agencies’ annual performance reports
                         for fiscal years 2009 to 2011, we found that systematic, agencywide
                         information on undisbursed balances in grant accounts eligible for
                         closeout was largely lacking.


                         In our 2012 grant closeout report, we reiterate our recommendation that
GAO Recommends           OMB instruct all executive departments and independent agencies to
that OMB Issue           report on the status and resolution of the undisbursed funding in grants
                         that have reached the grant end date in their annual performance reports,
Governmentwide           the actions taken to resolve the undisbursed funding, and the outcomes
Guidance to Track        associated with these actions. In addition, we recommend that the
and Report on            Director of OMB take the following three actions:

Undisbursed Balances     •   Revise the definition of “undisbursed balances in expired grant
                             accounts” in future guidance issued to agencies to focus on
in Grants Eligible for       undisbursed balances obligated to grant agreements that have
Closeout                     reached the grant end date and are eligible for closeout.

                         •   Instruct agencies with undisbursed balances still obligated to grants
                             several years past their grant end date to develop and implement
                             strategies to quickly and efficiently take action to close out these
                             grants and return unspent funds to the Treasury when appropriate.

                         •   Instruct agencies with expired grant accounts in federal payment
                             systems with no undisbursed balances remaining to develop and
                             implement procedures to annually identify and close out these
                             accounts to ensure that all closeout requirements have been met and
                             to minimize any potential fees for accounts with no balances.

                         OMB staff said that they generally agreed with the recommendations and
                         will consider them as they review and streamline grant policy guidance.



                         Page 6                                                           GAO-12-704T
                         OMB did not provide specific actions or time frames with which it would
                         address the issues that we have raised. We will continue to monitor
                         OMB’s action on our recommendations.

                         The challenge presented by undisbursed balances in expired grant
                         accounts is just one of a number of grants management challenges we
                         have identified in our past work. Grants continue to be an important tool
                         used by the federal government to achieve national objectives. As the
                         federal government confronts long-term and growing fiscal challenges, its
                         ability to maintain the flow of intergovernmental revenue, such as through
                         grant programs, could be constrained. To make the best use of federal
                         grant funds, it is critical to address grants management challenges that
                         could impact the efficiency and effectiveness of federal grants processes.
                         Accordingly, the Subcommittee has requested that we examine a number
                         of areas involving these issues in future work. However, before I discuss
                         these I would like to put them in a broader context by briefly describing
                         the level of recent federal grant spending and how it has changed over
                         the last three decades.


                         Grants have been, and continue to be, an important tool used by the
While Grants Have        federal government to provide program funding to state and local
Consistently Been a      governments. According to OMB, federal outlays for grants to state and
                         local governments increased from $91 billion in fiscal year 1980 (about
Significant              $221 billion in 2011 constant dollars) to over $606 billion in fiscal year
Component of             2011. 9 Although many federal departments and agencies award grants,
Federal Spending, the    HHS, which administers the Medicaid program, is by far the largest grant-
                         making agency, with grants outlays of almost $348 billion in fiscal year
Focus of Grants          2011, or about 57 percent of the total federal grants outlays that year.
Outlays Has Shifted In   Even when Medicaid’s outlays of $275 billion are excluded, HHS remains
                         the largest federal grant-making department. 10 Figure 1 shows the total
the Last 30 Years        federal outlays for grants to state and local governments over the period
                         from fiscal years 1980 to 2011, in constant dollars, and the increasing
                         amount of this total that went to Medicaid over time.



                         9
                          We used OMB data on grants outlays to state and local governments for this testimony.
                         Constant dollar amounts reflect adjustments for inflation (e.g., the purchasing power of the
                         $91 billion spent in 1980 represents about $221 billion in fiscal year 2011 dollars).
                         10
                           All further references to total or overall federal grants outlays refer to outlays to state
                         and local governments.




                         Page 7                                                                             GAO-12-704T
Figure 1: Total Federal Outlays for Grants to State and Local Governments and Medicaid, in 2011 Constant Dollars, Fiscal
Years 1980-2011




                                         It is important to note that although federal outlays for grants have
                                         increased during the past three decades, as shown in Figure 2, grants
                                         outlays as a percentage of total federal outlays in fiscal year 2011 was at
                                         a roughly comparable level to what it was more than 30 years earlier
                                         (15.5 percent vs. 16.8 percent). At the same time, Medicaid outlays
                                         increased from over 2 percent of total federal outlays in 1980 to almost 8
                                         percent in 2011. The considerable increase in Medicaid outlays was
                                         offset by an approximately equivalent decrease in the share of outlays for
                                         all other grants.




                                         Page 8                                                                  GAO-12-704T
Figure 2: Total Federal Outlays for Grants to State and Local Governments and Medicaid as a Percentage of Total Federal
Outlays, Fiscal Years 1980-2011




                                         Given the federal government’s use of grants to achieve national
Ongoing and Future                       objectives and respond to emerging trends, this Subcommittee has
Work Targets Key                         recently requested that we conduct a number of grant-related reviews in
                                         support of its oversight efforts. Today, I would like to briefly highlight four
Grants Management                        areas where our previous work and that of the inspectors general and
Issues                                   others have identified challenges, and where we are beginning the work
                                         you requested related to the management of grant programs. Specifically,
                                         they are the streamlining of grants management processes; the
                                         measurement of grant performance; grant lessons learned from
                                         implementing the American Recovery and Reinvestment Act of 2009
                                         (Recovery Act); and internal control weaknesses in grants management
                                         processes.

                                         For more than a decade, the federal government has undertaken several
                                         initiatives aimed at streamlining governmentwide grants management.



                                         Page 9                                                                 GAO-12-704T
Over the years, Congress has expressed concern over the
inconsistencies and weaknesses we and the inspectors general have
found in grants management and oversight. In response to your request
we plan to examine the progress OMB and federal grant governance
bodies have made toward streamlining grants management. We also
expect to assess what further actions should be taken to simplify
processes, reduce unnecessary burdens, and improve the governance of
streamlining initiatives. We plan to report our results next year.

We also expect to evaluate the extent to which there are governmentwide
requirements for measuring and reporting grant performance and the
extent to which federal agencies measure grant performance to report
progress toward their goals, as well as offer assistance to grantees on
collecting data and reporting grant performance. As with our streamlining
work, the specifics of this grant performance reporting work are currently
under development, and we anticipate a 2013 report. In our past work we
have reported that effective performance accountability provisions are of
fundamental importance in assuring the proper and effective use of
federal funds to achieve program goals.

Under the Recovery Act, grants have played an important role in
distributing federal funds in light of the most serious economic crisis since
the Great Depression. As of June 2012, Treasury had paid out more than
$250 billion in Recovery Act funds to state and local governments, much
of it through grants. Given the significant investment made in the
Recovery Act, and the considerable challenges facing our nation moving
forward, this Subcommittee recognized the importance of collecting,
analyzing, and sharing grant lessons and insights gained as a result of
this process. Building on our previous reviews, we will examine lessons
from the implementation of the Recovery Act—including specific
examples of practices and approaches that worked as well as challenges
encountered by federal, state, and local agencies. Among the potential
issues to consider are the efforts to facilitate coordination and
collaboration among federal, state, local, and nongovernmental partners
and actions taken to enhance the organizational and administrative
capacity of federal partners. Once again, we anticipate reporting to the
Subcommittee next year.

Finally, in numerous reviews over the years, we have identified
weaknesses in federal agencies’ processes for managing and overseeing
grant programs. Among the issues we are planning to address in future
work is how federal agencies can improve internal control over grants
monitoring. We will also examine what improvements, if any, are needed


Page 10                                                           GAO-12-704T
                  in federal agencies’ internal controls to help ensure the primary grantees
                  are providing adequate oversight of subgrantees.


                  The improvements made in the timeliness of grant closeouts since our
Concluding        2008 report demonstrate that congressional oversight can lead agencies
Observations      to focus attention on a specific grant challenge, and result in real
                  progress. However, our recent update of our earlier analysis of
                  undisbursed balances also shows that more still needs to be done to
                  close out grants; agencies would use their resources most effectively by
                  focusing initially on older accounts with larger undisbursed balances. As
                  our review of past grant work suggests, there are numerous other issues
                  where congressional attention could also likely pay dividends. This is all
                  the more relevant because federal grant programs remain important tools
                  to achieve national objectives and continue to be a significant component
                  of federal spending. We look forward to continuing to support this
                  Subcommittee’s efforts to examine the design and implementation of
                  federal grants and participating in its active oversight agenda.


                  Chairman Carper, Ranking Member Brown, and Members of the
                  Subcommittee, this completes my prepared statement. I would be
                  pleased to respond to any questions that you or other members of the
                  Subcommittee may have.


                  If you or your staff have any questions about this testimony, please
Contacts and      contact me at (202) 512-6806 or czerwinskis@gao.gov, or Beryl H. Davis,
Acknowledgments   Director, at (202) 512-2623 or davisbh@gao.gov. Contact points for our
                  Offices of Congressional Relations and Public Affairs may be found on
                  the last page of this statement. GAO staff who made key contributions to
                  this testimony are Phyllis L. Anderson, Assistant Director; Peter Del Toro,
                  Assistant Director; Thomas M. James, Assistant Director; Kimberly A.
                  McGatlin, Assistant Director; Laura M. Bednar, Maria C. Belaval, Anthony
                  M. Bova, Amy R. Bowser, Virginia A. Chanley, Melissa L. King, Thomas
                  J. McCabe, Diane N. Morris, and Omari A. Norman. Additional
                  contributions were made by Andrew Y. Ching, Travis P. Hill, Jason S.
                  Kirwan, Jennifer K. Leone, Cynthia M. Saunders, Albert C. Sim, and
                  Michael Springer.




                  Page 11                                                         GAO-12-704T
Appendix I: Deobligating Undisbursed
              Appendix I: Deobligating Undisbursed
              Balances in Expired Grant Accounts



Balances in Expired Grant Accounts

              While there can be substantial variation among grant programs, figure 1
              illustrates how closing out grants could allow an agency to redirect
              resources toward other projects and activities or return unspent funds to
              Treasury.

              Figure 1: Deobligating Undisbursed Balances in Expired Grant Accounts




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              Page 12                                                             GAO-12-704T
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