oversight

Fish and Wildlife Service: Options to Improve the Use of Federal Aid Programs' Administrative Funds

Published by the Government Accountability Office on 1999-09-29.

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

                     United States General Accounting Office

GAO                  Testimony
                     Before the Committee on Resources,
                     House of Representatives




For Release
on Delivery
Expected at
                     FISH AND WILDLIFE
11 a.m. EDT
Wednesday            SERVICE
September 29, 1999



                     Options to Improve the Use
                     of Federal Aid Programs’
                     Administrative Funds
                     Statement of Barry T. Hill, Associate Director,
                     Energy, Resources, and Science Issues,
                     Resources, Community, and Economic
                     Development Division




GAO/T-RCED-99-285
Mr. Chairman and Members of the Committee:

We are pleased to be here today to discuss the Fish and Wildlife Service’s
(Service) management and oversight of the administrative funds
associated with the Wildlife Restoration Program and, to a lesser extent,
with the Sport Fish Restoration Program. The Wildlife Restoration
Program was begun in 1938 following the passage of the Federal Aid in
Wildlife Restoration Act, often called the Pittman-Robertson Act. The
purpose of the act is to restore, conserve, manage, and enhance the
nation’s wildlife resources and to provide for public use and benefits from
these resources. The Service, an agency of the Department of the Interior,
administers the program. The Service’s Office of Federal Aid (Office)
provides overall support and direction for implementing the Wildlife
Restoration Program as well as a sister program, the Sport Fish
Restoration Program. This sister program provides funds to restore and
manage the nation’s sport fishery resources and to provide public use and
benefits from these resources. The programs received a total of about
$550 million in fiscal year 1998—$170 million for Wildlife and $380 million
for Sport Fish.

Funds provided for these programs are derived from federal excise taxes
from the sale of firearms, ammunition, archery equipment, fishing
equipment, and other items. The core mission of these programs is to
distribute funds to states and other qualified government recipients for the
purposes of wildlife and sport fish restoration. A portion of the funds can
be used by the Office for the programs’ administration and
implementation—up to 8 percent for wildlife and up to 6 percent for sport
fish. Of the roughly $550 million these programs received in fiscal year
1998, about $31 million was used for administration and
implementation—$13.5 million for Wildlife and $17.4 million for Sport Fish.

Our testimony today responds to your request that we (1) recap the results
of our July 20, 1999, testimony to you on the management and oversight of
the Federal Aid program,1 (2) provide options to improve the program’s
use of administrative funds, and (3) provide additional information related
to the use of administrative funds identified in our July 1999 testimony.




1
 Fish and Wildlife Service: Management and Oversight of the Federal Aid Program Needs Attention
(GAO/T-RCED-99-259, July 20, 1999).



Page 1                                                                       GAO/T-RCED-99-285
                           In our July 20, 1999, testimony, we identified numerous problems with the
Summary of Our             way administrative funds are used and managed. We believe that these
July 1999 Testimony        problems have led to a culture of permissive spending within the Office of
Results                    Federal Aid. The problems we identified included the following:

                       •   controls over expenditures, revenues, and grants were inadequate;
                       •   millions of dollars in program funds could not be tracked;
                       •   basic principles and procedures for managing travel funds were not
                           followed;
                       •   basic internal control standards or Office of Management and Budget
                           guidance for maintaining complete and accurate grants files was not
                           followed;
                       •   regional offices used administrative funds inconsistently and for purposes
                           that were not clearly justified;
                       •   charges for Service-wide overhead may not be accurate;
                       •   routine audits to determine whether administrative funds were being used
                           for authorized purposes were not conducted; and
                       •   the process for resolving audit findings involving states’ use of program
                           funds was questionable.

                           It is important to point out that many of the problems we identified in our
                           July 1999 testimony before this Committee were the same as those we
                           identified 6 years ago. In 1993, we reviewed the use of administrative funds
                           for the Sport Fish Restoration Program.2 As part of our recent work for
                           this Committee, we found that the Service had not been entirely
                           responsive to our earlier recommendations to correct the management
                           problems we identified in our previous review.


                           In light of the broad scope of the management problems that we identified
Options to Improve         in our July 1999 testimony, we believe that there are at least three primary
the Use of                 options to consider for controlling the use of administrative funds. First,
Administrative Funds       the Office of Federal Aid could be given additional time to correct the
                           problems we identified in our work. In August 1999, the Service said that it
                           had taken or was taking a number of corrective actions including
                           continuing with its reconciliation efforts to track the use of administrative
                           funds, requiring supervisory review and approval of travel vouchers, and
                           evaluating how to establish a procedure for performing routine audits of
                           administrative funds. This option would probably have the least impact on
                           the Office’s current operations, but it would require follow-up at some

                           2
                           Fisheries Management: Administration of the Sport Fish Restoration Program (GAO/RCED-94-4,
                           Nov. 8, 1993).



                           Page 2                                                                    GAO/T-RCED-99-285
                        point to verify that the promised corrective actions have been taken. With
                        this approach, we would be concerned about the Service’s commitment to
                        taking the needed corrective actions, given that it has not been fully
                        responsive to prior recommendations we have made.

                        Second, legislative limits could be placed on how the Service spends
                        administrative funds. For example, the spending of administrative funds
                        could be limited to functions necessary for the Office of Federal Aid to
                        carry out its most basic responsibilities; namely, to (1) administer the
                        formula for getting grant funds to the states and other qualified
                        government recipients, (2) review specific project proposals from these
                        entities, and (3) audit these entities’ use of the grant funds for compliance
                        with existing legislation and program goals. By placing more restrictions
                        on the use of the administrative funds this option would likely result in
                        less money being spent administering the program and would make more
                        funds available for distribution to the states and other qualified
                        government recipients.

                        A third option would be to require the Service to use appropriated funds to
                        administer the Wildlife and Sport Fish Restoration programs and devote
                        all excise tax revenues to state and other qualified government recipients’
                        grants. This option would require the Service to annually justify to the
                        Congress the amount of funds it needs for administering the program.
                        Hence, how the funds are being used and the direction that the program is
                        taking would be more visible to the Congress. Also, the Wildlife and Sport
                        Fish Restoration programs would be competing against other programs
                        within the Department of the Interior for appropriated funds. As in the
                        second option, this option could potentially remove much of the
                        organization’s flexibility for determining where to use the funds for
                        administrative purposes.


                        Subsequent to the July 20, 1999, hearing, the Committee asked us to
Additional              respond to a number of questions about the use of administrative funds
Information on the      raised by our testimony. Appendix I of my statement today provides our
Use of Administrative   responses to these questions. For the most part, our responses elaborate
                        on points made earlier. However, they also include substantial additional
Funds                   information, such as our views on actions the Fish and Wildlife Service is
                        planning to take to correct the problems we have identified. In this regard,
                        we are hopeful but not confident that the agency will be committed to
                        implementing the planned changes and that the changes will result in
                        lasting improvement. Our lack of confidence is due to the Office of Federal



                        Page 3                                                      GAO/T-RCED-99-285
                  Aid’s poor track record in dealing with the identified problems. For
                  example, in response to our past recommendation that all administrative
                  costs be thoroughly documented, the Service stated that it had a system
                  that allows it to maintain a comprehensive file for documenting all direct
                  charges against the Sport Fish Restoration Program. Nearly 6 years later,
                  we found that, in many instances, we could not track and verify the status
                  of a grant, the amounts authorized for payment, or when the expenditures
                  were made.


                  In closing, Mr. Chairman, I would like to reiterate that the administrative
                  funds associated with the Wildlife and Sport Fish Restoration programs
                  are used for various purposes. Collectively, the problems we identified
                  suggest a lack of attention to detail that erodes the Office of Federal Aid’s
                  ability to effectively manage and oversee the administrative aspects of the
                  programs and has created a culture of permissive spending that raises
                  questions about the Office’s approach to managing its administrative
                  funds. This situation is particularly important not only for the restoration
                  programs as they exist today but also because the amount of funding
                  provided for these programs could significantly increase. Bills have been
                  introduced in the Congress that, among other things, would provide
                  additional funding that could eventually range from $350 million to
                  $459 million per year, including funds for program administration. We
                  have presented some options that would affect the amount of funds for
                  administering the Wildlife and Sport Fish Restoration programs. The
                  options we have presented today are intended to provide additional
                  controls and accountability over the funds used to administer the Wildlife
                  and Sport Fish Restoration programs, and to assist the Committee in its
                  decisions about the future of the Office of Federal Aid’s administration of
                  these programs.

                  This concludes my prepared statement. I would be happy to respond to
                  any questions that you and Members of the Committee may have.


                  For further information, please contact Barry T. Hill at 202-512-3841.
Contact and       Individuals making key contributions to this testimony are Lew Adams,
Acknowledgments   Margie Armen, Cliff Fowler, and Roy Judy.




                  Page 4                                                      GAO/T-RCED-99-285
Page 5   GAO/T-RCED-99-285
Appendix I

Fish and Wildlife Service: Additional
Information Related to the Uses of
Administrative Funds Identified in Our
July 1999 Testimony
               Federal Aid administrative funds are used for several purposes within the
               Fish and Wildlife Service (Service). Examples include the uses made by
               the Administrative Grant Program, the Director’s Conservation Fund, the
               Office of Federal Aid, and regional offices for such purposes as salaries,
               travel, grants, and contracts. The Service also uses the Office of Federal
               Aid’s administrative funds to pay for general administrative support
               services such as telephone usage, equipment servicing and space rental,
               and a contractor to audit the use of program funds provided to the states
               and other qualified government recipients. This appendix provides our
               responses to the additional questions you asked about these and other
               topics.

               Question 1. What is the Administrative Grant Program, how have the
               program’s funds been used, and what problems does GAO have with the
               administration of this program?

               Response 1. The Administrative Grant Program is operated by the Office
               of Federal Aid. The program uses some of the administrative funds to
               support national fish and wildlife projects that provide collective benefits
               to at least 50 percent of the states. The Service annually publishes a notice
               in the Federal Register, announcing the procedures for submitting project
               proposals, deadlines, and the amount of money that is available for
               administrative grants. The applicants submit their proposals to the Office
               of Federal Aid (Office), which reviews each grant against established
               criteria to determine eligibility. To determine eligibility for an
               administrative grant, the Office makes an assessment of the benefits to be
               derived from the proposed project, the importance of providing the grant,
               the problems that need to be addressed, the number of states that are
               affected, and the approach that will be taken to accomplish the objectives
               of the grant. In fiscal year 1998, the Office made about $4 million in
               administrative funds available for administrative grants. The Office
               awarded 18 grants ranging from about $18,500 to $684,000 for such
               activities as developing and publishing a fish hatchery publication and a
               wildlife law news quarterly, developing a national hunter retention
               outreach program, and improving public knowledge of hunting and related
               animal use programs in the United States. Since fiscal year 1994, the Office
               has funded 83 grants totaling about $19.5 million.

               In reviewing administrative grant files, we found that the Office was not
               following standard management practices to ensure that grant funds were
               properly applied and accounted for. Specifically, we found that basic
               internal controls and documentation standards were not being used and



               Page 6                                                      GAO/T-RCED-99-285
Appendix I
Fish and Wildlife Service: Additional
Information Related to the Uses of
Administrative Funds Identified in Our
July 1999 Testimony




that the agency was not following the Office of Management and Budget’s
(OMB) requirements for grant management. We reviewed the grant files for
fiscal years 1993 through 1998 and found them to be incomplete, out of
date, and disorganized. To illustrate, the files did not contain required key
financial documents, status reports, or other supporting documentation.
As a result, in many instances, we could not track and verify the status of a
grant, the amounts authorized for payment, or the time periods in which
these expenditures were made.

We also found instances in which Office of Federal Aid officials authorized
questionable payments to grantees without thoroughly reviewing the
submitted documentation. For example, we found that the Office paid
grantees for alcoholic beverages and excessive meal charges that should
have been questioned, and for work that was neither related to the grant
nor ever performed. We are concerned that the problem of authorizing
questionable payments may be widespread because the officials
responsible for grant management said that they did not review the details
supporting requests for payment. Internal controls for this aspect of the
Office’s operations appeared to be nonexistent at the time of our review.

After our July 1999 testimony on this issue, the Service issued a notice in
the Federal Register on July 26, 1999, terminating the Administrative Grant
Program for new administrative grants effective in fiscal year 2000. In an
August 10, 1999, letter to us, the then-Acting Director of the Service stated
that the decision to terminate the program was due in part to budgetary
constraints and in recognition of concerns received in response to a
September 1998 Federal Register notice regarding the management of
these grants.

Question 2. What is the Director’s Conservation Fund, how has it been
used, and what problems does GAO have with the administration of this
fund?

Response 2. The Director’s Conservation Fund was established in 1994
and was terminated in March 1999. The Director’s Conservation Fund was
set up for use by the Director of the Service to make discretionary grants.
From fiscal years 1994 through 1998, the Director used about $3.8 million
in administrative funds for 53 grants. The grant funds have been used to
support the Service’s own activities such as conducting regional
workshops, human resource projects, and specific research projects on
subjects such as mourning dove productivity in the Central Valley of
California. These funds have also been granted to private organizations



Page 7                                                      GAO/T-RCED-99-285
Appendix I
Fish and Wildlife Service: Additional
Information Related to the Uses of
Administrative Funds Identified in Our
July 1999 Testimony




such as the FishAmerica Foundation3 for such activities as a challenge
cost-share program to enhance sport fisheries and their habitats and to a
state game and fish commission for a symposium on North America’s
hunting heritage.

We found that the Office had not followed OMB’s guidance that requires
agencies awarding grants to notify the public of intended funding priorities
for discretionary grant programs. Moreover, the procedures used for
approving grants under the Director’s Conservation Fund were more open
to subjective judgment and much less rigorous than the procedures used
for approving administrative grants. Under the Director’s Conservation
Fund, there were no specific criteria that a grantee needed to meet to
obtain approval. The potential grantee essentially had to identify only the
title, purpose, and estimated cost of the project. As we indicated in our
response to question 1, the criteria for eligibility and approval under the
Administrative Grant Program were much more delineated. To illustrate,
we found three grants, totaling $280,000, that were rejected under the
Administrative Grant Program but subsequently funded by the Director’s
Conservation Fund. We found a fourth grant for $75,000 that met the
eligibility requirements for an administrative grant but fell below the cutoff
point for funding. This grant was also funded under the Director’s
Conservation Fund. Finally, we found in a limited review of grants
awarded during fiscal years 1994 through 1998, that the Office had not
exercised adequate controls over these grants. Specifically, the Office had
not followed internal control documentation standards and OMB guidance.
As with the administrative grant files, the files for this program were
incomplete, out of date, and disorganized and did not contain required
financial forms and supporting documentation.

In its August 10, 1999, letter to us, the Service stated that it had terminated
the Director’s Conservation Fund. According to agency officials, the
Director made this decision in March 1999, shortly after we initiated our
audit.

Question 3. Does existing legislation authorize a national grant program
as exercised in the Administrative Grant Program and the Director’s
Conservation Fund?

Response 3. Program funds for the Federal Aid in Wildlife and Sport Fish
Restoration Acts are derived from federal excise taxes on selected items


3
 The FishAmerica Foundation is a nonprofit organization that supports projects designed to enhance
fish populations through habitat enhancement and water quality improvement.



Page 8                                                                       GAO/T-RCED-99-285
Appendix I
Fish and Wildlife Service: Additional
Information Related to the Uses of
Administrative Funds Identified in Our
July 1999 Testimony




used in hunting and fishing. The bulk of the program funds are available
for making grants to states to conduct fish and wildlife management and
restoration programs and projects. However, the legislation expressly
reserves a percentage of the program funds to be made available for
expenditure on “administration and execution” of the programs. This
portion of the program funds is often referred to as “administrative
funds.” The two authorizing statutes also specifically provide for some
additional particular activities to be conducted with administrative funds,
and they set a maximum amount that can be devoted annually to program
“administration and execution” (up to 8 percent of Wildlife Restoration
funds and up to 6 percent of Sport Fish Restoration funds).

While program administration is a relatively well-understood concept,
neither statute specifies what might constitute program “execution.” In
our view, the most logical interpretation of that language is that authority
to use funds for program execution encompasses carrying out activities
that further program goals but do not involve making grants to states. The
Department of the Interior’s Solicitor has issued several opinions that bear
on the interpretation of program execution with administrative funds. In
1949, the Solicitor advised that administrative funds could be used directly
by the Department to import bird eggs for the purposes of introducing a
new species of game birds into this country. In 1955 and again in 1985, the
Solicitor advised that administrative funds could be used to conduct
surveys that reported on matters other than the consumptive use of
wildlife. In 1986, the Solicitor determined that administrative funds could
be used to carry out a national education program and to do so by means
of grants to “public or private agencies and organizations.”

The existing legislation does not specifically direct that either the
Administrative Grant Program or the Director’s Conservation Fund be
established. However, the authority to use funds for program execution is
sufficiently broad that these types of programs are not precluded.

Question 4. On August 10, 1999, the Fish and Wildlife Service provided
you with a letter enumerating a number of actions it was taking to address
the concerns raised in your testimony. In light of your work in 1993 and
1999, what confidence do you have that the Service will actually follow
through on its commitments and implement the kind of corrective actions
it mentions in its letter?

Response 4. We are hopeful but not confident that these actions will
result in lasting change. Our lack of confidence is due to the Office’s



Page 9                                                     GAO/T-RCED-99-285
Appendix I
Fish and Wildlife Service: Additional
Information Related to the Uses of
Administrative Funds Identified in Our
July 1999 Testimony




(1) record in dealing with identified problems and (2) reinstatement or
resurrection of programs under different names that had been terminated
in response to prior recommendations.

In 1993, we reported on a number of problems with the use of
administrative funds for the Sport Fish Restoration Program and made
recommendations to the agency on how to correct them. In 1994, the
Department of the Interior notified the Congress that it and the Service
confirmed their agreement with each of the recommendations in our
report and identified actions taken in response to the recommendations.
However, our work in 1999 on the Wildlife Restoration Program shows
that the assurances given to both the Congress and to us in 1993 and 1994
led to little actual change. For example, in response to our
recommendation that all administrative costs be thoroughly documented,
the Service stated that it had a system allowing it to maintain a
comprehensive file for documenting all direct charges against the Sport
Fish Restoration and other Office of Federal Aid programs. Nearly 6 years
later, we found that, in many instances, we could not track and verify the
status of a grant, the amounts authorized for payment, or the time periods
in which the expenditures were made. Furthermore, the Office has not
effectively used the agency’s accounting system’s capability to identify
costs at the project level, thus making it impossible to identify all
project-specific costs. Finally, the Acting Director’s testimony submitted to
your Committee for the July 20, 1999, hearing stated that an internal
review the Service initiated 4 years ago raised some of the same concerns
that we identified about program administration. The Acting Director
stated that efforts have been under way to address these issues “but are
obviously not completed.”

The Office of Federal Aid responded to issues raised as a result of our 1999
work in part by reaffirming existing policy and by terminating programs.
Reaffirming existing policies is just the first step. Management must
ensure that these policies are implemented. Our concern is that this
additional step either will not be taken or that its effectiveness will
gradually degrade because of a lack of management attention, allowing a
similar situation to exist in the future. While terminating the
Administrative Grant Program and the Director’s Conservation Fund
provided a quick response, no statutory or other limitation exists to
prevent the programs’ reinstatement or resurrection under different
names. This latter point is of concern because the Office of Federal Aid
responded to our previous report by changing its criteria for approving
“special investigations” (the term the Office used for its projects) but



Page 10                                                    GAO/T-RCED-99-285
Appendix I
Fish and Wildlife Service: Additional
Information Related to the Uses of
Administrative Funds Identified in Our
July 1999 Testimony




then rescinded those changes. Hence, rather than limiting grants to a
maximum of (1) $200,000 per year for each grantee and (2) 3 years or less
duration, the Office resumed having no limits at all. Also, rather than
calling the projects special investigations, the Office renamed them
“administrative grants” or included them under the Director’s
Conservation Fund. We are concerned that this type of response could
recur and, as a result, the agency will again face the same management
problems that we reported on in our July 20, 1999, testimony.

Question 5. You have talked about problems in Federal Aid’s
management of travel funds. Could you please elaborate on the problems
you have identified, including providing specific examples of travel
abuses?

Response 5. We found that the Office did not routinely follow basic
principles and procedures for managing its travel funds. As we stated in
our July 20, 1999, testimony, the Service’s policy is that staff working for
the Office—like all Service employees—must receive specific approval
from the Director of the Service before attending certain national
conferences. However, we found nine instances in which this policy was
violated by Office staff who attended conferences in 1998 and 1999. In
addition, we found that the head of the Office filed almost $68,000 in travel
vouchers for 71 trips taken from October 1995 through June 1999 but was
inconsistent in obtaining approvals for his travel vouchers. He had a
supervisor approve his travel vouchers for 25 trips taken from October
1995 through February 1997. For travel taken from late February 1997
through May 1999, he had subordinates approve 38 of his travel vouchers
amounting to over $39,000 in travel expenses. This practice is not
permitted under the Service’s travel policy.

When we questioned the practice of having a subordinate approve a
supervisor’s travel voucher, we were told that the Service’s existing policy
allowed subordinates to sign travel vouchers, and we were provided with a
copy of a 1991 policy. However, the 1991 policy pertained to situations in
which an office was isolated or geographically removed, making it difficult
to obtain proper supervisory approval. Regardless, the policy had been
superceded in 1992 by a policy specifically requiring supervisory approval
for travel vouchers. In addition, a statement printed on the back of the
travel authorizations specifies that a supervisor is responsible for
approving a travel voucher.




Page 11                                                     GAO/T-RCED-99-285
Appendix I
Fish and Wildlife Service: Additional
Information Related to the Uses of
Administrative Funds Identified in Our
July 1999 Testimony




After we provided our testimony to the Committee on this issue in
July 1999, the Service concurred with the problems we identified. In its
August 10, 1999, letter to us, the Service said that it has suspended the use
of open travel authorizations for the Office’s entire staff and has
reapprised all Service staff of its travel rules and regulations. In addition,
the head of the Office was directed to submit all future travel vouchers to
his supervisor, the Assistant Director for External Affairs, for appropriate
review.

Question 6. Have you identified any additional issues with the use of
General Administrative Service (GAS) funds by the Fish and Wildlife
Service?

Response 6. In addition to the issues we addressed in our July 20, 1999,
testimony, we have identified two other issues that indicate that GAS
assessments were either too high in the past or could be lowered in the
future. The first issue relates to the potential impact on the GAS assessment
from projects and initiatives funded under the Servicewide Administrative
Support account managed by the Fish and Wildlife Service, which pays for
overhead and support expenses such as rental payments, telephone
service, postage, and training. This account is funded from three sources:
(1) appropriated funds, (2) reimbursable agreements, and (3) GAS. The GAS
portion is made up of assessments made to the Sport Fish and Wildlife
Restoration programs and nine other programs.

From fiscal year 1990 through fiscal year 1998, the Servicewide
Administrative Support account funded over $10 million in projects and
initiatives by the Fish and Wildlife Service Director’s Office, some of which
are questionable as central administrative support for the Service.
Examples of the questionable Director’s Office projects and initiatives
funded under the Servicewide Administrative Support account include
$400,000 for Atlantic salmon work, $200,000 for wolf monitoring and
reintroduction, and $100,000 for rhinoceros conservation studies. These
projects and initiatives were in addition to projects funded by the
Director’s Conservation Fund.

Service officials said that none of these projects and initiatives was funded
with the GAS component of the Servicewide Administrative Support
account. Regardless of which component paid for these expenses, if these
projects had not been funded, the GAS contribution to the account could
potentially be reduced. In July 1999, the Service advised us that




Page 12                                                      GAO/T-RCED-99-285
Appendix I
Fish and Wildlife Service: Additional
Information Related to the Uses of
Administrative Funds Identified in Our
July 1999 Testimony




Servicewide Administrative Support funds would no longer be used to
fund the Director’s Office projects and initiatives.

The second issue relates to the unobligated balance in the Servicewide
Administrative Support account at the end of the fiscal year. On the basis
of data we obtained, this account had unobligated balances at the end of
fiscal years 1990 through 1998. These balances ranged from as high as
about $7.4 million in fiscal year 1990 to as low as about $100,000 in fiscal
year 1998. Service officials informed us that these unobligated balances
relate to the appropriated fund component of the Servicewide
Administrative Support account. In total, from fiscal year 1990 through
fiscal year 1995, over $12 million in unobligated balances expired and were
not available for use in the following fiscal year. Hence, for those years,
the GAS component of the account could have been reduced. To illustrate,
in fiscal year 1990, the Service’s total GAS assessment was about
$5.5 million, of which almost $5.2 million came from the Sport Fish and
Wildlife Restoration programs. In that same year, about $7.4 million in
unobligated funds in the Servicewide Administrative Support account
expired. If the Service had spent all of its appropriated fund component in
the Servicewide Administrative Support account, it would have needed
less from the GAS component. That should then have translated into a
reduced GAS assessment and the potential for additional program funds to
go to the states and other qualified government recipients. Beginning in
fiscal year 1996, Interior’s appropriations acts have stipulated that
appropriated funds can be obligated over 2 years instead of just 1. And as a
result, it is unlikely that any unobligated balances will expire.

Question 7. The Administrative Grant Program was carried out in close
cooperation with the Grants-in-Aid Committee of the International
Association of Fish and Wildlife Agencies, raising questions about the
Committee’s role. If the now terminated Administrative Grant Program
was to be reconstituted, should Federal Aid officials reshape the
Committee’s involvement in the grant approval process?

Response 7. As it was previously conducted, the Administrative Grant
Program relied heavily on an outside group, the Grants-in-Aid Committee
of the International Association of Fish and Wildlife Agencies, to
recommend both the direction of the program and the award of
administrative grant funds. (See our response to question 1.) Because the
Committee’s role was so central to the functioning of the Administrative
Grant Program, officials of the Office of Federal Aid and others questioned
whether the Committee should have operated within the framework of the



Page 13                                                    GAO/T-RCED-99-285
Appendix I
Fish and Wildlife Service: Additional
Information Related to the Uses of
Administrative Funds Identified in Our
July 1999 Testimony




Federal Advisory Committee Act (FACA). That act requires, among other
things, that a notice of meetings be published in advance in the Federal
Register and that papers, records, and minutes of meetings be available to
the public.

The International Association of Fish and Wildlife Agencies is composed
of delegates from the 50 state fish and game authorities, foreign
governments, private organizations, and officials from the Office of
Federal Aid. With about 50 members, the Grants-in-Aid Committee
included state and private delegates as well as key staff from the Office of
Federal Aid. The Committee played an integral part in managing the
Administrative Grant Program, setting the focus areas each year for which
grant proposals would be solicited. It also evaluated and ranked eligible
grant proposals, including proposals from its parent organization, the
International Association of Fish and Wildlife Agencies. Finally, it
recommended those grants it believed the Office of Federal Aid should
fund and the amount of funding for each grant. The Committee’s grant
recommendations were typically adopted and implemented by the Office.

The Grants-in-Aid Committee was not chartered as a Federal Advisory
Committee. As a result, it performed the functions described above
independently and outside the public view. FACA requires, among other
things, that advisory committees be chartered and reviewed every 2 years
by the agency head, that committee membership be representative and
balanced, and that committee proceedings and records be open to the
public.

Officials of the Department of the Interior have questioned the
Grants-in-Aid Committee’s status. For example, in a November 1991
memo, the Chief of the Federal Aid Office stated that he believed that the
grant review process used the Committee in an advisory capacity and that
the Committee would need to comply with FACA. This opinion was shared
by the Chief’s supervisor who informed the Director of the Service in a
January 1992 memo, “The use of the Grants-In-Aid Committee has not
been approved under the Federal Advisory Committee Act and also raises
an appearance of a conflict of interest.” He went on to state that it would
be in the best interest of the Service to discontinue this practice to avoid
any further questions or criticism of the Service. Although this concern
was raised informally to the Department of the Interior’s Office of the
Solicitor, a written opinion was not requested, because, according to
Service and Office of Federal Aid officials, the informal advice they
obtained was that there was no violation of FACA.



Page 14                                                    GAO/T-RCED-99-285
Appendix I
Fish and Wildlife Service: Additional
Information Related to the Uses of
Administrative Funds Identified in Our
July 1999 Testimony




We did not make a determination about whether the Committee should
have been subject to FACA’s requirements. The applicability of the act to
the Committee’s activities was outside the scope of our audit work.
Because the Administrative Grant Program has recently been terminated,
questions about its former procedures are at this point academic.
Nevertheless, the Committee guided the disbursement of about $4 million
in Federal Aid funds to administrative grantees each year. It functioned as
a virtual partner in managing the Administrative Grant Program, and
because it was never brought under FACA, it operated largely without
supervision and behind closed doors. If the Administrative Grant Program
were to be reconstituted, the role of any outside group in setting grant
program parameters and in evaluating and ranking potential grantees
should be tailored appropriately. If the role is not substantially more
limited than what had previously existed, there should be a formal
determination that the group is functioning consistent with FACA.

Question 8. Are the regional offices in the Fish and Wildlife Service using
Federal Aid funds to pay for regional activities in a consistent manner?

Response 8. As we discussed in our July 20, 1999, testimony, we found
that the Service had no consistent practices for making regional office
assessments. These assessments are charges that the regions make against
the administrative funds for salaries, travel expenses, support costs, and
other administrative activities. Each of the regions uses a different
approach for making the assessments.

In its August 10, 1999, letter to us, the Service said that it has sought to
establish a workable degree of consistency to the regional use of
administrative funds. It said that as part of its annual budget guidance, it
has told its regions that no assessments may be levied against any
program, budget activity, subactivity, or project funded by the Federal Aid
in Wildlife Restoration Act unless advance notice of such assessments and
their bases are presented to the Committee on Appropriations and are
approved by the Committee. Subsequently, Service and Office of Federal
Aid officials told us that they provided this guidance since 1997. The
Service also said that not all of its regions have followed this guidance. To
ensure adherence to this stated policy, the Service said that it would
identify and adopt specific steps to help provide consistency and
uniformity. It also plans to seek guidance in this area from a State/Federal
Aid Review Team that has been formed to evaluate the administration of
the Federal Aid program. The Service, however, failed to identify the
specific steps it plans to take or the schedule for completing them. Service



Page 15                                                     GAO/T-RCED-99-285
Appendix I
Fish and Wildlife Service: Additional
Information Related to the Uses of
Administrative Funds Identified in Our
July 1999 Testimony




and Office of Federal Aid officials told us that they are currently
developing a plan that identifies the steps needed and their completion
dates.

Question 9. You emphasized the absence of routine audits of Federal
Aid’s use of administrative funds. However, many, perhaps even most,
federal programs are not routinely audited. Why do you think routine
audits are so important in the case of the Federal Aid program?

Response 9. We think routine audits of the administrative funds are
needed for several reasons. First, unlike most other federal programs,
Federal Aid receives dedicated tax revenues each year to administer its
programs. As a result, program officials do not have to publicly justify the
programs’ spending levels before the Congress each year. Second,
although Federal Aid provides bi-annual reports on its programs to the
public, it does not fully disclose all of its spending, as our work has shown.
For example, the spending associated with the use of administrative funds
by the Director’s Conservation Fund and the Service’s regional offices is
not discussed in these reports. Third, only three audits of the
administrative funds have been performed over the past 20 years, each of
which has identified some significant management problems. Since the
program funding does not have to be appropriated and no routine audits
are performed, the Federal Aid program has had very little oversight.

Routine audits will provide independent scrutiny of how these funds are
spent. Given the problems we identified in the Federal Aid program in
1993 and the problems we again found in 1999, we believe that routine
audits of the use of administrative funds are essential. Service and Office
of Federal Aid officials told us that they have a proposal from an
independent firm to perform an audit of the administrative funds covering
fiscal years 1999 and 2000.

Question 10. Do you think it is appropriate for Fish and Wildlife Service’s
regional Federal Aid officials to be responsible for resolving the audit
findings of the Defense Contract Audit Agency’s (DCAA) state audits?

Response 10. The Office of Federal Aid initiated a national audit program
in fiscal year 1996 to routinely audit how states and other qualified
government recipients are using the grant funds provided under the Sport
Fish and Wildlife Restoration programs. Under the audit program, each
recipient of grant funds will be audited every 5 years under a contract with




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Appendix I
Fish and Wildlife Service: Additional
Information Related to the Uses of
Administrative Funds Identified in Our
July 1999 Testimony




the DCAA. Resolution of the audit findings is the responsibility of the
Service’s regional Federal Aid office covering the entity being audited.

In our opinion, having the Service’s regional Federal Aid offices perform
audit resolution is problematic because it places them in a situation of
performing dual and somewhat conflicting roles and responsibilities. One
of the primary missions of the regional offices is to work closely with the
states in advocating and encouraging their participation in the Federal Aid
program to enhance the states’ wildlife and fishery resources. To have
these same offices policing the program by charging them with resolving
audit findings could make it more difficult to maintain independence and
comply with existing internal control standards governing the separation
of duties.4 According to these standards, key duties and responsibilities in
authorizing, processing, recording, and reviewing transactions should be
separated among individuals. Furthermore, the deterrent for the states to
spend funds inappropriately could be jeopardized if the audit resolution
process is not independent of an organization that has a significant role in
encouraging the use of grant funds. DCAA officials, who perform the audits
of the states, also raised this concern to us. According to these officials,
the Service and the states have a partnership, and it may be difficult for a
regional Federal Aid office to hold states responsible for making the
repayments indicated by audit findings. Therefore, assigning the
responsibility for audit resolution to a Department of the Interior
organization other than the Service’s regions would seem more
appropriate.

Question 11. In addition to grants made via the Director’s Conservation
Fund and the Administrative Grant Program, during your work did you
find evidence of other grants?

Response 11. We found that the Office of Federal Aid’s headquarters
made grants in addition to those made from the Director’s Conservation
Fund and the Administrative Grant Program. We identified 18 other grants
amounting to about $2.6 million that were awarded from fiscal year 1994
through fiscal year 1998. The grants ranged from $5,000 awarded to a high
school for student training in aquatic environment and fisheries
management to $400,000 each to three marine fisheries commissions. For
example, the Gulf States Marine Fisheries Commission received its
$400,000 in fiscal year 1994 to develop a work plan for the sport fish
restoration administrative program. Other examples of these grants
include $25,000 to a state game commission to conduct a symposium on

4
 Standards for Internal Controls in the Federal Government, U.S. General Accounting Office, 1983.



Page 17                                                                        GAO/T-RCED-99-285
           Appendix I
           Fish and Wildlife Service: Additional
           Information Related to the Uses of
           Administrative Funds Identified in Our
           July 1999 Testimony




           North America’s hunting heritage, $60,000 to a university to publish and
           distribute a fish and wildlife laws newsletter, and about $93,000 to a
           management firm to produce a handbook for fish and wildlife managers
           and administrators.

           It should be noted that the Federal Aid reports made available to the
           public do not divulge the existence of these grants, why they were made,
           or what the funds were used for, even though the reports explicitly state
           that their intent is to provide a complete accounting of where the Federal
           Aid funds are spent. For example, the message from the Office Chief
           appearing in a 1997 program update states, “This Program Update is
           intended to remove the mystery of where the money comes from and
           where it goes, to inform the reader about current Federal Aid issues and
           opportunities, and to build knowledge of and credibility for the Sport Fish
           and Wildlife Restoration grant programs and the U.S. Fish and Wildlife
           Service.” Similarly, in a program update for 1999, the Office Chief stated
           that “it is in the conservation community’s best interest” that the Office
           provides as much information as can be absorbed.




(141381)   Page 18                                                    GAO/T-RCED-99-285
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