**U.S. Department of Education**

**Office of Inspector General**

**[Semiannual Report To Congress, Number 54]{.underline}**

***October 1, 2006, - March 31, 2007***

**[TABLE OF CONTENTS]{.underline}**

**Message to Congress**

**Overview**

**Internal Controls and Accountability in State and Local Programs**

No Child Left Behind

Reading First

RMC Research Corporation Contracts

Reading Leadership Academies

Georgia Reading First Program

New York Reading First Program

Wisconsin Reading First Program

Supplemental Educational Services

Migrant Education Program

California

Performance Data -- Reported Graduation and Dropout Rates

Oklahoma

Washington State

Comparability of Services

Arizona

Ohio

Schoolwide Plans

Indiana

Michigan

Grantee Accountability

> Bureau of Indian Affairs and the Individuals with Disabilities
> Education Act

BIA Administration of IDEA, Part B

> Department of Education's Oversight of Interior's IDEA, Part B
> Programs

Parental Information and Resources Center Grants

The Learning Exchange

Congressional Earmark Recipients

KIPP Foundation

High-Risk Grantees

Virgin Islands

Investigations

**Internal Controls and Accountability in Student Financial Assistance
Programs**

Follow-up to Audit of Special Allowance Payments to Nelnet

Audit Reports

Philander Smith College

FAFSA Verification

Investigations

**Internal Controls and Accountability in Financial Management and
Department Operations**

Financial Management

Financial Statement Audits

Additional Work

Drug Control Funds

Internal Operations

Department's Competitive Sourcing/A-76 Competition

Controls Over Excessive Drawdowns By Grantees

Specific Recommendations for OPE and OII

Controls Over Contract Monitoring for IES

IT Equipment Inventory

Investigations

**Hurricane-Related Efforts**

Controls Over Hurricane Education Recovery Funding

**Other Noteworthy Efforts**

Nonfederal Audits

President's Council on Integrity and Efficiency

GAO/PCIE Financial Audit Manual Update

GAO/PCIE Financial Statement Audit Roundtable

Joint PCIE/CFOC Working Group

New ID Theft DVD

**SAR 54 Tables**

> **Table 1:** Recommendations Described in Previous SARs on Which
> Corrective Action Has Not Been Completed
>
> **Table 2:** OIG Audit Reports on Department Programs and Activities
> (October 1, 2006, to March 31, 2007)
>
> **Table 3**: Other OIG Reports on Department Programs and Activities
> (October 1, 2006, to March 31, 2007)

**Table 4**: OIG Issued Audit Reports with Questioned Costs

> **Table 5**: OIG Issued Audit Reports with Recommendations for Better
> Use of Funds

**Table 6**: Unresolved Reports Issued Prior to October 1, 2006

**Table 7**: Statistical Profile: October 1, 2006 to March 31, 2007

**[Message to Congress]{.underline}**

We are pleased to provide this semiannual report on the activities and
accomplishments of the Office of Inspector General (OIG), U.S.
Department of Education (Department) from October 1, 2006, through March
31, 2007, as required by the *Inspector General Act of 1978*. The
audits, inspections, investigations, and other activities highlighted in
this report illustrate our on-going commitment to promoting
accountability, efficiency, and effectiveness in federal education
programs and operations.

Over the last six months, OIG issued 46 audit, inspection, and
alternative product reports. We identified over \$447 million questioned
costs and over \$113 million unsupported costs. Audits, inspections, and
investigations concluded during this reporting period continued to
uncover problems with the Department's internal controls, placing
federal funds at risk of waste, fraud, and abuse. Summaries of our work
are highlighted in this report. As stated in our recent Management
Challenges report, the success of an organization's mission and the
achievement of its goals depend on how well it manages its programs. It
cannot effectively manage its programs without establishing and
maintaining appropriate internal controls and accountability. The
Department must ensure that all entities involved in its programs are
adhering to statutory and regulatory requirements, and that the offices
responsible for administering these programs are providing adequate
oversight of program participants.

In recent months and in response to our audits of the Reading First
program and special allowance payments made to the student lender
Nelnet, Inc. (Nelnet) -- work where we identified significant lapses in
internal control, Secretary Spellings made a commitment to correcting
the deficiencies we identified in those audits. With Reading First, the
Secretary agreed to fully implement our recommendations, and these
improvements and corrective actions are already underway. In response to
our audit of special allowance payments made to Nelnet, the Department
reached a settlement that protects the taxpayers from potentially \$882
million in future improper payments. Although we also recommended
recovery of approximately \$278 million in funds already paid to Nelnet,
we are pleased that the Department accepted our audit findings and acted
to protect the taxpayers from further losses. These issues are discussed
in more detail in the pages of this Semiannual Report. Please know we
are continuing our work in this area to protect the integrity of the
Federal Family Education Loan program. We are also working with
Department officials on implementation of new audit guidance, which was
issued in late April.

Finally, as you work to reauthorize the *Elementary and Secondary
Education Act of 1965* (ESEA), as amended by the *No Child Left Behind
Act of 2001* (NCLB), I would like to bring to your attention our
significant body of work on a number of key provisions of the law. For
the last six years, my office has worked to help the Department ensure
NCLB dollars are allotted and used in accordance with the law and
applicable regulations so they reach the intended recipients. We have
released over 100 NCLB-related reports, providing recommendations for
the Department to improve its administration of the programs or that of
its grantees. In instances where we identified areas of the law that may
need further clarification or enhancement, we have made suggestions for
Congress to consider. Our final reports can be accessed via our website
at www.ed.gov/offices/oig, and we are available to discuss them with you
in more detail, should you require additional information.

Thank you for your continued support of our efforts. I look forward to
working with the 110^th^ Congress in furthering our goals and achieving
our mission.

John P. Higgins, Jr.

Inspector General

**[OVERVIEW]{.underline}**

The Office of Inspector General (OIG), for the period October 1, 2006,
through March 31, 2007, continued its work to promote efficiency,
effectiveness, and integrity in the programs and operations of the U.S.
Department of Education (Department). Audits, inspections, and
investigations concluded during this reporting period continued to
uncover problems with the Department's internal controls, placing
federal funds at risk of waste, fraud, and abuse. As we stated in our
recent Management Challenges report, the success of an organization's
mission and the achievement of its goals depend on how well it manages
its programs. It cannot effectively manage its programs without
establishing and maintaining appropriate internal controls. "Internal
controls" are the plans, methods, and procedures aimed at helping an
agency meet its goals and achieve its objectives, while minimizing
operational problems. Only by improving its internal controls and
demanding accountability by its managers, staff, contractors, and
grantees, can the Department be an effective steward of the billions of
taxpayer dollars supporting its programs and operations. America's
students and taxpayers deserve nothing less.

The U.S. Congress has long recognized the importance of internal
controls in federal program management, beginning with the Budget and
Accounting Procedures Act of 1950, which placed responsibility for
establishing and maintaining adequate systems of accounting and internal
control upon the head of each agency. In 1982, Congress passed the
Federal Managers\' Financial Integrity Act (FMFIA), requiring federal
agencies to establish internal controls over their programs and
financial systems. "The FMFIA also required the Comptroller General to
issue standards for internal control in government. Passage of new laws
and requirements for federal agencies, along with advancements in
technology highlighted the need to update the standards through the
years. In 1999, the Government Accountability Office (GAO) released
*"Standards for Internal Control for the Federal Government"* that
provides an overall framework to help agencies establish and maintain
internal controls, as well as identify and address major performance and
management challenges and areas at greatest risk of fraud, waste, abuse,
and mismanagement.

According to the GAO report, there are five standards for internal
control: (1) control environment -- which is the foundation for all
other standards; (2) risk assessment; (3) control activities; (4)
information and communications; and (5) monitoring. These standards
define the minimum level of quality acceptable for internal control in
government and provide the basis against which an agency's internal
operations are to be evaluated. Work concluded by OIG over the last six
months found that one or more of these standards was weak in the
Department's management, monitoring, or oversight of the programs and
operations we reviewed.

In the first section of our report, we provide a summary of our recent
work in the area of elementary, secondary, and special education
programs. A lapse in internal controls by the Department in these
programs can have a significant impact on other entities involved in the
programs. Perhaps nowhere is this more evident than in our recent
reviews of the Reading First program, where weaknesses in all five
internal control standards at the Department existed throughout the
program. Following the release of our first report on the Reading First
program, Secretary Spellings stated her intention to fully implement
every one of our recommendations. You will find more on our Reading
First work in this section of our report, along with highlights of our
efforts in the area of elementary, secondary, and special education.
This includes our continuing efforts to assess state educational agency
(SEA) and local educational agency (LEA) compliance with requirements of
the *Elementary and Secondary Education Act of 1965,* as amended (ESEA)
by the *No Child Left Behind Act of 2001* (NCLB), such as the Migrant
Education program, comparability of services requirements, and the
reporting of graduation and dropout rates. Each of these areas relies
heavily on the quality and reliability of data, which in turn relies
heavily on an effective control environment to ensure the data is
collected, maintained, and reported accurately. This section of the
report also includes summaries of work identifying grantee
accountability issues, and weaknesses in Department monitoring and
oversight of its grantees, including \$217 million in education funds
that may well be at risk of waste, fraud, or abuse. This section also
includes summaries of cases we have closed over the past six months
involving fraud by individuals placed in positions of trust within the
elementary, secondary, or special education community.

For 27 years, helping the Department to identify and reduce waste,
fraud, or abuse, in the student financial assistance programs has been a
top OIG priority. With \$77 billion awarded last year through the
student financial assistance programs and an outstanding loan portfolio
of over \$400 billion, the Office of Federal Student Aid (FSA) must
provide adequate oversight and demand accountability from its staff,
partners, and participants to help protect these taxpayer dollars from
waste, fraud, and abuse. In the second section of this report, you will
find summaries of our recent work in this area. In our last Semiannual
Report to Congress (SAR), No. 53, we discussed audit findings that
identified significant lapses in management and accountability in the
Federal Family Education Loan (FFEL) program, specifically a lack of an
acceptable level of internal control by FSA's Financial Partners, and
our audit of special allowance payments made to the student lender
Nelnet, Inc. (Nelnet), which estimated that the lender was improperly
paid more than \$278 million, and could be improperly paid approximately
\$882 million more if its billings are not corrected. When dealing with
a program of this size and complexity, employing effective internal
controls is critical in order for the Department to provide reasonable
assurance that its assets and programs are protected. To date, the
Department has not taken any action on the recommendations we included
in our Financial Partners audit. Regarding our Nelnet audit, in January,
the Department announced it had reached a settlement with Nelnet that
prohibits any future special allowance payments to the lender at the 9.5
percent floor rate on loans that were not made from eligible sources of
funds. Although we also recommended recovery of approximately \$278
million in funds already paid to Nelnet, we are pleased that the
Department accepted our audit findings and acted to protect the
taxpayers from further losses. You will find more information on the
settlement and related follow-up activities to the audit in this section
of the report, where you will also find summaries of some of the
investigative cases we closed involving theft of student financial aid
funds.

In the third section of this report are highlights of the audits and
reviews we completed on the Department's financial management and
internal operations---areas where effective implementation of internal
controls minimizes an agency's vulnerability to waste, fraud, and abuse.
Since 2002, the Department has made progress in improving internal
controls in its financial management, which have led to the agency
receiving a "clean" audit opinion five years in a row. While this
improvement is significant and noteworthy, recent audits of the
Department's and FSA's financial management identified weaknesses in
internal control, specifically in the area of information technology
(IT) security. In addition, work concluded over the last six months
shows continued inadequacies with the Department's internal monitoring
and control activities---two of the five standards of internal control.
Our results show a need for the Department to improve its physical
controls to secure and safeguard vulnerable assets, as well as a need
for improvements in its monitoring performance measures and indicators
to ensure that its resources are used efficiently. The Department must
also improve its controls to ensure that its contractors are delivering
appropriate services. More discussion on these findings, as well as
summaries of internal investigations that were closed during this
reporting period can be found in this section of the report.

In the fourth section of our report, we provide an update on our work
regarding funds being used to support education-related hurricane
recovery efforts. Like most federal agencies, we consider stewardship of
these funds to be one of our highest priorities. With such a large
amount of funding needing to be distributed in a short amount of time,
employing the five standards of internal control in this area is vital.
As the bulk of our work in this area is still underway, we highlight
only our completed work in this section of the report.

OIG constantly strives to improve its operations through our work with
the IG community. In the fifth section of this report, we highlight a
number of our contributions and the work we accomplished over the last
six months within the IG community.

In the sixth and final section of this report, there is a compilation of
tables of the audits, inspections and investigations we concluded during
this reporting period, as required by the *Inspector General Act of
1978,* as amended.

For more information on the work or activities discussed in this report,
please contact the OIG Congressional Liaison at (202) 245-7023, e-mail
us directly at <oigpublicaffairs@ed.gov> or visit our website at
[www.ed.gov/offices/oig](http://www.ed.gov/offices/oig).

**[Internal Controls and Accountability]{.underline}**

**[in State and Local Programs]{.underline}**

The Department\'s elementary and secondary programs serve more than
14,600 school districts and approximately 54 million students attending
more than 94,000 public schools and 27,000 private schools each year. In
recent years, we have increased our resources in reviewing allegations
of waste, fraud, or abuse in this area, where our findings have
indicated a need for improved internal controls from the Department
level down to local grantees. Lapses in internal controls by the
Department or any other entity engaged in K-12 programs can have a
significant impact on other entities involved in the program. Perhaps
nowhere is this more evident than in our recent reviews of the Reading
First program, where a breakdown of all five internal control standards
by the Department---lack of a control environment, failure to conduct an
effective risk assessment, lack of control activities, poor information
and communication, and an overall lack of monitoring by
management---existed throughout the program, negatively impacting the
states, damaging the program's integrity, and leading to questions as to
whether Department staff violated established prohibitions on influence
over curriculum. In response to our work, Secretary Spellings has taken
action to address the findings of our reports, and has already begun
implementing our recommendations.

Recent work in other areas of elementary, secondary, and special
education continue to show a need for improved internal controls not
only by the Department, but by grantees as well. During this report
period, we continued our reviews of SEA compliance with requirements of
the Migrant Education program, and the reporting of graduation and
dropout rates. All of these issues rely heavily on the quality and
reliability of data, which in turn rely heavily on effective internal
controls to ensure data is collected and maintained accurately. This is
an important issue, as the consequences of poor data quality can be
serious for SEAs and LEAs: schools and districts could be erroneously
defined as being in need of improvement or corrective action, and
ultimately not making annual yearly progress goals. With so much
dependent on data, ensuring data integrity is without question a
critical aspect of NCLB.

Finally, we continue to uncover issues with accountability by grantees
and weaknesses in Department internal control standards, specifically
related to monitoring and oversight. This includes education funds
provided to other federal government agencies, such as the U.S.
Department of the Interior's Bureau of Indian Affairs, where our work
recently identified \$217 million in education funds that may well be at
risk of waste, fraud, or abuse. Below you will find more information on
our recent work in the area of grantee accountability, as well as brief
summaries of some of the significant investigative cases we closed over
the last six months involving theft of federal education dollars by
those in a position of trust to educate our children.

**[No Child Left Behind]{.underline}**

**[Reading First]{.underline}**

During this reporting period, we concluded our series of audits on the
Reading First program. Reading First is a \$1 billion per year program
included in the NCLB, and was established to provide kindergarten
through third grade reading programs that are based on scientifically
based reading research. The goal of the program is to ensure that every
student can read at grade level or above by the end of the third grade.
In May 2005, OIG began receiving allegations about Reading First. The
allegations indicated that the Department was promoting and excluding
specific programs and assessments, as well as using consultants with
ties to these programs and assessments. We also received letters from
members of Congress asking us to look into these allegations. OIG
performed a series of reviews on various aspects of the program: (1) the
Department's grant application process (discussed in SAR 53); (2) the
Department's administration of selected aspects of the Reading First
program; and (3) RMC Research Corporation's (RMC) administration of the
Reading First program contracts. We also conducted three audits to
assess state compliance with the Reading First provisions of the NCLB in
(4) Georgia, (5) New York, and (6) Wisconsin. These audits sought to
determine whether the SEA developed and used criteria for selecting the
scientifically based reading research (SBRR) programs in accordance with
laws, regulations, and guidance, and if it approved the local
educational agencies applications in accordance with laws, regulations,
and guidance.

Through our work, we found that the Department: (1) appeared to
inappropriately influence the use of certain programs and assessments;
(2) failed to comply with statutory requirements and its own guidance;
(3) obscured the requirements of the statute; and (4) created an
environment that allowed real and perceived conflicts of interest.

First, with regard to inappropriate influence, we found that the
Department allowed certain activities that led, in part, to a perception
that there was a Department approved list of reading programs and
assessments. An example of this was the Reading Leadership Academies
(RLAs). The Department and the National Institute for Literacy (NIFL)
sponsored three RLAs to assist the states in preparing Reading First
applications. The Department exercised control over the content and
presenters for the RLAs. Of ten "Theory to Practice" presentations at
the three RLAs, six contained information on the Direct Instruction
program. The luncheon speaker for two of the RLAs also focused on the
Direct Instruction program. Some participants in the RLAs expressed
concerns about the content of the sessions. While the Department was
aware of this issue, it failed to change course resulting in similar
comments concerning the third RLA. We also identified, after the
conclusion of the state application process, instances where it appears
that there may have been intervention by Department officials with
regard to the programs that states and LEAs were choosing for Reading
First.

With regard to the Department's compliance with the Reading First
statute and its own guidance, the statute called for a balanced expert
panel to review Reading First applications. The expert panel was to
consist of a minimum of three experts nominated by the NIFL, the
National Institute of Child Health and Human Development, the National
Academy of Sciences, and the Department. Senior Department officials
decided to use sub-panels for the review process and to create an
"Advisory and Oversight Panel" with three representatives from each of
the four organizations as required by the statute. The Advisory and
Oversight Panel concept was never implemented and as a result the
process used by the Department was not in accordance with the
requirements of the statute since none of the sub-panels created by the
Department included representation from each of the four nominating
organizations. In fact, the majority of the individuals on 15 of the 16
sub-panels were nominated by the Department -- not by the other
organizations, and 7 of the sub-panels were comprised of individuals
nominated entirely by the Department. In addition, we found that the
Department obscured the requirements of the statute by inappropriately
including standards in the application criteria that were not based on
the statutory language and excluding standards that were required by the
statute.

Finally, with regard to conflict of interest, our work found that the
Department did not place an appropriate level of emphasis on issues
related to conflicts of interest. This can be seen in two specific
areas. First, although not required, the Department developed a process
to screen expert review panelists for conflicts of interest; however,
the Department's process was not effective. The Department did not ask
panelists if they were aware of any circumstances that might cause
someone to question their impartiality. In addition, the Department did
not review the panelists' resumes for potential conflicts of interest.
Second, the Department's contractor, RMC, which was used to provide
technical assistance to states and assist the states in preparing
applications, did not adequately address conflict of interest issues.
Neither RMC nor the Department ensured that the required organizational
conflict of interest clause was included in its consultant and
subcontractor agreements. In addition, RMC did not adequately vet
technical assistance consultants for potential bias. As a result, during
our work, we noted that appearances of bias or impaired objectivity
existed.

Overall, our work shows that the Department failed to comply with all of
the requirements within the statute and created requirements that were
not required by the statute. In addition, the Department's actions call
into question whether it violated provisions of the *Department of
Education's Organization Act* (DEOA) and the ESEA that prohibit
Department officials from exercising any direction or control over the
curriculum or program of instruction of a school. Based on our findings,
we made a number of recommendations, with which Secretary Spellings
fully concurred and has already begun to implement. We also suggested
that Congress consider clarifying whether reading programs need to have
scientific evidence of effectiveness in order to be eligible for funding
under Reading First and clarifying conflict of interest requirements in
federally funded programs.

Below are summaries of the five Reading First reports we issued during
this reporting period.

> **RMC Research Corporation Contracts**: Our audit sought to determine
> whether: (1) RMC and its subcontractors (the technical assistance
> centers or TACs) provided appropriate assistance to SEAs and LEAs; (2)
> RMC (including subcontractors and employees) complied with its own
> and\\or the contracts' conflict of interest (COI) requirements; and
> (3) RMC provided appropriate guidance and information to the TACs. Our
> audit disclosed that RMC did not adequately address COI issues during
> the first two contracts; did not include the required COI clause in
> its subcontracts and consulting agreements; did not adequately vet
> technical assistance providers for reading product relationships and
> affiliations; and did not have formal COI policies and procedures.
> Based on our findings, we recommended that the Department and RMC
> develop and implement formal COI policies and procedures for use in
> the current Reading First contract and any other current or future
> Department contracts, as well as determine and mitigate or neutralize
> any instances of bias or impaired objectivity that exist for all
> technical assistance providers. RMC concurred in principle with our
> finding and fully concurred with our recommendations. [Click
> here](http://www.ed.gov/about/offices/list/oig/auditreports/a03f0022.doc)
> for a copy of the report.
>
> **Reading Leadership Academies**: This review sought to determine
> whether the Department carried out its role, in accordance with
> applicable laws and regulations, in administering the RLAs and related
> meetings and conferences, its award process for the National Center
> for Reading First Technical Assistance (NCRFTA) contract, and its
> website and guidance for the Reading First program. Our audit
> disclosed that the Department generally administered its Reading First
> website and related guidance in accordance with applicable laws and
> regulations. As for the RLAs, we concluded that the Department did not
> have controls in place to ensure compliance with curriculum provisions
> of the DEOA and NCLB. We also found that the Department did not
> adequately assess issues of bias and lack of objectivity when
> approving individuals to be technical assistance providers before and
> after the NCRFTA contract was awarded. Based on our findings, we made
> a number of recommendations with which the Department concurred and
> proposed corrective action; however, it only agreed in part with our
> findings. [Click
> here](http://www.ed.gov/about/offices/list/oig/auditreports/a03g0006.pdf)
> for a copy of the report.
>
> **Georgia Reading First Program**: We found that the Georgia
> Department of Education (GDOE) did not have written policies and
> procedures in place and did not adequately manage several areas of the
> LEA grant application process. We recommended that the Department
> require GDOE to develop written policies and procedures for its LEA
> and school grant application process to ensure it follows state and
> federal Reading First law, regulations, and guidelines in
> administering the Reading First grant application process and program.
> GDOE did not agree with all parts of our finding, but did concur with
> the recommendation. [Click
> here](http://www.ed.gov/about/offices/list/oig/auditreports/a04g0003.pdf)
> for a copy of the report.
>
> **New York Reading First Program**: We found that although New York
> State Department of Education (NYSED) generally developed and used
> criteria for selecting the scientifically based reading research
> programs in accordance with the law as interpreted by the Department,
> NYSED did not approve LEA applications in accordance with laws,
> regulations and guidance. Specifically, NYSED could not provide
> support that approved LEAs, which received \$216 million in Reading
> First funds, met requirements of the ESEA. NYSED also inappropriately
> used priority points to approve 9 LEAs that received \$118 million in
> Reading First funds, and did not follow established record retention
> requirements. Based on our findings, we made several recommendations,
> including that the Department require NYSED to provide support to
> demonstrate that the reading programs at each of the LEAs awarded
> Reading First subgrants meet the ESEA required activities or return
> the unsupported funds, and ensure that priority points are used in
> accordance with ESEA requirements and that all Reading First
> applications were scored correctly, or return \$118 million of
> unallowable Reading First funds. NYSED concurred with all but two of
> our recommendations. [Click
> here](http://www.ed.gov/about/offices/list/oig/auditreports/a02g0002.pdf)
> for a copy of the report.
>
> **Wisconsin Reading First Program**: We found that the Wisconsin
> Department of Public Instruction (WDPI) developed and used criteria
> for selecting the SBRR programs in accordance with the law as
> interpreted by the Department. WDPI, however, did not always approve
> the LEAs' applications in accordance with the law and regulations
> related to implementing high-quality programs. Based on our findings,
> we recommended that the Department require WDPI to provide support for
> nine of its Reading First funded programs that lacked sufficient
> documentation that the programs met eligibility requirements or return
> the funding provided to the LEA to the Department. We also recommended
> that it implement and follow policies and procedures to provide
> reasonable assurance that all funded LEA applications clearly
> demonstrate that the requirements of Reading First are met prior to
> receiving Reading First funds. WDPI concurred with our
> recommendations. [Click
> here](http://www.ed.gov/about/offices/list/oig/auditreports/a05g0011.pdf)
> for a copy of the report.

**[Supplemental Educational Services]{.underline}**

The ESEA requires LEAs to offer supplemental educational services (SES)
to students from low-income families when the students attend a Title I
school that is in the second year of school improvement, or has been
identified for corrective actions or restructuring. SES consists of
tutoring, remediation, and other educational interventions that are
designed to increase the academic achievement of students, and are in
addition to instruction provided during the school day. SES providers
must be approved by the state. Over the last several years, OIG has
completed 11 reviews that evaluated SEA and LEA implementation of the
SES provisions of the ESEA.

During this reporting period, we produced an in-depth report titled, *An
OIG Perspective on the Supplemental Educational Services Provisions of
the Elementary and Secondary Education Act*. The report was developed
based on the knowledge obtained while conducting these reviews, and
provides an OIG perspective on selected SES provisions in the ESEA and
Department regulations. It discusses one issue relevant to the SES
eligibility provisions of the ESEA and provides three alternatives to
the current eligibility rules in the ESEA. Based on our work, we suggest
that consideration be given as to whether the focus of SES eligibility
should be on academic proficiency rather than family income.

The report also discusses one issue relevant to the Department's
implementing regulations that currently prohibit schools or LEAs
identified as in need of improvement from operating as SES providers.
Even though the ESEA contains no specific prohibition, the Department's
regulations currently prohibit any school or LEA identified as in need
of improvement from operating as an SES provider. In contrast, the
Department's SES guidance allows SES providers, including schools or
LEAs not in improvement status operating as SES providers, to hire
teachers from schools in improvement status for their SES operations.
The Department's policy of not allowing schools or LEAs in improvement
to operate as SES providers may override SEA authority to evaluate and
approve SES providers operating in their states and may also
unnecessarily increase the costs of delivering SES by eliminating school
or LEA providers that could deliver SES at a lower cost than private
providers. This policy may also reduce the provider options available to
parents of eligible students. Therefore, we suggest that the Department
reconsider its policy on this matter and explore strategies for
evaluating the quality of each SES program operated by a school or LEA
that is identified as in need of improvement. [Click
here](http://www.ed.gov/about/offices/list/oig/auditreports/s09g0007.pdf)
for a copy of our report.

**[Migrant Education Program]{.underline}**

The Migrant Education Program (MEP), authorized within the NCLB,
provides funds to states to support high quality education programs for
migratory children and help ensure that migratory children who move
among the states are not penalized in any manner by disparities among
states in curriculum, graduation requirements, or state academic content
and student academic achievement standards. Funds also ensure that
migratory children are not only provided with appropriate education
services (including supportive services) that address their special
needs but also that such children receive full and appropriate
opportunities to meet the same challenging state academic content and
student academic achievement standards that all children are expected to
meet. Funds are allocated to SEAs, based on each state's per pupil
expenditure for education and counts of eligible migratory children, age
3 through 21, residing within the state. Over the last two years, OIG
has conducted audits to determine SEA compliance with the child count
provision. In SAR 52, we reported our findings in Georgia and Oklahoma;
in SAR 53 we reported our findings in Arkansas; and during this
reporting period, we concluded an audit in California. Our work in the
MEP area identified problems with MEP student eligibility, and as a
result, millions of dollars may have been appropriated to states for
ineligible students.

> **California**: Our audit sought to determine whether the California
> Department of Education (CDE) and selected MEP regions within the
> state have systems in place to ensure the accurate count of children
> eligible to participate in the MEP. California's MEP funding for award
> year 2003-2004 was \$130,703,626. CDE reported to the Department a
> total of 312,062 participating children during the child count
> reporting period. Our audit found that while the CDE and the two MEP
> regions reviewed had systems in place to determine migrant child
> eligibility and report migrant child count, it included ineligible
> children in its migrant child count, a number of whom were not
> eligible to participate in the MEP because a "qualifying move" had not
> occurred. Based on our findings, we made a number of recommendations,
> including that the Department require CDE to issue more detailed
> guidance and training, consistent with federal regulations and
> guidance, on the definition of "qualifying move." We also recommended
> that the Department require CDE to adjust its migrant child count for
> the time period reviewed and return to the Department any funds
> expended for ineligible children. CDE did not explicitly express
> concurrence with our findings, but expressed varying degrees of
> concurrence and non-concurrence with our recommendations, and
> described the corrective actions taken or planned to address the
> recommendations. [Click
> here](http://www.ed.gov/about/offices/list/oig/auditreports/a09f0024.pdf)
> for a copy of our report.

**[Performance Data -- Reported Graduation and Dropout
Rates]{.underline}**

Over the last two years, OIG has examined SEA graduation and dropout
rates included in the annual Consolidated State Performance Report
(CSPR) -- the system by which states apply for and report on multiple
ESEA programs through a single consolidated application and report. Our
audits looked to determine whether SEAs' required reporting of
graduation and dropout rates were supported by reliable data and met the
requirements of the ESEA. In SAR 52, we reported the results of our work
in Texas; in SAR 53, we reported the results of our audit of South
Dakota; and during this reporting period, we concluded reviews in
Oklahoma and Washington state. While the data collection techniques in
each state varied, each produced a similar result: issues of
non-compliance with elements of data collection and reporting, and a
lack of effective internal controls to ensure data reliability.

> **Oklahoma**: We found that the Oklahoma State Department of Education
> (OSDE) met the requirements of ESEA by reporting graduation and
> dropout rates; however, it used a graduation rate formula that did not
> meet the requirements of the NCLB graduation rate definition. In
> addition, data used to calculate the dropout rates reported in its
> 2003-2004 CSPR was not reliable. We made a number of recommendations,
> including that the Department require OSDE to develop and provide
> necessary personnel with adequate training on graduation and dropout
> data collection and reporting, and to monitor graduation and dropout
> data collection and reporting at the state, district, and site level.
> OSDE concurred with our findings and recommendations. [Click
> here](http://www.ed.gov/about/offices/list/oig/auditreports/a06g0008.pdf)
> for a copy of the report.
>
> **Washington State**: We found that the state complied with the
> requirements of ESEA by submitting a report; however, the student data
> used by the State of Washington Office of the Superintendent of Public
> Instruction (WOSPI) to calculate the reported rates was not reliable
> and the required definition of a "high school dropout" was not used to
> calculate the reported dropout rates. Based on our findings, we made a
> number of recommendations, including that the Department require WOSPI
> to adhere to the CSPR instructions for reporting dropout rates. WOSPI
> concurred with our findings and agreed to implement our
> recommendations. [Click
> here](http://www.ed.gov/about/offices/list/oig/auditreports/a09g0009.pdf)
> for a copy of the report.

**[Comparability of Services]{.underline}**

To be eligible to receive Title I funds, an LEA must use state and local
funds to provide services in Title I schools that, taken as a whole, are
at least comparable to services provided in non-Title I schools. This is
called "comparability of services," and ensures that an LEA uses state
and local funds to provide services to Title I schools that are,
essentially "comparable," or "the same" as the services that are
provided to non-Title I schools. This ensures that Title I schools are
not discriminated against in the distribution of local resources. Over
the last six months, we concluded two audits to assess SEA compliance
with this provision of the NCLB: one in Arizona, and another in Ohio.
Our work identified a need for improved internal controls by SEAs and
LEAs to ensure they are adhering to and complying with the statute, as
well as a need for improved monitoring and oversight to ensure adherence
to and compliance with the statute.

> **Arizona**: Our work revealed that the Arizona Department of
> Education (ADE) needs to strengthen its monitoring of LEA compliance
> with the comparability requirement. ADE also needs to ensure that the
> LEAs reviewed as part of our audit are performing comparability
> determinations properly, including the use of appropriate and correct
> data. We made a number of recommendations, including that the
> Department require ADE to implement procedures to ensure LEA
> compliance with the NCLB comparability requirement, and require LEAs
> reviewed to submit all required documentation to support compliance or
> return that portion of the over \$4 million in Title I funds ADE
> received that was disbursed to them should they fail to demonstrate
> comparability for the school year reviewed. ADE did not explicitly
> express concurrence with our findings, but it did describe the
> corrective actions it has taken or planned to take to address our
> recommendations. [Click
> here](http://www.ed.gov/about/offices/list/oig/auditreports/a09g0020.pdf)
> for a copy of the report.
>
> **Ohio**: Our audit found that that the Ohio Department of Education
> (ODE) did not ensure that LEAs were reporting complete and accurate
> comparability information. ODE did not adequately monitor LEAs'
> compliance because it did not always use correct data when reviewing
> the LEAs' comparability reports. In addition, ODE did not ensure that
> each LEA developed and followed procedures for complying with
> comparability of services requirements during the school years we
> examined. As a result, ODE cannot ensure that the LEAs were reporting
> complete and accurate comparability information. Based on our
> findings, we made a number of recommendations, including that the
> Department require ODE to provide sufficient and verifiable
> documentation to support compliance with the comparability of services
> requirements or return to the Department funds that were allocated to
> non-comparable schools. ODE did not dispute our findings and generally
> concurred with all but one of our recommendations. [Click
> here](http://www.ed.gov/about/offices/list/oig/auditreports/a05g0015.pdf)
> for a copy of the report.

**[Schoolwide Plans]{.underline}**

NCLB allows schools in an area with a poverty level of 40 percent or
more, or in which at least 40 percent of enrolled students are from
low-income families, to operate schoolwide programs. Schools operating
schoolwide programs may use Title I funds to upgrade the entire
educational program in a school in order to improve the academic
achievement of all students, particularly the lowest-achieving students.
The school must develop a comprehensive schoolwide plan in consultation
with the LEA and its school support team or another technical assistance
provider, and the school community. The comprehensive plan must: (1)
describe how the school will implement the schoolwide program
components; (2) describe how the school will use resources to implement
the schoolwide program components; (3) include a list of SEA, LEA, and
other federal programs for which the school will consolidate funds to
use in its schoolwide program; and (4) describe how the school will
provide individual student academic assessment results to parents.
During this reporting period, we concluded two reviews in this area: one
in Indiana and another in Michigan. The audits sought to determine: (1)
if the SEAs and LEAs had adequate processes in place to ensure that
schoolwide schools had schoolwide plans that included all required
elements and that these schools implemented their schoolwide plans; (2)
if the schoolwide plans for selected schools included all required
elements; and (3) whether the selected schools implemented the elements
included in their schoolwide plans. Our work identified weaknesses in
monitoring and oversight to ensure adherence to and compliance with the
statute.

> **Indiana**: The Department allocated approximately \$174 million in
> Title I funds to the Indiana Department of Education (IDE) for the
> 2005-2006 school year, where 160 schools operated schoolwide programs.
> We found that IDE and the two LEAs we reviewed (Indianapolis and East
> Chicago) had adequate processes in place to ensure that schools
> implemented the elements included in their schoolwide plans, but did
> not ensure that schoolwide plans included all required elements. We
> also found that the two schools we reviewed did not include all
> required elements in their schoolwide plans. Not ensuring that
> schoolwide plans include all required elements could potentially lead
> to decreased implementation of required schoolwide plan elements and
> schoolwide plans that are less likely to improve the academic
> achievement of all students. We made a number of recommendations,
> including that the Department require IDE ensure that both schools
> revise their schoolwide plans to include all required elements. IDE
> concurred with our findings and recommendations. [Click
> here](http://www.ed.gov/about/offices/list/oig/auditreports/a05g0034.pdf)
> for a copy of the report.
>
> **Michigan**: The Department allocated approximately \$424 million in
> Title I funds to the Michigan Department of Education (MDE) for the
> 2005-06 school year, where 902 schools in 250 LEAs operated schoolwide
> programs. Our audit found MDE and the four LEAs we reviewed generally
> had adequate processes in place to ensure that schools implemented the
> elements included in their schoolwide plans but did not ensure that
> schoolwide plans included all required elements. Similar to Indiana,
> we also found that the schools reviewed did not include all required
> elements in their schoolwide plans. Our recommendations for MDE
> mirrored those for IDE, including that the Department require MDE to
> ensure that all schools reviewed revise their schoolwide plans to
> include all required elements. We also recommended that the MDE
> provide guidance to all LEAs in Michigan on how to monitor schoolwide
> plans for inclusion and proper implementation of all required
> elements. MDE concurred with our findings and recommendations. [Click
> here](http://www.ed.gov/about/offices/list/oig/auditreports/a05g0018.pdf)
> for a copy of our report.

**[Grantee Accountability]{.underline}**

**[Bureau of Indian Affairs and the Individuals with Disabilities
Education Act]{.underline}**

The Department provides funding for disadvantaged and disabled students
to the Bureau of Indian Affairs (BIA) through the Department of the
Interior (Interior). BIA is an agency within Interior. The BIA allocates
these funds to elementary and secondary schools operated or funded by
the Secretary of the Interior, including tribal-operated schools that
are funded by the BIA. Overall, the Department provided \$140 million in
education funds to BIA in 2002 and \$188 million in 2003. The
Individuals with Disabilities Education Act (IDEA), Part B requires the
Department to provide funds to the Secretary of the Interior to assist
in providing special education and related services to children with
disabilities. The Office of Indian Education Programs (OIEP), located
within the BIA, provides technical assistance to and has oversight
responsibility for 185 BIA-funded elementary and secondary schools, and
two post-secondary colleges.

During this reporting period, OIG concluded two audits in this area: one
to determine whether BIA schools administered IDEA, Part B funds in
accordance with requirements, laws, and regulations, and provided
services to eligible children in accordance with the student\'s
Individualized Education Program (IEP), and a second audit to determine
whether the Department's oversight of Interior's IDEA, Part B programs
was adequate to disclose potential problems. Our work identified a need
for improved internal controls by both the Department and BIA,
specifically in the area of monitoring and oversight, as their previous
efforts have left millions of dollars at risk of waste, fraud, or abuse.

> **BIA Administration of IDEA, Part B**: Our review covered the period
> July 1, 2001, through September 30, 2003. We selected seven BIA
> schools for review based upon the amount of IDEA, Part B funds
> received, student body population, and recommendations from officials
> at BIA. We found that the seven BIA schools reviewed did not
> administer IDEA, Part B funds in accordance with applicable
> requirements, laws, and regulations and were unable to demonstrate
> that 68 percent of the students in our sample received the planned
> special education and related services in accordance with their IEPs.
> In addition, because the responsible agency within the BIA was unable
> to adequately account for the entire \$111 million of IDEA, Part B
> funds appropriated during our audit period, we determined that other
> Department funds, totaling \$217 million, also administered by
> Interior during the two-year audit period might be at risk.
>
> Based on our findings, we made a number of recommendations, including
> that the Department obtain an assurance from BIA officials that the
> \$111 million of IDEA, Part B funds was used to deliver educational
> assistance to the children with disabilities at all of the BIA funded
> schools and return any funds not used for those purposes. We also
> recommended that the Department coordinate with Interior to require
> BIA to account for the remaining \$217 million in other Department
> funds it received during the audit period, or return those funds. The
> Department and BIA concurred with some of our findings and
> recommendations. [Click
> here](http://www.ed.gov/about/offices/list/oig/auditreports/a06f0019.pdf)
> for a copy of the report.
>
> **Department of Education's Oversight of Interior's IDEA, Part B
> Programs**: We found that the Department did not provide adequate
> oversight of BIA's IDEA, Part B programs from September 2001 to
> September 2003. While it provided some programmatic oversight of BIA
> programs in the form of comments and feedback on the annual
> performance reports submitted by BIA, Department officials did not
> perform sufficient on-site visits to BIA schools or BIA offices. As a
> result, the Department was unaware of the inadequate documentation
> substantiating the special education and related services provided by
> the schools to children with disabilities, or the lack of accounting
> procedures at BIA to account for IDEA, Part B funds. Consequently, the
> Department was unable to take timely corrective action.
>
> Because BIA did not adequately account for the IDEA, Part B funds and
> it functioned as the SEA for all other Department programs, we
> determined that all education funds administered by Interior, totaling
> over \$328 million during this specific audit period, might be at
> risk. Subsequently, the Department has worked with BIA to develop a
> corrective action plan to address a variety of issues at BIA. The
> corrective action plan contains steps to address programmatic and
> fiduciary compliance including, but not limited to, improving
> administrative, organizational, and management capability and program
> and financial accountability. In addition, the Department has imposed
> certain conditions on BIA's continuing eligibility for IDEA, Part B
> funding. Based on our findings, we made a number of recommendations,
> including that the Department continue with the implementation of the
> current corrective action plan; but if BIA deviates from the plan, or
> fails to successfully complete the plan, the Department should
> evaluate whether to identify BIA as a high-risk entity. The Department
> concurred with several of our recommendations, and said it had taken
> steps to address a number of them. [Click
> here](http://www.ed.gov/about/offices/list/oig/auditreports/a06g0002.pdf)
> for a copy of the report.

**[Parental Information and Resource Center Grants]{.underline}**

**The Learning Exchange**: In November, we released our final audit
report that sought to determine whether The Learning Exchange's (LX), a
non-profit educational consulting agency, expenditures for its Parental
Information and Resource Center (PIRC) project were allocable,
allowable, reasonable, and in accordance with approved budgets, and
grant terms and conditions. We reviewed LX from its inception in October
2003, through the February 2006 termination of the grant's
authorization. The PIRC grant program provides resources that grantees
can use to assist the parents of children who attend Title I schools
identified for improvement, corrective action, or restructuring. Our
audit revealed that LX did not properly contract for services,
incorrectly allocated employee compensation payments, spent PIRC grant
funds for unallowable activities, and did not retain sufficient
documentation to support PIRC expenditures and demonstrate it met
federal requirements. The total amount of questioned costs came to over
\$436,000. Based on our findings, we made a number of recommendations,
including that, because of the pervasiveness of LX's mismanagement of
its PIRC grant, the Department consider initiating proceedings to debar
LX from future participation in federal programs. LX disagreed with some
of our findings, but generally justified its administrative failures by
identifying extenuating circumstances and agreed to be debarred for a
reasonable amount of time from federally funded contracts. It also
committed itself to strengthening its internal control procedures.
[Click
here](http://www.ed.gov/about/offices/list/oig/auditreports/a07g0013.doc)
for a copy of our report.

**[Congressional Earmark Recipients]{.underline}**

**KIPP Foundation**: During this reporting period, we concluded an audit
to determine whether the Knowledge Is Power Program (KIPP) Foundation
conducted six Congressionally‑directed grants, totaling over \$8
million, in accordance with applicable laws, federal regulations, and
approved grant applications. KIPP is an educational program used to
operate a nationwide network of free open-enrollment college-preparatory
public schools in under-served communities. The KIPP Foundation
(Foundation) is the national non-profit organization that supports the
network. Our audit found that while the Foundation generally conducted
the grants in accordance with the applicable law and approved grant
applications, it did not fully comply with federal regulations when it
included unallowable costs and costs lacking support documentation or
budget approval in its charges to the grant accounts. The Department
intended the funds awarded to the Foundation to be used to support the
KIPP School Leadership Program, curriculum development, teacher
training, and extended learning time at KIPP schools. While we did not
identify any serious deficiencies that prevented the Foundation from
achieving the grant goals, improvements to its control environment,
specifically its financial management system, are needed to ensure that
grant funds are used only for allowable and allocable costs. We made a
number of recommendations with which KIPP concurred and agreed to
implement our recommendations. [Click
here](http://www.ed.gov/about/offices/list/oig/auditreports/a09g0010.pdf)
for a copy of the report.

**[High-Risk Grantees]{.underline}**

**Virgin Islands**: We conducted an audit to determine whether the
Virgin Islands Department of Education (VIDE) ensured that Learning
Point Associates (LPA) adequately met contract deliverables prior to
payment by VIDE, and if it complied with applicable laws and regulations
for the period of September 15, 2003, through September 30, 2005. VIDE
entered into a \$7.4 million fixed-price contract with LPA, a
not-for-profit education consulting agency, in 2003 to develop a
comprehensive, territory-wide plan to: give schools greater site-based
authority to determine needs and apply funding; enhance school
site-based management through greater community involvement and
accountability; implement individual school programs; bring VIDE into
compliance with requirements for Department programs; and utilize
quantitative data for decision-making at the school level. We found that
VIDE did not ensure that LPA completed contract deliverables in
accordance with the contract. Although LPA did complete the contract
deliverables, VIDE did not have sufficient controls in place to ensure
that the contract deliverables were completed timely, accurately, and
prior to payment. Based on our findings, we made a number of
recommendations geared towards helping VIDE improve its internal
controls, including that the Department require VIDE to develop and
implement adequate contract administration policies and procedures, and
ensure that future contracts contain adequate controls and information
reporting requirements. VIDE concurred with our findings and
recommendations. [Click
here](http://www.ed.gov/about/offices/list/oig/auditreports/a02f0023.pdf)
for a copy of our report.

**[Investigations]{.underline}**

Our investigations into suspected fraudulent activity by SEAs, LEAs, and
other federal education grantees have led to the arrest and conviction
of a number of high-ranking state and local education
employees---individuals who were in positions of public trust---for
theft or misuse of federal education funds. We will continue to
aggressively pursue those who seek to defraud federal education programs
at the expense of our nation\'s students. Here are a few examples of our
work in this area over the last six months.

**Montana**: A former education director of the Fort Peck Tribe, and her
husband, the former Superintendent of Brockton Schools, were sentenced
to prison terms, probation, and were ordered to pay restitution for
charges related to theft of federal funds. They were each sentenced to
12 months incarceration, 3 years probation, and ordered to pay \$12,000
in restitution. The former education director was ordered to pay an
additional \$1,855 in restitution. Our investigation, conducted jointly
with the Interior OIG, found that the former education director
conspired with her husband and her uncle, a former Tribal Consultant, to
submit and approve payment of false invoices for various consulting
services that were never performed. Additionally, the former director
falsified her daughter\'s Free Application for Student Aid (FAFSA) by
indicating she was a single mother with one income.

**New York**: A former Long Island Assistant Superintendent for Business
of the William Floyd School District was sentenced for stealing
approximately \$675,000 in school and state pension funds over a
six-year period. The former official received a combined two-to-six-year
sentence on four counts of second-degree grand larceny, one count of
third-degree grand larceny and two counts of money laundering. He was
previously sentenced to 30 months incarceration on federal tax evasion
charges for failing to report the stolen funds as income.

**Pennsylvania**: A former Philadelphia charter school principal and
chief administrative officer at the Center for Economics and Law (CEL)
was sentenced to 33 months incarceration for his role in a scheme to
defraud the Philadelphia School District (PSD). The former official
directed school employees to report students as enrolled who had dropped
out of school, or who had transferred to out-of-state or private schools
knowing that the PSD computer system could not readily track students
once they left the district. As a result of the fraud, CEL was overpaid
approximately \$207,000. In addition to incarceration, the former
principal was ordered to make full restitution, serve three years of
supervised release, and is prohibited from holding any administrative
position in an educational institution.

**[Internal Controls and Accountability in]{.underline}**

**[Student Financial Assistance Programs]{.underline}**

The Department's student financial assistance programs are large and
complex. The loan and grant programs rely on over 6,000 postsecondary
institutions, more than 3,000 lenders, 35 guaranty agencies and many
contractors. With \$77 billion awarded last year through the student
financial assistance programs and an outstanding loan portfolio of over
\$400 billion, the Department must ensure that all entities involved in
the programs are adhering to statutory and regulatory requirements. As
the office responsible for administering the student aid program, FSA
must provide adequate oversight and demand accountability from its
staff, partners, and participants to help protect these dollars from
waste, fraud, and abuse.

In SAR 53, we discussed two audits that identified significant lapses in
management and accountability in the FFEL program: our audit on
Financial Partners that revealed an unacceptable level of internal
controls; and our audit of special allowance payments made to the
student lender Nelnet, Inc., estimated that Nelnet was improperly paid
more than \$278 million in special allowance payments, and could be
improperly paid about \$882 million for the ineligible loans after June
2005, if its billings are not corrected. When dealing with a program of
this size and complexity, and particularly as the student loan programs
were on the GAO High-Risk List for more than a decade, effective
internal controls are needed to provide reasonable assurance that
programs---and the taxpayer dollars that support them---are protected
from waste, fraud, and abuse. Based on the findings of these two audits,
we made a series of recommendations to help FSA and the Department
correct deficiencies and improve internal controls. To date, FSA and the
Department have taken only minimal steps to address our recommendations.
This limited progress is discussed below, as well as summaries of other
work we concluded in the student financial assistance arena over the
last six months. In addition, we closed a number of investigative cases
of theft of student financial aid funds by both those in positions of
trust in schools, as well as by students themselves, which are
highlighted below.

**[Follow-up to Audit of Special Allowance Payments to
Nelnet]{.underline}**

In January, the Department announced a settlement with the student
lender Nelnet on loans billed at the 9.5 percent special allowance rate.
As discussed in SAR 53, a 2006 OIG audit estimated that Nelnet was
improperly paid more than \$278 million in special allowance payments,
and could be improperly paid an additional \$882 million unless its
billings are corrected. ([Click
here](http://www.ed.gov/about/offices/list/oig/auditreports/a07f0017.pdf)
for a copy of the report). The Department\'s settlement prohibits any
future special allowance payments to Nelnet at the 9.5 percent floor
rate on loans that were not made from eligible sources of funds, which
was one of our two recommendations. The Department did not, however,
require Nelnet to pay back any overpayments already received, which was
the second recommendation detailed in our September audit report.

Shortly after announcing the Nelnet settlement, the Department issued a
"Dear Colleague" letter to participants in the student lender program,
restating which loans are eligible for the 9.5 percent special allowance
payment, as set forth in the *Higher Education Act of 1965, as amended*
(HEA). The letter informed participants that the Department would
require audits of all pending claims from lenders seeking the 9.5
percent special allowance payment, and that the audits would be
conducted by independent accounting firms. In addition, the "Dear
Colleague" letter stated that if a lender complies with this provision
of the law going forward, submits to an audit, and agrees to certify
future special allowance payment billings, the Department would not
require the lender to pay back any overpayments it may have received.
The Department's decision has come under the scrutiny of Congress and
the media, as it is unclear how much the Department may have overpaid
these lenders. OIG staff has been working with FSA and the Department on
new audit guidance for special allowance payments, which was issued in
late April, and continues to conduct work in this area to protect the
integrity of the federal student loan programs.

**[AUDIT REPORTS]{.underline}**

**Philander Smith College**: During this reporting period, we concluded
an audit to determine whether Philander Smith College (PSC) complied
with the Title IV program requirements for student eligibility,
verification, return of Title IV funds, and accounting for the Federal
Perkins Loan program (Perkins) and the William D. Ford Federal Direct
Loan program (Direct Loans). We determined that PSC often did not comply
with the Title IV program requirements, and as a result did not meet the
administrative capability standards for Title IV programs. Based on the
significance of these findings, we concluded that the entire \$11.4
million in Department funds that PSC expended during the audit review
period might be at risk for similar misuse. Among our findings, we
concluded that PSC: (1) did not account for or properly administer the
Perkins Loan Funds; (2) did not return unearned Title IV funds; (3)
failed to monitor the verification process and ensure that all required
verifications were completed; (4) did not properly disburse or reconcile
Direct Loan Program funds; and (5) did not report student status changes
to the National Student Loan Data System. Based on our findings, we made
a number of recommendations, including that FSA require PSC to: (1)
reconcile the Perkins Loan and Direct Loan Programs; (2) return funds to
the Department for disbursements made to ineligible students; and (3)
develop and implement adequate policies, procedures, and management
controls. PSC agreed with our findings but did not agree with all of our
recommendations. [Click
here](http://www.ed.gov/about/offices/list/oig/auditreports/a06f0018.doc)
for a copy of the report.

**[FAFSA Verification]{.underline}**

In 2006, OIG initiated a series of audits at nine Title IV participant
schools to determine if the schools completed verification of applicant
data and accurately reported verification results to the Department. As
described in the *Federal Student Aid Handbook 2005-2006*, "Application
and Verification Guide," when a school disburses a federal Pell Grant
for a student, the school is required to report the verification status
of the student's application to the Department's Common Origination and
Disbursement (COD) system. The student verification status remains blank
when the school has not performed verification because the application
was not selected for verification. OIG reviewed nine schools: American
University of Puerto Rico (Puerto Rico); ATI Technical Center (Texas);
Boston College (Massachusetts); Cerritos Community College (California);
East Carolina University (North Carolina); Morton College (Illinois);
the College of New Rochelle (New York); the School of Art Institute of
Chicago (Illinois); and Technical Career Institute (New York). Our work
revealed that all of the schools except the American University of
Puerto Rico had policies and procedures in place that ensured FAFSA
information was verified in accordance with applicable HEA provisions,
federal regulations, and Department guidance; however, East Carolina
University did not consistently adhere to the procedures. We found that
all schools properly performed verification by following written
policies and procedures, obtaining appropriate student-provided
documentation, and accurately reporting changes in application
information, but only four of the schools accurately reported student
verification status to the COD. This is a critical step as it completes
the process and lets the Department know that the verification has been
completed. Based on our findings, we recommended that FSA require ATI
Technical Center, Cerritos Community College, East Carolina University,
Morton College, and the School of Art Institute of Chicago to confirm
that they are properly recording verification status in COD. For the
American University of Puerto Rico, we recommended that FSA require the
school to develop written policies and procedures for the verification
process. The schools concurred with our findings and recommendations.
[Click
here](http://www.ed.gov/about/offices/list/oig/auditreports/a09g0032.pdf)
for a copy of the American University of Puerto Rico report, [click
here](http://www.ed.gov/about/offices/list/oig/auditreports/a09g0029.pdf)
for a copy of the ATI report, [click
here](http://www.ed.gov/about/offices/list/oig/auditreports/a09g0028.pdf)
for a copy of the Boston College report, [click
here](http://www.ed.gov/about/offices/list/oig/auditreports/a09g0023.pdf)
for a copy of the Cerritos Community College report, [click
here](http://www.ed.gov/about/offices/list/oig/auditreports/a09g0033.pdf)
for the East Carolina University report, [click
here](http://www.ed.gov/about/offices/list/oig/auditreports/a09g0026.pdf)
for the Morton College report, [click
here](http://www.ed.gov/about/offices/list/oig/auditreports/a09g0031.pdf)
for the College of New Rochelle report, [click
here](http://www.ed.gov/about/offices/list/oig/auditreports/a09g0027.pdf)
for the School of Art Institute of Chicago report; and [click
here](http://www.ed.gov/about/offices/list/oig/auditreports/a09g0030.pdf)
for a copy of the Technical Career Institute report.

**[Investigations]{.underline}**

Identifying and investigating fraud and abuse in the student financial
assistance arena has always been a top OIG priority. The following are
summaries of some of the more significant cases of student financial aid
fraud that were closed over the last six months.

***Fraud by Government Officials***

> A former North Carolina state representative was sentenced to 12
> months probation and a \$1,000 fine for making false statements to the
> government by providing false, fictitious documents to the Department
> in an attempt to convince Department officials that his student loan
> debt had been paid in full. As a result of our investigation, the
> representative paid off the remaining balance of his student loan
> obligations.

***Fraud by School Officials***

> A former president and a former financial aid director of Morris Brown
> College were sentenced to prison terms, probation, and ordered to pay
> restitution for student financial aid fraud. The former officials
> fraudulently obtained student loans and grants from the Department and
> private lenders for ineligible and withdrawn students, and in some
> instances students that never attended the college. Our joint
> investigation with the FBI determined that between August 1999 and
> January 2002, more than 1,800 disbursements of federally insured loans
> and Pell grants were directed to the college on behalf of ineligible
> students.
>
> A former men's basketball coach/instructor at Barton County Community
> College was sentenced to two years federal probation and ordered to
> pay over \$26,000 in restitution for student financial aid fraud and
> mail fraud. The former coach prepared and submitted fraudulent time
> sheets representing that student athletes worked in the campus
> employment program and Federal Work Study program. He also
> participated in a scheme involving academic fraud by completing
> academic work on behalf of student/athletes enabling them to receive
> an associate's degree and to achieve eligibility to play basketball on
> a NCAA Division I basketball team.
>
> A Cerritos College Assistant Football Coach, who was also the Student
> Judicial Affairs coordinator was sentenced to 24 months incarceration
> for falsifying dependency override documentation and residency
> certifications to obtain Title IV aid for over 25 ineligible players.
> Further, he falsified admission applications for out-of-state players
> so that they would not have to pay the higher tuition fees. In
> addition to incarceration, the former coach was sentenced to five
> years probation, and was ordered to pay over \$70,000 to the
> Department and more than \$20,000 to the Cerritos Community College,
> terminate his employment at the College, and never hold a position
> where he may have access to or control of public money.
>
> Two school officials were sentenced to a combined 45 months of
> incarceration, six years of supervised release, and ordered to pay
> approximately \$795,000 in restitution after pleading guilty to
> defrauding the Department and the U.S. Department of Health and Human
> Services. Our investigation disclosed that the owner of the California
> School of Medical Sciences (CSMS), authorized to receive federal
> financial aid, conspired with the General Manager of the Software
> Training Center (STC) to provide financial aid applications from
> current STC computer students in order to obtain federal funds for
> purported ultrasound courses at CSMS that the students never attended.
> To promote the fraud, the officials manufactured and forged student
> signatures on attendance records, course evaluation sheets and report
> cards showing that the students had enrolled and completed an
> ultrasound course that they in fact never attended.

***Fraud by Students/Individuals***

> A former nursing student was sentenced to five years probation and
> ordered to pay over \$16,000 in restitution for student financial aid
> fraud for her role in a grade-buying scheme at Southern University
> (SU). Our investigation disclosed that the nursing student allegedly
> paid a former SU Associate Registrar to alter her official transcripts
> by removing failing grades and/or adding passing grades for classes,
> some of which she never attended. As a result, the nursing student
> illegally received approximately \$10,500 in FFEL loans and \$6,650 in
> Pell grants.

***Identity Theft***

> A Boston man was sentenced to 18 months in prison and ordered to pay
> approximately \$139,000 in restitution, including over \$18,000 to the
> Department after pleading guilty to making false statements and Social
> Security fraud. The man fraudulently obtained federal student loans by
> using another person's identity, which allowed him to conceal his
> prior student loan default status. The remainder of the restitution
> order is owed to the U.S. Department of Housing and Urban Development,
> and the Social Security Administration for fraudulently obtaining
> benefits from those agencies.
>
> A Minnesota woman was sentenced to 12 months incarceration, 5 years of
> supervised release, and ordered to pay approximately \$67,000 in
> restitution for financial aid fraud. Our investigation revealed that
> from 1993 through 2005, the woman fraudulently obtained federal and
> nonfederal student financial aid funds by enrolling in several
> academic institutions in the Minneapolis area using the identity of
> both her minor child and her deceased grandmother.

**[Internal Controls and Accountability in]{.underline}**

**[Financial Management and Department Operations]{.underline}**

Internal controls serve as the first line of defense in safeguarding
assets and in preventing and detecting fraud, abuse, and errors. Given
the billions of dollars the Department distributes each year, Department
managers must give top priority to improving internal controls in order
to minimize the Department's vulnerability to waste, fraud, and abuse.
Since 2002, the Department has made noteworthy progress by improving
internal controls over its financial management. This has enabled the
Department to receive a clean audit opinion for the last five years.
While its improved financial management is helping the Department
identify a number of problem areas and possible misappropriations of
federal funds, work conducted during this reporting period shows
continued inadequacies in its operations due to ineffective internal
controls.

Lack of effective internal controls, including monitoring and most
notably control activities -- policies and procedures, techniques, and
mechanisms that enforce management directives -- leave federal funds and
agency assets vulnerable to waste, fraud, and abuse. Work concluded
during this report period shows a need for the Department to improve its
physical control to secure and safeguard vulnerable assets, specifically
its IT equipment. It must also improve its monitoring performance
measures and indicators to ensure that its resources are used
efficiently, and that its contractors are meeting all requirements and
delivering appropriate services. By strengthening its internal controls
in its internal operations, specifically its control activities, the
Department can truly and efficiently utilize the taxpayer dollars with
which it has been entrusted.

**[Financial Management]{.underline}**

**Financial Statement Audits**: In November, we transmitted the final
audit reports covering the Department's and FSA's Fiscal Year (FY) 2006
comparative financial statements, and the Department's FY2006
special-purpose financial statements. Ernst & Young, LLP, Certified
Public Accountants (E&Y), conducted the audits and we performed
oversight and monitoring procedures considered necessary to provide
negative assurance that E&Y conducted the audits in accordance with
standards. The Department and FSA each earned an unqualified or "clean"
opinion on their respective comparative financial statements. The
Reports on Internal Control for both the Department and FSA noted
reportable conditions covering credit reform estimation and financial
reporting processes, and controls surrounding information systems.
Neither audit noted instances of noncompliance, exclusive of the Federal
Financial Management Improvement Act of 1996 (FFMIA); however, they did
note that the Department's and FSA's financial management systems did
not substantially comply with certain systems requirements of the FFMIA
due to the control weaknesses surrounding information systems.

The audits found that the controls over credit reform estimation and
financial reporting could be strengthened by: improving the analytical
tools used for the loan estimation process; documenting, in detail, the
programs written to develop the assumptions for the loan estimating
model and document scenarios under which deviation from patterns of
prior cash flows are appropriate; continuing to develop detailed
operating procedures for the loan estimation process, which would
include the step-by-step procedures that take place during the various
phases of the process; and more fully implementing cohort reporting. The
audits also found control weaknesses within information technology
security and systems. These included, among others, weaknesses in access
controls, configuration management, security incident handling
procedures, and intrusion detection systems.

**Drug Control Funds**: As required by Section 1704(d) of Title 21, U.S.
Code, and in accordance with the Office of National Drug Control Policy
Circular *Drug Control Accounting,* we authenticated the Department's
accounting of FY2006 drug control funds by expressing a conclusion on
the reliability of each assertion made in the Department's accounting.
Based upon our review, nothing came to our attention that caused us to
believe that the Department's accounting and assertions were not fairly
stated in all material respects.

**Additional Work**: During this reporting period, we also transmitted
the agreed-upon procedures report covering the Department's FY2006
Federal intragovernmental activity and balances. E&Y performed the
engagements, and we performed oversight and monitoring, as stated above.
The purpose of the intragovernmental activity and balances engagement
was to perform certain agreed-upon procedures stated in the U.S.
Department of Treasury's (Treasury) Financial Manual. This report was
provided to Treasury\'s Financial Management Service and the GAO as
required.

**[Department Operations]{.underline}**

**[Department's Competitive Sourcing/A-76 Competition]{.underline}**

Competitive sourcing is a process that opens commercial activities
performed by the government to competition between the public and
private sectors. The competitive sourcing process is intended to improve
the performance and efficiency of federal government activities. Federal
regulations require agencies to hold a competition to select the best
service provider for non-inherently governmental functions or commercial
activities, which include human resources services. In 2002, the
Department developed the "One-ED" project -- a project intended to
create a more efficient and effective organization. As part of One-ED,
an employee team studied human resources and training functions to
determine the most cost efficient way to deliver quality services. It
ultimately decided that these functions could benefit from competitive
sourcing. In 2003, the Department held a standard competition for the
following human resources functions: staffing and hiring; employee
relations; and training and development, which were awarded to the
Department's Most Efficient Organization (MEO). MEO refers to the
government's in-house organization, and may include a mix of federal
employees and contract support. The MEO defined how it would be
organized and managed, and proposed that it could perform the competed
work for just over \$38 million over five years. Department officials
selected the MEO as the service provider after they concluded that it
offered the best value solution compared to private sector proposals.

In 2006, we initiated an inspection to determine whether the MEO is
meeting the performance requirements, and if it is meeting the cost
savings. We were unable to determine if the MEO was meeting the
performance requirements because it did not collect any data on 11 of
the 12 performance requirements, and there has been no evaluation of the
MEO's performance. We also found that the Department-wide savings
reported to OMB were overstated by more than \$5.1 million. Based on our
findings, we recommended that the Department reconsider how to best
provide the competed human resources and training functions and
determine whether the MEO should continue. The Department concurred with
our findings and recommendation, and has terminated the MEO. [Click
here](http://www.ed.gov/about/offices/list/oig/aireports/i13g0004.doc)
for a copy of the report.

**[Controls Over Excessive Cash Drawdowns By Grantees]{.underline}**

Monitoring is not only one of the five standards for internal control,it
is an integral part of grant administration. Further, according to the
Department's *Handbook for the Discretionary Grant Process*
(Handbook)*,* "well-designed monitoring must also address the
\[Department's\] fiduciary responsibility to ensure grantees' compliance
with legal and fiscal requirements and to protect against fraud, waste
and abuse." The *Handbook* directs the Department's program staff to pay
particular attention to grantees' fiscal activities as part of its
monitoring process by using the Grants Administration and Payment System
(GAPS) as the primary tool. GAPS provides payment and expenditure
reporting data on Department grantees. One of the available reports is
the Excessive Drawdown Report, which assists program offices in
identifying those discretionary grantees that may have violated cash
management policies and regulations by drawing funds in excess of a
grant's immediate cash needs. Our audit to determine whether the
Department's controls identify and prevent excessive cash drawdowns by
grantees found that the Department's controls did not effectively
identify or prevent excessive cash drawdowns. As an example, we found
that the Excessive Drawdown Reports did not identify 1,379 unique grants
that met the excessive drawdown threshold criteria during FY2005. The
net drawdown activity for these grants totaled \$212 million. We also
found that staff did not always fulfill its responsibility to ensure
program offices monitored excessive drawdowns. As a result, the
Department is not monitoring all grants for excessive drawdowns, and
cannot ensure its grantees are compliant with fiscal requirements. Based
on our findings, we made a number of recommendations aimed at correcting
deficiencies in the Excessive Drawdown Report and staff follow-up, the
Department agreed with all but one. [Click
here](http://www.ed.gov/about/offices/list/oig/auditreports/a19f0025.doc)
for a copy of our report.

**[Specific Recommendations for OPE and OII]{.underline}**

> In the course of our audit of excessive cash drawdowns by grantees, we
> determined that the Office of Innovation and Improvement (OII) and the
> Office of Postsecondary Education (OPE) had the largest number of
> potentially excessive drawdowns on the reports, with 236 and 189
> drawdowns, respectively. Together, OII and OPE represented 425 of the
> 495 total drawdowns on the reports (86 percent). Prior to the release
> of our final report, we submitted a Management Information Report to
> each office, providing immediate information that we believe may be
> beneficial in future oversight of excessive cash drawdowns made by OII
> and OPE grantees. In both instances, we found the offices did not
> always effectively respond to and resolve individual drawdowns on the
> Excessive Drawdown Reports. We recommended that the Department require
> both OII and OPE program staff ensure that all grants appearing on the
> Report are researched, excess cash balances are resolved, and the
> official grant file is documented accordingly. [Click
> here](http://www.ed.gov/about/offices/list/oig/auditreports/x19f0025.pdf)
> for a copy of the OII report; [click
> here](http://www.ed.gov/about/offices/list/oig/auditreports/x19g0010.pdf)
> for a copy of the OPE report.

**[Controls Over Contract Monitoring for IES]{.underline}**

During this reporting period, we concluded an audit to determine whether
the Department's contract monitoring process ensures that contractors
adhere to the requirements of the contract, and if it receives the
products and services intended. We focused our review on the Institute
of Education Sciences (IES), which was established by the *Education
Sciences Reform Act* as an office within the Department in 2002. During
the time period of our review, IES had the highest number of payments of
any office within the Department, the highest number of active
contracts, and the second highest amount of payments during this review
period.

Our audit revealed that the Department's monitoring process for IES
contracts did not always ensure contractors adhered to the specified
requirements or that the Department received the products and services
intended. Department staff did not adequately document receipt and
acceptance of deliverables; they did not prepare written evaluations of
contractor-submitted reports; nor did they appropriately review invoices
prior to approving payment. This occurred because Department staff was
not always familiar with regulations, policies and procedures, or with
the terms of the contract they were assigned to monitor. All of the
issues noted were also reported in OIG's previous audit of IES contract
monitoring, which led us to conclude that the corrective actions taken
by the Department in response to our prior audit were not always
effective, and that further corrective actions are needed to improve
monitoring in these areas. We made a number of new recommendations in
response to which the Department proposed corrective actions. [Click
here](http://www.ed.gov/about/offices/list/oig/auditreports/a19g0004.pdf)
for a copy of our report.

**[IT Equipment Inventory]{.underline}**

The *Federal Property and Administrative Services Act of 1949*, as
amended, requires that each federal agency maintain adequate inventory
controls and accountability systems for property under its control. To
assist in fulfilling this requirement, the Department conducts an annual
physical inventory of its IT equipment, such as computers, printers, and
monitors. The Department's Office of Management (OM) is responsible for
maintaining control over the IT assets, and acquired the services of an
inventory services contractor (ISC) to assist in conducting the IT
equipment inventory for FY2005. According to the contract, the ISC was
to collect and/or validate data on all applicable equipment, and provide
computerized files to the Department so it could update its inventory
system to ensure its data is current, complete, and accurate.

In November 2006, we concluded an audit to evaluate the process and
results of this inventory. Our audit found that the Department could not
support the results reported in the equipment inventory. The ISC
reported 5,037 items as not found during the inventory process, 2,259
being desktop/laptop computers or servers. These items were not
necessarily missing, as they may have been located in areas the
contractor did not gain access to during the inventory, such as
alternate work sites, items on property passes, or perhaps represented
errors in bar code scanning. In its final report, the Department
reported that 98.9 percent of the total items in the inventory were
accounted for; only 411 items were reported as "unassigned" or not
found. We attempted to validate the process for reconciling the 5,037
items initially not found by the ISC to the 411 items in the final
results reported by the Department, and found that the Department did
not have any documentation to support their final results. In addition,
we found that the Department did not effectively manage its inventory
contracts. Specifically, it did not ensure that the inventory met stated
goals, and monitoring and documentation of contractor oversight was not
adequate. As a result, the Department lacks assurance that the inventory
and reconciliation processes were conducted appropriately and that
inventory results were accurate. The Department concurred with our
findings, and proposed corrective actions to address each of our
recommendations. [Click
here](http://www.ed.gov/about/offices/list/oig/auditreports/a19g0007.pdf)
for a copy of the report.

**[Investigations]{.underline}**

During this reporting period, significant settlements were reached with
two Department vendors, as well as a former Department official. Below
you will find summaries of these events.

**Former Deputy Secretary Enters Into Settlement Agreement**: On March
19, the U.S. Attorney's Office for Washington, D.C., acting on behalf of
the Department, entered into a settlement agreement with a former Deputy
Secretary. Under the terms of the settlement, the former official
admitted liability and agreed to pay \$50,000, the maximum amount
allowed under law, for continuing to hold bank stock that he was
required to sell under conflict-of-interest rules. Our investigation
found that the former official held over 800 shares of Bank of America
stock, a financial institution that participates in and benefits from
the FFEL program. While he held this stock, he participated in policy
matters that came before him in his official capacity at the Department
that may have had a direct and predictable effect on Bank of America.
The former official was informed by White House ethics officials that he
would have to sell his bank stocks. The former official reluctantly
agreed to sell his bank shares, and did sell other bank stock owned by
his family; but he did not sell his more than 800 shares in Bank of
America, despite repeated questions from ethics officials at the
Department, and despite being informed by a financial advisor that his
Bank of America shares had not been sold at the time his family's other
bank shares had been sold. Through this settlement, the former official
admitted his liability by virtue of his failure to divest his Bank of
America shares as required. 

**\$90,000 Settlement With Armstrong Williams**: In October, Armstrong
Williams agreed to pay \$90,000 to settle allegations that his media
relations company, the Graham Williams Group (GWG), submitted false
claims to the Department under his contract to provide media services
for the NCLB*.* This civil settlement is the result of joint
inspection/investigation conducted by the OIG's Special Investigation
Unit and the Operations Internal Audit Team in 2005.

**\$255,000 Settlement With Avaya Communications**: In October 2006, a
\$255,000 settlement was reached with Avaya Communications concerning
its responsibility for the acts of one of its former employees who was a
participant in a wide-ranging conspiracy to defraud the Department. The
settlement is a result of the contention that Avaya is liable for its
former employee's participation in a scheme through which the Department
was defrauded of more than \$1 million. A previous settlement in this
matter with the prime contractor, Verizon Federal, Inc., for \$2 million
dollars was reached in 2002.

**[Hurricane-Related Efforts]{.underline}**

The *Hurricane Education Recovery Act (HERA),* passed as part of *Public
Law* 109-148 in 2005*,* authorized three new grant programs to assist
school districts and schools in meeting the educational needs of
students displaced by Hurricanes Katrina and Rita, and to help schools
closed as a result of the hurricanes to re-open as quickly and
effectively as possible. These programs are: (1) the Immediate Aid to
Restart School Operations program (Restart), funded at \$750 million;
(2) the Assistance for Homeless Youth (HY) program, funded at \$5
million; and (3) the Temporary Emergency Impact Aid for Displaced
Students (EIA) program, funded at \$645 million. In addition, *Public
Law 109-148* included \$200 million for students and institutions of
postsecondary education affected by the hurricanes. In June 2006,
Congress appropriated an additional \$235 million for the Emergency
Impact Aid programs, and an additional \$50 million for postsecondary
institutions and students in the *Emergency Supplemental Appropriations
Act for Defense, the Global War on Terror, and Hurricane Recovery 2006*.
At the close of reporting period, Congress was considering adding
another \$30 million for these programs for FY2007.

With such a large amount of funding needing to be distributed in
critical areas in a short amount of time, effective internal controls,
particularly risk assessment, is vital. That's why in 2005, prior to the
disbursement of its hurricane-related funds, OIG worked closely with the
Department, providing assistance and advice in matters relating to
internal controls over *HERA*-related funding. This allowed OIG an
opportunity to alert the Department to potential areas of risk or
concern before the first *HERA* dollars were released, and provided the
Department an opportunity to implement safeguards to help prevent waste,
fraud, and abuse of these funds. Our emphasis was on appropriate
monitoring, as well as accurate and reliable recordkeeping and reporting
by grant recipients. We also advised the Department on issue areas
identified by our regional audit teams, all in an effort to help ensure
these vital dollars reach the intended recipients.

During this reporting period, OIG completed one audit, with eight
additional efforts near completion. An additional audit is scheduled to
begin later in FY2007. Pursuant to our policy to keep confidential the
details of our ongoing work, below you will find a summary of our
completed audit. When the other audits are finalized, we will report our
findings to the U.S. Congress, the Department, and the general public.

**[Controls Over Hurricane Education Recovery Funding]{.underline}**

In January 2007, we issued a Management Information Report to provide
the Department with information that may be beneficial in ensuring HERA
funds are appropriately expended. The information was gleaned from an
audit we conducted to assess the adequacy of controls over funding for
Restart, HY, and EIA. Our work noted that the Department had issued
guidance and information consistent with legislative requirements,
allocated funding using methodologies that were appropriate and
reasonable, and developed and initiated implementation of monitoring
plans. We did, however, find that the Department did not obtain
supporting data to provide assurance of the accuracy of displaced
student counts, which is used as the basis for allocation of funds under
both the EIA and HY programs prior to the allocation of funds. Instead,
the Department relied upon information and certifications provided by
the SEAs, which the SEAs received from the LEAs, BIA-funded schools, and
nonpublic schools. The Department also took steps to verify student
counts during its EIA monitoring visits. Based on our findings, we
suggested that the Department continue to obtain supporting information
for displaced student counts during monitoring visits to help ensure
that funds allocated for the EIA and HY programs were appropriate, and
incorporate single audit reviews as they become available into the
monitoring plan for each program.

**[Other Noteworthy Efforts]{.underline}**

**[Nonfederal Audits]{.underline}**

Participants in Department programs are required to submit annual audits
performed by independent public accountants (IPAs). We perform quality
control reviews (QCRs) of these audits to assess their quality. We
completed 41 QCRs of audits conducted by 40 different IPAs, or offices
of firms with multiple offices. We concluded that 19 (46 percent) were
acceptable, 16 (39 percent) were technically deficient, and 6 (15
percent) were substandard.

**[President's Council on Integrity and Efficiency]{.underline}**

## PCIE Audit Committee: Inspector General Higgins continues to chair the Audit Committee of the President's Council on Integrity and Efficiency (PCIE). Highlights from this reporting period include:

**[GAO/PCIE Financial Audit Manual Update]{.underline}**

> GAO and the Federal Audit Executive Council (FAEC) are working to
> update the GAO/PCIE Financial Audit Manual for recent changes to the
> auditing standards. First drafts of a number of manual chapters have
> been issued for comment with additional sections to follow shortly.
> The GAO/FAEC team hopes to issue the final document by the end of June
> 2007.

**[GAO/PCIE Financial Statement Audit Roundtable]{.underline}**

> In February 2007, the PCIE and GAO hosted the annual Financial
> Statement Audit Roundtable. Speakers discussed a wide range of issues
> affecting financial statement audits before a group of participants
> that included representatives from the PCIE, GAO, the OMB, the Chief
> Financial Officers' Council (CFOC), the Federal Accounting Standards
> Advisory Board and independent public accountants.

**[Joint CFOC/PCIE Working Group]{.underline}**

> In order to maximize the effectiveness and efficiency of the financial
> statement audits that each IG office is required to perform on its
> agency annually, the PCIE and the CFOC established a working group in
> January. The Working Group, chaired by OMB and composed primarily of
> Deputy CFOs and Assistant IGs for Audit, looks to address issues that
> arose during the FY2006 financial statement audit process, identify
> common problems and develop best practices. In March, the Working
> Group began its efforts to produce the best practices report,
> entitled, *Best Practice Guide: Coordinating the Preparation and Audit
> of Federal Financial Statements*. The Working Group is currently
> soliciting ideas and comments from the financial community, and looks
> to release its final report later this year.
>
> **[New DVD on ID Theft]{.underline}**
>
> In January, OIG released its second DVD on the issue of identity theft
> in the student financial assistance arena. Entitled *Identity Theft:
> It's Not Worth It,* the DVD tracks how OIG Investigative Services,
> together with the U.S. Attorney's Office, U.S. Marshals Service, U.S
> Postal Inspection Service, and Truckee Meadows Community College,
> worked together to stop a \$1 million financial aid fraud scam,
> spearheaded by a 64-year old grandmother. The DVD discusses how the
> woman---along with seven of her family members, including children and
> grandchildren---used the identities of more than 65 people to obtain
> almost \$1 million in federal student aid at various colleges in
> Arizona, Colorado, Maryland, Nevada, and Texas through distance
> education programs. In 2003, OIG worked with the Arizona Department of
> Public Safety to produce *FSA Identity Theft: We Need Your Help.* This
> report featured an individual incarcerated for student aid fraud who
> describes the techniques he used to steal identities. To date, OIG has
> distributed nearly 100 DVDs to schools, lenders, and other
> participants in the student financial assistance programs.

+-------+-------------------------------------------------+-----------+
| *     |                                                 |           |
| *Repo |                                                 |           |
| rting |                                                 |           |
| Re    |                                                 |           |
| quire |                                                 |           |
| ments |                                                 |           |
| of    |                                                 |           |
| the   |                                                 |           |
| Insp  |                                                 |           |
| ector |                                                 |           |
| Ge    |                                                 |           |
| neral |                                                 |           |
| Act,  |                                                 |           |
| As    |                                                 |           |
| Amen  |                                                 |           |
| ded** |                                                 |           |
+-------+-------------------------------------------------+-----------+
| Se    | Requirement                                     | Table     |
| ction |                                                 | Number    |
+-------+-------------------------------------------------+-----------+
| **5(  | **Significant Problems, Abuses, and             |           |
| a)(1) | Deficiencies**                                  |           |
| and** |                                                 |           |
|       | Activities and Accomplishments                  |           |
| **5   |                                                 |           |
| (a)   |                                                 |           |
| (2)** |                                                 |           |
+-------+-------------------------------------------------+-----------+
| *     | **Uncompleted Corrective Actions**              | 1         |
| *5(a) |                                                 |           |
| (3)** | Recommendations Described in Previous SARs on   |           |
|       | which                                           |           |
|       |                                                 |           |
|       | Corrective Action Has Not Been Taken            |           |
+-------+-------------------------------------------------+-----------+
| *     | **Matters Referred to Prosecutive Authorities** | 7         |
| *5(a) |                                                 |           |
| (4)** | Statistical Profile                             |           |
+-------+-------------------------------------------------+-----------+
| **5(  | **Summary of Instances where Information**      |           |
| a)(5) |                                                 |           |
| and   | **was Refused or Not Provided**                 |           |
| 6(b)  |                                                 |           |
| (2)** |                                                 |           |
+-------+-------------------------------------------------+-----------+
| *     | **Listing of Reports**                          | 2         |
| *5(a) |                                                 |           |
| (6)** | OIG Audit Services Reports on Department        | 3         |
|       | Programs and Activities                         |           |
|       |                                                 |           |
|       | Other OIG Reports on Department Programs and    |           |
|       | Activities                                      |           |
+-------+-------------------------------------------------+-----------+
| *     | **Summary of Significant Audits**               |           |
| *5(a) |                                                 |           |
| (7)** | Activities and Accomplishments                  |           |
+-------+-------------------------------------------------+-----------+
| *     | **Audit Reports Containing Questioned Costs**   | 4         |
| *5(a) |                                                 |           |
| (8)** | OIG Issued Audit Reports with Questioned Costs  |           |
+-------+-------------------------------------------------+-----------+
| *     | **Audit Reports Containing Recommendations      | 5         |
| *5(a) | for**                                           |           |
| (9)** |                                                 |           |
|       | **Better Use of Funds**                         |           |
|       |                                                 |           |
|       | OIG Issued Audit Reports with Recommendations   |           |
|       | for Better Use of Funds                         |           |
+-------+-------------------------------------------------+-----------+
| **    | **Summary of Unresolved Audit Reports Issued    | 6         |
| 5(a)( | Prior to the**                                  |           |
| 10)** |                                                 |           |
|       | **Beginning of the Reporting Period**           |           |
|       |                                                 |           |
|       | Unresolved Reports Issued Prior to October 1,   |           |
|       | 2006                                            |           |
+-------+-------------------------------------------------+-----------+
| **    | **Significant Revised Management Decisions**    |           |
| 5(a)( |                                                 |           |
| 11)** |                                                 |           |
+-------+-------------------------------------------------+-----------+
| **    | **Significant Management Decisions with**       |           |
| 5(a)( |                                                 |           |
| 12)** | **which OIG Disagreed**                         |           |
+-------+-------------------------------------------------+-----------+
| **    | **Unmet Intermediate Target Dates Established   |           |
| 5(a)( | by the Department**                             |           |
| 13)** |                                                 |           |
|       | Under the *Federal Financial Management         |           |
|       | Improvement Act of 1996*                        |           |
+-------+-------------------------------------------------+-----------+

<table>
<colgroup>
<col style="width: 0%" />
<col style="width: 0%" />
<col style="width: 10%" />
<col style="width: 0%" />
<col style="width: 24%" />
<col style="width: 0%" />
<col style="width: 9%" />
<col style="width: 0%" />
<col style="width: 11%" />
<col style="width: 0%" />
<col style="width: 11%" />
<col style="width: 0%" />
<col style="width: 8%" />
<col style="width: 0%" />
<col style="width: 9%" />
<col style="width: 0%" />
<col style="width: 0%" />
<col style="width: 9%" />
<col style="width: 3%" />
</colgroup>
<tbody>
<tr class="odd">
<td></td>
<td colspan="17"><strong>Table 1: Recommendations Described in Previous
SARs on Which Corrective Action Has Not Been Completed</strong></td>
<td></td>
</tr>
<tr class="even">
<td></td>
<td colspan="17"><em>Section 5(a)(3) of the IG Act as amended requires a
listing of each report resolved before the commencement of the reporting
period for which management has not completed corrective action. The
reports listed below are OIG internal and nationwide audit
reports.</em></td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td colspan="2" rowspan="2"><p>Report</p>
<p>Number</p></td>
<td colspan="2" rowspan="2"><p>Report Title</p>
<p>(Prior SAR Number and Page)</p></td>
<td colspan="2" rowspan="2"><p>Date</p>
<p>Issued</p></td>
<td colspan="2" rowspan="2">Date Resolved</td>
<td colspan="2" rowspan="2"><p>Total</p>
<p>Monetary</p>
<p>Findings</p></td>
<td colspan="5">Number of Recommendations</td>
<td colspan="2" rowspan="2"><p>Latest</p>
<p>Target</p>
<p>Date</p>
<p>(Per Corrective Action Plan)</p></td>
<td><mark></mark></td>
</tr>
<tr class="even">
<td></td>
<td colspan="2">Open</td>
<td colspan="3">Closed</td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td colspan="17"><h1 id="new-audits-since-last-reporting-period">NEW
AUDITS SINCE LAST REPORTING PERIOD</h1></td>
<td></td>
</tr>
<tr class="even">
<td></td>
<td colspan="17"></td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td colspan="17"><strong><u>FSA</u></strong></td>
<td></td>
</tr>
<tr class="even">
<td></td>
<td colspan="2">A04E0006</td>
<td colspan="2">Death and Total and Permanent Disability Discharges of
FFEL and Direct Loan Program Loans (SAR 52, pg 27)</td>
<td colspan="2">11/14/2005</td>
<td colspan="2">2/24/2006</td>
<td colspan="2"></td>
<td colspan="2">2</td>
<td colspan="3">2</td>
<td colspan="2">9/30/2007</td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td colspan="2">A11F0004</td>
<td colspan="2">Security Review of the Virtual Data Center – Fiscal Year
2005 (SAR 51, pg 26)</td>
<td colspan="2">9/29/2005</td>
<td colspan="2">11/21/2005</td>
<td colspan="2"></td>
<td colspan="2">1</td>
<td colspan="3">10</td>
<td colspan="2">8/15/2007</td>
<td></td>
</tr>
<tr class="even">
<td></td>
<td colspan="17"><strong><u>Office of the Chief Financial Officer
(OCFO)</u></strong></td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td colspan="2">A17F0004</td>
<td colspan="2">Financial Statement Audits Fiscal Years 2005 and 2004
U.S. Department of Education (SAR 52, pg 28)</td>
<td colspan="2">11/15/2005</td>
<td colspan="2">1/12/2006</td>
<td colspan="2"></td>
<td colspan="2">1</td>
<td colspan="3">4</td>
<td colspan="2">3/30/2007</td>
<td></td>
</tr>
<tr class="even">
<td></td>
<td colspan="17"><strong><u>Office of the Chief Information Officer
(OCIO)</u></strong></td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td colspan="2">A19F0009</td>
<td colspan="2">Telecommunications Billing Accuracy (SAR 52, pg 28)</td>
<td colspan="2">2/1/2006</td>
<td colspan="2">3/22/2006</td>
<td colspan="2"></td>
<td colspan="2">7</td>
<td colspan="3">0</td>
<td colspan="2">9/30/2008</td>
<td></td>
</tr>
<tr class="even">
<td></td>
<td colspan="17"><strong><u>Office of Planning, Evaluation &amp; Policy
Development (OPEPD)</u></strong></td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td colspan="2">A11E0003</td>
<td colspan="2">Audit of the Department’s Performance Based Data
Management Initiative (SAR 51, pg 28)</td>
<td colspan="2">9/29/2005</td>
<td colspan="2">3/28/2006</td>
<td colspan="2"></td>
<td colspan="2">0</td>
<td colspan="3">14</td>
<td colspan="2">*</td>
<td></td>
</tr>
<tr class="even">
<td></td>
<td colspan="17"><strong><u>AUDITS REPORTED IN PREVIOUS
SARs</u></strong></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="2"></td>
<td colspan="17"><strong><u>Office of the Deputy Secretary
(ODS)</u></strong></td>
</tr>
<tr class="even">
<td colspan="2"></td>
<td colspan="2">A09E0014</td>
<td colspan="2">Departmental Actions to Ensure Charter Schools’ Access
to Title I and <em>IDEA</em> Part B Funds (SAR 50, pg 22) <em>(Office of
Elementary and Secondary Education (OESE) and the Office of Special
Education and Rehabilitative Services (OSERS) also designated as action
official)</em></td>
<td colspan="2">10/26/2004</td>
<td colspan="2">1/10/2005</td>
<td colspan="2"></td>
<td colspan="2">3</td>
<td>3</td>
<td colspan="4">3/30/2007</td>
</tr>
<tr class="odd">
<td colspan="3" rowspan="2"><p>Report</p>
<p>Number</p></td>
<td colspan="2" rowspan="2"><p>Report Title</p>
<p>(Prior SAR Number and Page)</p></td>
<td colspan="2" rowspan="2"><p>Date</p>
<p>Issued</p></td>
<td colspan="2" rowspan="2">Date Resolved</td>
<td colspan="3" rowspan="2"><p>Total</p>
<p>Monetary</p>
<p>Findings</p></td>
<td colspan="5">Number of Recommendations</td>
<td colspan="2" rowspan="2"><p>Latest</p>
<p>Target</p>
<p>Date</p>
<p>(Per Corrective Action Plan)</p></td>
</tr>
<tr class="even">
<td colspan="2">Open</td>
<td colspan="3">Closed</td>
</tr>
<tr class="odd">
<td colspan="4"><strong><u>OCFO</u></strong></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
<td colspan="4"></td>
</tr>
<tr class="even">
<td colspan="4">A19D0007</td>
<td colspan="2">Audit of the Department of Education’s Followup Process
for External Audits (SAR 50, pg 22)</td>
<td colspan="2">3/31/2005</td>
<td colspan="2">8/8/2005</td>
<td colspan="2"></td>
<td colspan="2">6</td>
<td>4</td>
<td colspan="4">11/30/2007</td>
</tr>
<tr class="odd">
<td colspan="19"><strong><u>Office of Management (OM)</u></strong></td>
</tr>
<tr class="even">
<td colspan="4">A19D0008</td>
<td colspan="2">Audit of the Department’s Management of the Federal
Employees’ Compensation Act Program (SAR 50, pg 23)</td>
<td colspan="2">3/30/2005</td>
<td colspan="2">5/13/2005</td>
<td colspan="2">$14,366</td>
<td colspan="2">0</td>
<td>16</td>
<td colspan="4">*</td>
</tr>
<tr class="odd">
<td colspan="19"><blockquote>
<p>* Closure of audits was not completed in AARTS by the end of
reporting period (3/31/2007)<em>.</em></p>
</blockquote></td>
</tr>
</tbody>
</table>

+-----------------------------------------------------------------------+
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| **    |                       |     |   |        |        |   |     | |
| |                                                                     |
| Table |                       |     |   |        |        |   |     | |
| |                                                                     |
| 2:    |                       |     |   |        |        |   |     | |
| |                                                                     |
| OIG   |                       |     |   |        |        |   |     | |
| |                                                                     |
| Audit |                       |     |   |        |        |   |     | |
| |                                                                     |
| Re    |                       |     |   |        |        |   |     | |
| |                                                                     |
| ports |                       |     |   |        |        |   |     | |
| |                                                                     |
| on    |                       |     |   |        |        |   |     | |
| |                                                                     |
| Depar |                       |     |   |        |        |   |     | |
| |                                                                     |
| tment |                       |     |   |        |        |   |     | |
| |                                                                     |
| Pro   |                       |     |   |        |        |   |     | |
| |                                                                     |
| grams |                       |     |   |        |        |   |     | |
| |                                                                     |
| and   |                       |     |   |        |        |   |     | |
| |                                                                     |
| Ac    |                       |     |   |        |        |   |     | |
| |                                                                     |
| tivit |                       |     |   |        |        |   |     | |
| |                                                                     |
| ies** |                       |     |   |        |        |   |     | |
| |                                                                     |
|       |                       |     |   |        |        |   |     | |
| |                                                                     |
| **(Oc |                       |     |   |        |        |   |     | |
| |                                                                     |
| tober |                       |     |   |        |        |   |     | |
| |                                                                     |
| 1,    |                       |     |   |        |        |   |     | |
| |                                                                     |
| 2006, |                       |     |   |        |        |   |     | |
| |                                                                     |
| th    |                       |     |   |        |        |   |     | |
| |                                                                     |
| rough |                       |     |   |        |        |   |     | |
| |                                                                     |
| March |                       |     |   |        |        |   |     | |
| |                                                                     |
| 31,   |                       |     |   |        |        |   |     | |
| |                                                                     |
| 20    |                       |     |   |        |        |   |     | |
| |                                                                     |
| 07)** |                       |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| *Se   |                       |     |   |        |        |   |     | |
| |                                                                     |
| ction |                       |     |   |        |        |   |     | |
| |                                                                     |
| 5(    |                       |     |   |        |        |   |     | |
| |                                                                     |
| a)(6) |                       |     |   |        |        |   |     | |
| |                                                                     |
| of    |                       |     |   |        |        |   |     | |
| |                                                                     |
| the   |                       |     |   |        |        |   |     | |
| |                                                                     |
| IG    |                       |     |   |        |        |   |     | |
| |                                                                     |
| Act   |                       |     |   |        |        |   |     | |
| |                                                                     |
| as    |                       |     |   |        |        |   |     | |
| |                                                                     |
| am    |                       |     |   |        |        |   |     | |
| |                                                                     |
| ended |                       |     |   |        |        |   |     | |
| |                                                                     |
| req   |                       |     |   |        |        |   |     | |
| |                                                                     |
| uires |                       |     |   |        |        |   |     | |
| |                                                                     |
| a     |                       |     |   |        |        |   |     | |
| |                                                                     |
| li    |                       |     |   |        |        |   |     | |
| |                                                                     |
| sting |                       |     |   |        |        |   |     | |
| |                                                                     |
| of    |                       |     |   |        |        |   |     | |
| |                                                                     |
| each  |                       |     |   |        |        |   |     | |
| |                                                                     |
| r     |                       |     |   |        |        |   |     | |
| |                                                                     |
| eport |                       |     |   |        |        |   |     | |
| |                                                                     |
| comp  |                       |     |   |        |        |   |     | |
| |                                                                     |
| leted |                       |     |   |        |        |   |     | |
| |                                                                     |
| by    |                       |     |   |        |        |   |     | |
| |                                                                     |
| OIG   |                       |     |   |        |        |   |     | |
| |                                                                     |
| d     |                       |     |   |        |        |   |     | |
| |                                                                     |
| uring |                       |     |   |        |        |   |     | |
| |                                                                     |
| the   |                       |     |   |        |        |   |     | |
| |                                                                     |
| repo  |                       |     |   |        |        |   |     | |
| |                                                                     |
| rting |                       |     |   |        |        |   |     | |
| |                                                                     |
| per   |                       |     |   |        |        |   |     | |
| |                                                                     |
| iod.* |                       |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| R     | ## Report Title       | D   | Q |        | Unsup  | N |     | |
| |                                                                     |
| eport |                       | ate | u |        | ported | o |     | |
| |                                                                     |
| N     |                       |     | e |        |        | . |     | |
| |                                                                     |
| umber |                       | ### | s |        | Costs  | o |     | |
| |                                                                     |
|       |                       | ##  | t |        |        | f |     | |
| |                                                                     |
|       |                       | Iss | i |        |        |   |     | |
| |                                                                     |
|       |                       | ued | o |        |        | R |     | |
| |                                                                     |
|       |                       |     | n |        |        | e |     | |
| |                                                                     |
|       |                       |     | e |        |        | c |     | |
| |                                                                     |
|       |                       |     | d |        |        | o |     | |
| |                                                                     |
|       |                       |     |   |        |        | m |     | |
| |                                                                     |
|       |                       |     | C |        |        | m |     | |
| |                                                                     |
|       |                       |     | o |        |        | - |     | |
| |                                                                     |
|       |                       |     | s |        |        | e |     | |
| |                                                                     |
|       |                       |     | t |        |        | n |     | |
| |                                                                     |
|       |                       |     | s |        |        | d |     | |
| |                                                                     |
|       |                       |     | \ |        |        | a |     | |
| |                                                                     |
|       |                       |     | * |        |        | t |     | |
| |                                                                     |
|       |                       |     |   |        |        | i |     | |
| |                                                                     |
|       |                       |     |   |        |        | o |     | |
| |                                                                     |
|       |                       |     |   |        |        | n |     | |
| |                                                                     |
|       |                       |     |   |        |        | s |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| # AUD |                       |     |   |        |        |   |     | |
| |                                                                     |
| IT RE |                       |     |   |        |        |   |     | |
| |                                                                     |
| PORTS |                       |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| *     |                       |     |   |        |        |   |     | |
| |                                                                     |
| *[FSA |                       |     |   |        |        |   |     | |
| |                                                                     |
| ]{.un |                       |     |   |        |        |   |     | |
| |                                                                     |
| derli |                       |     |   |        |        |   |     | |
| |                                                                     |
| ne}** |                       |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| # A06 | # Phil                | # 1 |   | \$4    |        |   | 20  | |
| |                                                                     |
| F0018 | ander Smith College's | 1/2 |   | 76,167 |        |   |     | |
| |                                                                     |
|       |  Administration of Ti | /06 |   |        |        |   |     | |
| |                                                                     |
|       | tle IV Student Financ |     |   |        |        |   |     | |
| |                                                                     |
|       | ial Assistance Progra |     |   |        |        |   |     | |
| |                                                                     |
|       | ms Needs Improvement  |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| # A09 | #                     | # 3 |   |        |        |   | 1   | |
| |                                                                     |
| G0023 |  Cerritos Community C | /26 |   |        |        |   |     | |
| |                                                                     |
|       | ollege's Verification | /07 |   |        |        |   |     | |
| |                                                                     |
|       |  of Applicant Informa |     |   |        |        |   |     | |
| |                                                                     |
|       | tion Submitted on the |     |   |        |        |   |     | |
| |                                                                     |
|       |  Free Application for |     |   |        |        |   |     | |
| |                                                                     |
|       |  Federal Student Aid  |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| # A09 | # Morton C            | # 3 |   |        |        |   | 2   | |
| |                                                                     |
| G0026 | ollege's Verification | /26 |   |        |        |   |     | |
| |                                                                     |
|       |  of Applicant Informa | /07 |   |        |        |   |     | |
| |                                                                     |
|       | tion Submitted on the |     |   |        |        |   |     | |
| |                                                                     |
|       |  Free Application for |     |   |        |        |   |     | |
| |                                                                     |
|       |  Federal Student Aid  |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| # A09 | # School of t         | # 3 |   |        |        |   | 2   | |
| |                                                                     |
| G0027 | he Art Institute of C | /26 |   |        |        |   |     | |
| |                                                                     |
|       | hicago's Verification | /07 |   |        |        |   |     | |
| |                                                                     |
|       |  of Applicant Informa |     |   |        |        |   |     | |
| |                                                                     |
|       | tion Submitted on the |     |   |        |        |   |     | |
| |                                                                     |
|       |  Free Application for |     |   |        |        |   |     | |
| |                                                                     |
|       |  Federal Student Aid  |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| # A09 | # Boston C            | # 1 |   |        |        |   | N   | |
| |                                                                     |
| G0028 | ollege's Verification | /17 |   |        |        |   | one | |
| |                                                                     |
|       |  of Applicant Informa | /07 |   |        |        |   |     | |
| |                                                                     |
|       | tion Submitted on the |     |   |        |        |   |     | |
| |                                                                     |
|       |  Free Application for |     |   |        |        |   |     | |
| |                                                                     |
|       |  Federal Student Aid  |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| # A09 | # AT                  | # 3 |   |        |        |   | 3   | |
| |                                                                     |
| G0029 | I Technical Training  | /26 |   |        |        |   |     | |
| |                                                                     |
|       | Center's Verification | /07 |   |        |        |   |     | |
| |                                                                     |
|       |  of Applicant Informa |     |   |        |        |   |     | |
| |                                                                     |
|       | tion Submitted on the |     |   |        |        |   |     | |
| |                                                                     |
|       |  Free Application for |     |   |        |        |   |     | |
| |                                                                     |
|       |  Federal Student Aid  |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| #     | #                     | #   |   | Ques   | Unsup  |   | No. | |
| |                                                                     |
|       |                       |     |   | tioned | ported |   | of  | |
| |                                                                     |
| # Rep | # Report Title        | #   |   | C      | Costs  |   | R   | |
| |                                                                     |
| ort N |                       |  Da |   | osts\* |        |   | eco | |
| |                                                                     |
| umber |                       | te  |   |        |        |   | mm- | |
| |                                                                     |
|       |                       | Iss |   |        |        |   | end | |
| |                                                                     |
|       |                       | ued |   |        |        |   | ati | |
| |                                                                     |
|       |                       |     |   |        |        |   | ons | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| # A09 | #                     | # 1 |   |        |        |   | N   | |
| |                                                                     |
| G0030 |  Technical Career Ins | /17 |   |        |        |   | one | |
| |                                                                     |
|       | titutes' Verification | /07 |   |        |        |   |     | |
| |                                                                     |
|       |  of Applicant Informa |     |   |        |        |   |     | |
| |                                                                     |
|       | tion Submitted on the |     |   |        |        |   |     | |
| |                                                                     |
|       |  Free Application for |     |   |        |        |   |     | |
| |                                                                     |
|       |  Federal Student Aid  |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| # A09 | The College of New    | # 1 |   |        |        |   | N   | |
| |                                                                     |
| G0031 | Rochelle's            | /17 |   |        |        |   | one | |
| |                                                                     |
|       | Verification of       | /07 |   |        |        |   |     | |
| |                                                                     |
|       | Applicant Information |     |   |        |        |   |     | |
| |                                                                     |
|       | Submitted on the Free |     |   |        |        |   |     | |
| |                                                                     |
|       | Application for       |     |   |        |        |   |     | |
| |                                                                     |
|       | Federal Student Aid   |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| # A09 | # Americ              | # 3 |   |        |        |   | 1   | |
| |                                                                     |
| G0032 | an University of Puer | /26 |   |        |        |   |     | |
| |                                                                     |
|       | to Rico's Verificatio | /07 |   |        |        |   |     | |
| |                                                                     |
| #     | n of Applicant Inform |     |   |        |        |   |     | |
| |                                                                     |
|       | ation Submitted on th | #   |   |        |        |   |     | |
| |                                                                     |
| #     | e Free Application fo |     |   |        |        |   |     | |
| |                                                                     |
|       | r Federal Student Aid |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| # A09 | # East Carolina Uni   | # 3 |   | \      |        |   | 6   | |
| |                                                                     |
| G0033 | versity's Verificatio | /26 |   | $1,464 |        |   |     | |
| |                                                                     |
|       | n of Applicant Inform | /07 |   |        |        |   |     | |
| |                                                                     |
|       | ation Submitted on th |     |   |        |        |   |     | |
| |                                                                     |
|       | e Free Application fo |     |   |        |        |   |     | |
| |                                                                     |
|       | r Federal Student Aid |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| # A17 | # Financ              | #   |   |        |        |   | 5   | |
| |                                                                     |
| G0004 | ial Statement Audits  |  11 |   |        |        |   |     | |
| |                                                                     |
|       |                       | /15 |   |        |        |   |     | |
| |                                                                     |
|       | # Fiscal              | /06 |   |        |        |   |     | |
| |                                                                     |
|       |  Years 2006 and 2005  |     |   |        |        |   |     | |
| |                                                                     |
|       |                       |     |   |        |        |   |     | |
| |                                                                     |
|       | #                     |     |   |        |        |   |     | |
| |                                                                     |
|       |  Federal Student Aid  |     |   |        |        |   |     | |
| |                                                                     |
|       |                       |     |   |        |        |   |     | |
| |                                                                     |
|       | # *(OC                |     |   |        |        |   |     | |
| |                                                                     |
|       | FO also designated as |     |   |        |        |   |     | |
| |                                                                     |
|       |  an action official)* |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| # [OC |                       |     |   |        |        |   |     | |
| |                                                                     |
| FO]{. |                       |     |   |        |        |   |     | |
| |                                                                     |
| under |                       |     |   |        |        |   |     | |
| |                                                                     |
| line} |                       |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| # A07 | # Parental            | #   |   | \$4    |        |   | 7   | |
| |                                                                     |
| G0013 | Information and Resou |  11 |   | 36,664 |        |   |     | |
| |                                                                     |
|       | rce Center Grant at T | /16 |   |        |        |   |     | |
| |                                                                     |
|       | he Learning Exchange  | /06 |   |        |        |   |     | |
| |                                                                     |
|       |                       |     |   |        |        |   |     | |
| |                                                                     |
|       | *(Office of           |     |   |        |        |   |     | |
| |                                                                     |
|       | Innovation and        |     |   |        |        |   |     | |
| |                                                                     |
|       | Improvement (OII)     |     |   |        |        |   |     | |
| |                                                                     |
|       | also designated as an |     |   |        |        |   |     | |
| |                                                                     |
|       | action official)*     |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| # A09 | KIPP Foundation's     | # 1 |   | \      |        |   | 6   | |
| |                                                                     |
| G0010 | Administration of the | 2/6 |   | $4,391 |        |   |     | |
| |                                                                     |
|       | Fund for the          | /06 |   |        |        |   |     | |
| |                                                                     |
|       | Improvement of        |     |   |        |        |   |     | |
| |                                                                     |
|       | Education Grants      |     |   |        |        |   |     | |
| |                                                                     |
|       | *(OII also designated |     |   |        |        |   |     | |
| |                                                                     |
|       | as an action          |     |   |        |        |   |     | |
| |                                                                     |
|       | official)*            |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| # A17 | Financial Statement   | #   |   |        |        |   | 5   | |
| |                                                                     |
| G0003 | Audits Fiscal Years   |  11 |   |        |        |   |     | |
| |                                                                     |
|       | 2006 and 2005 U.S.    | /15 |   |        |        |   |     | |
| |                                                                     |
|       | Department of         | /06 |   |        |        |   |     | |
| |                                                                     |
|       | Education *(FSA also  |     |   |        |        |   |     | |
| |                                                                     |
|       | designated as an      |     |   |        |        |   |     | |
| |                                                                     |
|       | action official)*     |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| # A17 | Financial Statement   | #   |   |        |        |   | N   | |
| |                                                                     |
| G0005 | Audits for Fiscal     |  11 |   |        |        |   | one | |
| |                                                                     |
|       | Years 2006 and 2005   | /17 |   |        |        |   |     | |
| |                                                                     |
|       | U.S. Department of    | /06 |   |        |        |   |     | |
| |                                                                     |
|       | Education Special     |     |   |        |        |   |     | |
| |                                                                     |
|       | Purpose Financial     |     |   |        |        |   |     | |
| |                                                                     |
|       | Statements            |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| # A19 | # Controls            | #   |   |        |        |   | 9   | |
| |                                                                     |
| F0025 | Over Excessive Cash D |  12 |   |        |        |   |     | |
| |                                                                     |
|       | rawdowns By Grantees  | /18 |   |        |        |   |     | |
| |                                                                     |
|       |                       | /06 |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| # A19 | # Controls Over Con   | #   |   |        |        |   | 6   | |
| |                                                                     |
| G0004 | tract Monitoring for  |  12 |   |        |        |   |     | |
| |                                                                     |
|       | Institute of Educatio | /14 |   |        |        |   |     | |
| |                                                                     |
|       | n Sciences Contracts  | /06 |   |        |        |   |     | |
| |                                                                     |
|       |                       |     |   |        |        |   |     | |
| |                                                                     |
|       | *(IES also designated |     |   |        |        |   |     | |
| |                                                                     |
|       | as an action          |     |   |        |        |   |     | |
| |                                                                     |
|       | official)*            |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| R     | Report Title          | D   |   | Ques   | Unsup  |   | No. | |
| |                                                                     |
| eport |                       | ate |   | tioned | ported |   | of  | |
| |                                                                     |
| N     |                       | Iss |   | C      | Costs  |   | R   | |
| |                                                                     |
| umber |                       | ued |   | osts\* |        |   | eco | |
| |                                                                     |
|       |                       |     |   |        |        |   | mm- | |
| |                                                                     |
|       |                       |     |   |        |        |   | end | |
| |                                                                     |
|       |                       |     |   |        |        |   | ati | |
| |                                                                     |
|       |                       |     |   |        |        |   | ons | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| **    |                       |     |   |        |        |   |     | |
| |                                                                     |
| [OESE |                       |     |   |        |        |   |     | |
| |                                                                     |
| ]{.un |                       |     |   |        |        |   |     | |
| |                                                                     |
| derli |                       |     |   |        |        |   |     | |
| |                                                                     |
| ne}** |                       |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| A02   | Virgin Islands        | 1   |   |        |        |   | 2   | |
| |                                                                     |
| F0023 | Department of         | /30 |   |        |        |   |     | |
| |                                                                     |
|       | Education             | /07 |   |        |        |   |     | |
| |                                                                     |
|       | Administration of the |     |   |        |        |   |     | |
| |                                                                     |
|       | Learning Point        |     |   |        |        |   |     | |
| |                                                                     |
|       | Associates Contract   |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| A02   | Audit of New York     | 1   |   | \      | \$97,4 |   | 8   | |
| |                                                                     |
| G0002 | State Education       | 1/3 |   | $118,3 | 91,672 |   |     | |
| |                                                                     |
|       | Department's Reading  | /06 |   | 40,582 |        |   |     | |
| |                                                                     |
|       | First Program         |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| A02   | Mid-Hudson Migrant    | 1   |   |        |        |   | N   | |
| |                                                                     |
| G0009 | Education Outreach    | /31 |   |        |        |   | one | |
| |                                                                     |
|       | Program               | /07 |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| A03   | RMC Research          | 3/7 |   |        |        |   | 3   | |
| |                                                                     |
| F0022 | Corporation's         | /07 |   |        |        |   |     | |
| |                                                                     |
|       | Administration of the |     |   |        |        |   |     | |
| |                                                                     |
|       | Reading First Program |     |   |        |        |   |     | |
| |                                                                     |
|       | Contracts *(OCFO also |     |   |        |        |   |     | |
| |                                                                     |
|       | designated as an      |     |   |        |        |   |     | |
| |                                                                     |
|       | action official)*     |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| A03   | The Department's      | 2   |   |        |        |   | 3   | |
| |                                                                     |
| G0006 | Administration of     | /22 |   |        |        |   |     | |
| |                                                                     |
|       | Selected Aspects of   | /07 |   |        |        |   |     | |
| |                                                                     |
|       | the Reading First     |     |   |        |        |   |     | |
| |                                                                     |
|       | Program *(OCFO also   |     |   |        |        |   |     | |
| |                                                                     |
|       | designated as an      |     |   |        |        |   |     | |
| |                                                                     |
|       | action official)*     |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| A04   | Review of the Georgia | 1   |   |        |        |   | 1   | |
| |                                                                     |
| G0003 | Reading First Program | /18 |   |        |        |   |     | |
| |                                                                     |
|       |                       | /07 |   |        |        |   |     | |
| |                                                                     |
| ##    |                       |     |   |        |        |   |     | |
| |                                                                     |
| ####  |                       | #   |   |        |        |   |     | |
| |                                                                     |
|       |                       | ### |   |        |        |   |     | |
| |                                                                     |
|       |                       | ##  |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| A05   | Wisconsin Department  | 10  |   |        | \$5,8  |   | 2   | |
| |                                                                     |
| G0011 | of Public             | /20 |   |        | 44,522 |   |     | |
| |                                                                     |
|       | Instruction's Reading | /06 |   |        |        |   |     | |
| |                                                                     |
|       | First Program         |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| A05   | Ohio Department of    | 11  |   |        | \$3    |   | 6   | |
| |                                                                     |
| G0015 | Education's Title I,  | /13 |   |        | 15,012 |   |     | |
| |                                                                     |
|       | Part A, Comparability | /06 |   |        |        |   |     | |
| |                                                                     |
|       | of Services           |     |   |        |        |   |     | |
| |                                                                     |
|       | Requirement           |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| A05   | Michigan Schools'     | 1   |   |        |        |   | 3   | |
| |                                                                     |
| G0018 | Implementation of     | 1/6 |   |        |        |   |     | |
| |                                                                     |
|       | Schoolwide Plans      | /06 |   |        |        |   |     | |
| |                                                                     |
|       | Under the NCLB        |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| A05   | Indiana Schools'      | 3   |   |        |        |   | 5   | |
| |                                                                     |
| G0034 | Implementation of     | /15 |   |        |        |   |     | |
| |                                                                     |
|       | Schoolwide Plans      | /07 |   |        |        |   |     | |
| |                                                                     |
|       | Under the NCLB        |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| A06   | Data Quality Review   | 10  |   |        |        |   | 5   | |
| |                                                                     |
| G0008 | of the Oklahoma       | /23 |   |        |        |   |     | |
| |                                                                     |
|       | Consolidated State    | /06 |   |        |        |   |     | |
| |                                                                     |
|       | Performance Report    |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| A09   | California Department | 1   |   | \*\*   |        |   | 6   | |
| |                                                                     |
| F0024 | of Education's        | 2/1 |   |        |        |   |     | |
| |                                                                     |
|       | Migrant Education     | /06 |   |        |        |   | ##  | |
| |                                                                     |
|       | Program               |     |   |        |        |   | ### | |
| |                                                                     |
|       |                       |     |   |        |        |   | #   | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| A09   | Data Quality Review   | 11  |   |        |        |   | 7   | |
| |                                                                     |
| G0009 | of Washington         | /14 |   |        |        |   |     | |
| |                                                                     |
|       | Consolidated State    | /06 |   |        |        |   |     | |
| |                                                                     |
|       | Performance Reports   |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| A09   | Arizona Department of | 3   |   |        | \$10,1 |   | 11  | |
| |                                                                     |
| G0020 | Education's Oversight | /26 |   |        | 85,915 |   |     | |
| |                                                                     |
|       | of the ESEA, Title I, | /07 |   |        |        |   |     | |
| |                                                                     |
|       | Part A Comparability  |     |   |        |        |   |     | |
| |                                                                     |
|       | of Services           |     |   |        |        |   |     | |
| |                                                                     |
|       | Requirement           |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| R     | Report Title          | D   |   | Ques   | Unsup  |   | No. | |
| |                                                                     |
| eport |                       | ate |   | tioned | ported |   | of  | |
| |                                                                     |
| N     |                       | Iss |   | C      | Costs  |   | R   | |
| |                                                                     |
| umber |                       | ued |   | osts\* |        |   | eco | |
| |                                                                     |
|       |                       |     |   |        |        |   | mm- | |
| |                                                                     |
|       |                       |     |   |        |        |   | end | |
| |                                                                     |
|       |                       |     |   |        |        |   | ati | |
| |                                                                     |
|       |                       |     |   |        |        |   | ons | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| **[OM |                       |     |   |        |        |   |     | |
| |                                                                     |
| ]{.un |                       |     |   |        |        |   |     | |
| |                                                                     |
| derli |                       |     |   |        |        |   |     | |
| |                                                                     |
| ne}** |                       |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| A19   | Audit of the          | 11  |   |        |        |   | 8   | |
| |                                                                     |
| G0007 | Department of         | /29 |   |        |        |   |     | |
| |                                                                     |
|       | Education FY2005 IT   | /06 |   |        |        |   |     | |
| |                                                                     |
|       | Equipment Inventory   |     |   |        |        |   |     | |
| |                                                                     |
|       |                       |     |   |        |        |   |     | |
| |                                                                     |
|       | *(OCFO also           |     |   |        |        |   |     | |
| |                                                                     |
|       | designated as an      |     |   |        |        |   |     | |
| |                                                                     |
|       | action official)*     |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| **[   |                       |     |   |        |        |   |     | |
| |                                                                     |
| OSERS |                       |     |   |        |        |   |     | |
| |                                                                     |
| ]{.un |                       |     |   |        |        |   |     | |
| |                                                                     |
| derli |                       |     |   |        |        |   |     | |
| |                                                                     |
| ne}** |                       |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| A06   | Results of five       | 3   |   | \      |        |   | 6   | |
| |                                                                     |
| F0019 | audits of the IDEA,   | /28 |   | $328,0 |        |   |     | |
| |                                                                     |
|       | Part B requirements   | /07 |   | 00,000 |        |   |     | |
| |                                                                     |
|       | at schools under the  |     |   |        |        |   |     | |
| |                                                                     |
|       | supervision of the    |     |   |        |        |   |     | |
| |                                                                     |
|       | U.S. Department of    |     |   |        |        |   |     | |
| |                                                                     |
|       | Interior's Bureau of  |     |   |        |        |   |     | |
| |                                                                     |
|       | Indian Affairs        |     |   |        |        |   |     | |
| |                                                                     |
|       |                       |     |   |        |        |   |     | |
| |                                                                     |
|       | *(Report was          |     |   |        |        |   |     | |
| |                                                                     |
|       | addressed to the      |     |   |        |        |   |     | |
| |                                                                     |
|       | Bureau of Indian      |     |   |        |        |   |     | |
| |                                                                     |
|       | Education, Department |     |   |        |        |   |     | |
| |                                                                     |
|       | of the Interior)*     |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| A06   | Results of our audit  | 3   |   |        |        |   | 4   | |
| |                                                                     |
| G0002 | of the IDEA, Part B   | /30 |   |        |        |   |     | |
| |                                                                     |
|       | requirements at       | /07 |   |        |        |   |     | |
| |                                                                     |
|       | schools under the     |     |   |        |        |   |     | |
| |                                                                     |
|       | supervision of the    |     |   |        |        |   |     | |
| |                                                                     |
|       | Department of         |     |   |        |        |   |     | |
| |                                                                     |
|       | Interior's Bureau of  |     |   |        |        |   |     | |
| |                                                                     |
|       | Indian Affairs        |     |   |        |        |   |     | |
| |                                                                     |
|       |                       |     |   |        |        |   |     | |
| |                                                                     |
|       | *(Report was          |     |   |        |        |   |     | |
| |                                                                     |
|       | addressed to the      |     |   |        |        |   |     | |
| |                                                                     |
|       | Deputy Secretary of   |     |   |        |        |   |     | |
| |                                                                     |
|       | Education, also       |     |   |        |        |   |     | |
| |                                                                     |
|       | designated as an      |     |   |        |        |   |     | |
| |                                                                     |
|       | action official)*     |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| **A   |                       |     |   |        |        |   |     | |
| |                                                                     |
| LTERN |                       |     |   |        |        |   |     | |
| |                                                                     |
| ATIVE |                       |     |   |        |        |   |     | |
| |                                                                     |
| PRODU |                       |     |   |        |        |   |     | |
| |                                                                     |
| CTS** |                       |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| # [OC |                       |     |   |        |        |   |     | |
| |                                                                     |
| FO]{. |                       |     |   |        |        |   |     | |
| |                                                                     |
| under |                       |     |   |        |        |   |     | |
| |                                                                     |
| line} |                       |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| # B17 | Federal               | #   |   |        |        |   | \*\ | |
| |                                                                     |
| G0006 | Intragovernmental     |  12 |   |        |        |   | *\* | |
| |                                                                     |
|       | Activity and Balances | /19 |   |        |        |   |     | |
| |                                                                     |
|       | Agreed-Upon           | /06 |   |        |        |   |     | |
| |                                                                     |
|       | Procedures Report     |     |   |        |        |   |     | |
| |                                                                     |
|       | *(Attestation         |     |   |        |        |   |     | |
| |                                                                     |
|       | Report)*              |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| # X17 | Final Management      | #   |   |        |        |   | \*\ | |
| |                                                                     |
| H0002 | Letter                |  12 |   |        |        |   | *\* | |
| |                                                                     |
|       |                       | /15 |   |        |        |   |     | |
| |                                                                     |
|       | Fiscal Years 2006 and | /06 |   |        |        |   |     | |
| |                                                                     |
|       | 2005 Financial        |     |   |        |        |   |     | |
| |                                                                     |
|       | Statement Audits U.S. |     |   |        |        |   |     | |
| |                                                                     |
|       | Department of         |     |   |        |        |   |     | |
| |                                                                     |
|       | Education and Federal |     |   |        |        |   |     | |
| |                                                                     |
|       | Student Aid           |     |   |        |        |   |     | |
| |                                                                     |
|       |                       |     |   |        |        |   |     | |
| |                                                                     |
|       | *(Management          |     |   |        |        |   |     | |
| |                                                                     |
|       | Information Report*   |     |   |        |        |   |     | |
| |                                                                     |
|       |                       |     |   |        |        |   |     | |
| |                                                                     |
|       | *- OCIO and FSA also  |     |   |        |        |   |     | |
| |                                                                     |
|       | designated as action  |     |   |        |        |   |     | |
| |                                                                     |
|       | officials)*           |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| # [OC |                       |     |   |        |        |   |     | |
| |                                                                     |
| IO]{. |                       |     |   |        |        |   |     | |
| |                                                                     |
| under |                       |     |   |        |        |   |     | |
| |                                                                     |
| line} |                       |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| #     | # Closure of Audit to | # 3 |   |        |        |   | N   | |
| |                                                                     |
|  A19- |  Determine the Accura | /22 |   |        |        |   | one | |
| |                                                                     |
| H0003 | cy of Amounts Billed  | /07 |   |        |        |   |     | |
| |                                                                     |
|       | to the U.S. Departmen |     |   |        |        |   |     | |
| |                                                                     |
|       | t of Education Under  |     |   |        |        |   |     | |
| |                                                                     |
|       | the Education Network |     |   |        |        |   |     | |
| |                                                                     |
|       |  Contract (GS-35F-438 |     |   |        |        |   |     | |
| |                                                                     |
|       | 1G) by Computer Scien |     |   |        |        |   |     | |
| |                                                                     |
|       | ces Corporation *(Aud |     |   |        |        |   |     | |
| |                                                                     |
|       | it Closeout Letter)*  |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| **    |                       |     |   |        |        |   |     | |
| |                                                                     |
| [OESE |                       |     |   |        |        |   |     | |
| |                                                                     |
| ]{.un |                       |     |   |        |        |   |     | |
| |                                                                     |
| derli |                       |     |   |        |        |   |     | |
| |                                                                     |
| ne}** |                       |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| X19   | Controls over         | 1   |   |        |        |   | \*\ | |
| |                                                                     |
| G0003 | Hurricane Education   | /31 |   |        |        |   | *\* | |
| |                                                                     |
|       | Recovery Funding      | /07 |   |        |        |   |     | |
| |                                                                     |
|       | *(Management          |     |   |        |        |   |     | |
| |                                                                     |
|       | Information Report -  |     |   |        |        |   |     | |
| |                                                                     |
|       | State and Local No.   |     |   |        |        |   |     | |
| |                                                                     |
|       | 07-03)*               |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| R     | Report Title          | D   |   | Ques   | Unsup  |   | No. | |
| |                                                                     |
| eport |                       | ate |   | tioned | ported |   | of  | |
| |                                                                     |
| N     |                       | Iss |   | C      | Costs  |   | R   | |
| |                                                                     |
| umber |                       | ued |   | osts\* |        |   | eco | |
| |                                                                     |
|       |                       |     |   |        |        |   | mm- | |
| |                                                                     |
|       |                       |     |   |        |        |   | end | |
| |                                                                     |
|       |                       |     |   |        |        |   | ati | |
| |                                                                     |
|       |                       |     |   |        |        |   | ons | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| *     |                       |     |   |        |        |   |     | |
| |                                                                     |
| *[OII |                       |     |   |        |        |   |     | |
| |                                                                     |
| ]{.un |                       |     |   |        |        |   |     | |
| |                                                                     |
| derli |                       |     |   |        |        |   |     | |
| |                                                                     |
| ne}** |                       |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| X19   | Controls Over         | 10  |   |        |        |   | \*\ | |
| |                                                                     |
| F0025 | Excessive Cash Draws  | /16 |   |        |        |   | *\* | |
| |                                                                     |
|       | by Grantees           | /06 |   |        |        |   |     | |
| |                                                                     |
|       |                       |     |   |        |        |   |     | |
| |                                                                     |
|       | *(Management          |     |   |        |        |   |     | |
| |                                                                     |
|       | Information Report*   |     |   |        |        |   |     | |
| |                                                                     |
|       |                       |     |   |        |        |   |     | |
| |                                                                     |
|       | *- State and Local    |     |   |        |        |   |     | |
| |                                                                     |
|       | No. 07-01)*           |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| **[O  |                       |     |   |        |        |   |     | |
| |                                                                     |
| ffice |                       |     |   |        |        |   |     | |
| |                                                                     |
| of    |                       |     |   |        |        |   |     | |
| |                                                                     |
| Pos   |                       |     |   |        |        |   |     | |
| |                                                                     |
| tseco |                       |     |   |        |        |   |     | |
| |                                                                     |
| ndary |                       |     |   |        |        |   |     | |
| |                                                                     |
| Educ  |                       |     |   |        |        |   |     | |
| |                                                                     |
| ation |                       |     |   |        |        |   |     | |
| |                                                                     |
| (OPE) |                       |     |   |        |        |   |     | |
| |                                                                     |
| ]{.un |                       |     |   |        |        |   |     | |
| |                                                                     |
| derli |                       |     |   |        |        |   |     | |
| |                                                                     |
| ne}** |                       |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| X19   | Controls Over         | 11  |   |        |        |   | \*\ | |
| |                                                                     |
| G0010 | Excessive Cash        | /15 |   |        |        |   | *\* | |
| |                                                                     |
|       | Drawdowns by Grantees | /06 |   |        |        |   |     | |
| |                                                                     |
|       |                       |     |   |        |        |   |     | |
| |                                                                     |
|       | *(Management          |     |   |        |        |   |     | |
| |                                                                     |
|       | Information Report -  |     |   |        |        |   |     | |
| |                                                                     |
|       | State and Local No.   |     |   |        |        |   |     | |
| |                                                                     |
|       | 07-02)*               |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| **[   |                       |     |   |        |        |   |     | |
| |                                                                     |
| OPEPD |                       |     |   |        |        |   |     | |
| |                                                                     |
| ]{.un |                       |     |   |        |        |   |     | |
| |                                                                     |
| derli |                       |     |   |        |        |   |     | |
| |                                                                     |
| ne}** |                       |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| B17   | Office of Inspector   | 1   |   |        |        |   | N   | |
| |                                                                     |
| H0001 | General's Independent | /29 |   |        |        |   | one | |
| |                                                                     |
|       | Report on the U.S.    | /07 |   |        |        |   |     | |
| |                                                                     |
|       | Department of         |     |   |        |        |   |     | |
| |                                                                     |
|       | Education's Detailed  |     |   |        |        |   |     | |
| |                                                                     |
|       | Accounting of Fiscal  |     |   |        |        |   |     | |
| |                                                                     |
|       | Year 2006 Drug        |     |   |        |        |   |     | |
| |                                                                     |
|       | Control Funds, dated  |     |   |        |        |   |     | |
| |                                                                     |
|       | January 24, 2007      |     |   |        |        |   |     | |
| |                                                                     |
|       |                       |     |   |        |        |   |     | |
| |                                                                     |
|       | *(Attestation         |     |   |        |        |   |     | |
| |                                                                     |
|       | Report)*              |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
| |                                                                     |
| \*    |                       |     |   |        |        |   |     | |
| |                                                                     |
| For   |                       |     |   |        |        |   |     | |
| |                                                                     |
| pur   |                       |     |   |        |        |   |     | |
| |                                                                     |
| poses |                       |     |   |        |        |   |     | |
| |                                                                     |
| of    |                       |     |   |        |        |   |     | |
| |                                                                     |
| this  |                       |     |   |        |        |   |     | |
| |                                                                     |
| sche  |                       |     |   |        |        |   |     | |
| |                                                                     |
| dule, |                       |     |   |        |        |   |     | |
| |                                                                     |
| quest |                       |     |   |        |        |   |     | |
| |                                                                     |
| ioned |                       |     |   |        |        |   |     | |
| |                                                                     |
| costs |                       |     |   |        |        |   |     | |
| |                                                                     |
| may   |                       |     |   |        |        |   |     | |
| |                                                                     |
| in    |                       |     |   |        |        |   |     | |
| |                                                                     |
| clude |                       |     |   |        |        |   |     | |
| |                                                                     |
| other |                       |     |   |        |        |   |     | |
| |                                                                     |
| r     |                       |     |   |        |        |   |     | |
| |                                                                     |
| ecomm |                       |     |   |        |        |   |     | |
| |                                                                     |
| ended |                       |     |   |        |        |   |     | |
| |                                                                     |
| r     |                       |     |   |        |        |   |     | |
| |                                                                     |
| ecove |                       |     |   |        |        |   |     | |
| |                                                                     |
| ries. |                       |     |   |        |        |   |     | |
| |                                                                     |
| P     |                       |     |   |        |        |   |     | |
| |                                                                     |
| lease |                       |     |   |        |        |   |     | |
| |                                                                     |
| see   |                       |     |   |        |        |   |     | |
| |                                                                     |
| foo   |                       |     |   |        |        |   |     | |
| |                                                                     |
| tnote |                       |     |   |        |        |   |     | |
| |                                                                     |
| 3     |                       |     |   |        |        |   |     | |
| |                                                                     |
| under |                       |     |   |        |        |   |     | |
| |                                                                     |
| Table |                       |     |   |        |        |   |     | |
| |                                                                     |
| 4 for |                       |     |   |        |        |   |     | |
| |                                                                     |
| addit |                       |     |   |        |        |   |     | |
| |                                                                     |
| ional |                       |     |   |        |        |   |     | |
| |                                                                     |
| i     |                       |     |   |        |        |   |     | |
| |                                                                     |
| nform |                       |     |   |        |        |   |     | |
| |                                                                     |
| ation |                       |     |   |        |        |   |     | |
| |                                                                     |
| rega  |                       |     |   |        |        |   |     | |
| |                                                                     |
| rding |                       |     |   |        |        |   |     | |
| |                                                                     |
| quest |                       |     |   |        |        |   |     | |
| |                                                                     |
| ioned |                       |     |   |        |        |   |     | |
| |                                                                     |
| and   |                       |     |   |        |        |   |     | |
| |                                                                     |
| u     |                       |     |   |        |        |   |     | |
| |                                                                     |
| nsupp |                       |     |   |        |        |   |     | |
| |                                                                     |
| orted |                       |     |   |        |        |   |     | |
| |                                                                     |
| c     |                       |     |   |        |        |   |     | |
| |                                                                     |
| osts. |                       |     |   |        |        |   |     | |
| |                                                                     |
|       |                       |     |   |        |        |   |     | |
| |                                                                     |
| \*\*  |                       |     |   |        |        |   |     | |
| |                                                                     |
| We    |                       |     |   |        |        |   |     | |
| |                                                                     |
| ident |                       |     |   |        |        |   |     | |
| |                                                                     |
| ified |                       |     |   |        |        |   |     | |
| |                                                                     |
| s     |                       |     |   |        |        |   |     | |
| |                                                                     |
| ignif |                       |     |   |        |        |   |     | |
| |                                                                     |
| icant |                       |     |   |        |        |   |     | |
| |                                                                     |
| nu    |                       |     |   |        |        |   |     | |
| |                                                                     |
| mbers |                       |     |   |        |        |   |     | |
| |                                                                     |
| of    |                       |     |   |        |        |   |     | |
| |                                                                     |
| ineli |                       |     |   |        |        |   |     | |
| |                                                                     |
| gible |                       |     |   |        |        |   |     | |
| |                                                                     |
| chi   |                       |     |   |        |        |   |     | |
| |                                                                     |
| ldren |                       |     |   |        |        |   |     | |
| |                                                                     |
| in    |                       |     |   |        |        |   |     | |
| |                                                                     |
| this  |                       |     |   |        |        |   |     | |
| |                                                                     |
| re    |                       |     |   |        |        |   |     | |
| |                                                                     |
| port, |                       |     |   |        |        |   |     | |
| |                                                                     |
| but   |                       |     |   |        |        |   |     | |
| |                                                                     |
| did   |                       |     |   |        |        |   |     | |
| |                                                                     |
| not   |                       |     |   |        |        |   |     | |
| |                                                                     |
| pr    |                       |     |   |        |        |   |     | |
| |                                                                     |
| oject |                       |     |   |        |        |   |     | |
| |                                                                     |
| esti  |                       |     |   |        |        |   |     | |
| |                                                                     |
| mated |                       |     |   |        |        |   |     | |
| |                                                                     |
| quest |                       |     |   |        |        |   |     | |
| |                                                                     |
| ioned |                       |     |   |        |        |   |     | |
| |                                                                     |
| c     |                       |     |   |        |        |   |     | |
| |                                                                     |
| osts. |                       |     |   |        |        |   |     | |
| |                                                                     |
| We    |                       |     |   |        |        |   |     | |
| |                                                                     |
| r     |                       |     |   |        |        |   |     | |
| |                                                                     |
| ecomm |                       |     |   |        |        |   |     | |
| |                                                                     |
| ended |                       |     |   |        |        |   |     | |
| |                                                                     |
| that  |                       |     |   |        |        |   |     | |
| |                                                                     |
| more  |                       |     |   |        |        |   |     | |
| |                                                                     |
| tho   |                       |     |   |        |        |   |     | |
| |                                                                     |
| rough |                       |     |   |        |        |   |     | |
| |                                                                     |
| re    |                       |     |   |        |        |   |     | |
| |                                                                     |
| views |                       |     |   |        |        |   |     | |
| |                                                                     |
| be    |                       |     |   |        |        |   |     | |
| |                                                                     |
| cond  |                       |     |   |        |        |   |     | |
| |                                                                     |
| ucted |                       |     |   |        |        |   |     | |
| |                                                                     |
| to    |                       |     |   |        |        |   |     | |
| |                                                                     |
| dete  |                       |     |   |        |        |   |     | |
| |                                                                     |
| rmine |                       |     |   |        |        |   |     | |
| |                                                                     |
| the   |                       |     |   |        |        |   |     | |
| |                                                                     |
| total |                       |     |   |        |        |   |     | |
| |                                                                     |
| nu    |                       |     |   |        |        |   |     | |
| |                                                                     |
| mbers |                       |     |   |        |        |   |     | |
| |                                                                     |
| of    |                       |     |   |        |        |   |     | |
| |                                                                     |
| ineli |                       |     |   |        |        |   |     | |
| |                                                                     |
| gible |                       |     |   |        |        |   |     | |
| |                                                                     |
| chi   |                       |     |   |        |        |   |     | |
| |                                                                     |
| ldren |                       |     |   |        |        |   |     | |
| |                                                                     |
| and   |                       |     |   |        |        |   |     | |
| |                                                                     |
| the   |                       |     |   |        |        |   |     | |
| |                                                                     |
| r     |                       |     |   |        |        |   |     | |
| |                                                                     |
| eturn |                       |     |   |        |        |   |     | |
| |                                                                     |
| of    |                       |     |   |        |        |   |     | |
| |                                                                     |
| funds |                       |     |   |        |        |   |     | |
| |                                                                     |
| exp   |                       |     |   |        |        |   |     | |
| |                                                                     |
| ended |                       |     |   |        |        |   |     | |
| |                                                                     |
| for   |                       |     |   |        |        |   |     | |
| |                                                                     |
| the   |                       |     |   |        |        |   |     | |
| |                                                                     |
| ineli |                       |     |   |        |        |   |     | |
| |                                                                     |
| gible |                       |     |   |        |        |   |     | |
| |                                                                     |
| chi   |                       |     |   |        |        |   |     | |
| |                                                                     |
| ldren |                       |     |   |        |        |   |     | |
| |                                                                     |
| f     |                       |     |   |        |        |   |     | |
| |                                                                     |
| ound. |                       |     |   |        |        |   |     | |
| |                                                                     |
|       |                       |     |   |        |        |   |     | |
| |                                                                     |
| \     |                       |     |   |        |        |   |     | |
| |                                                                     |
| *\*\* |                       |     |   |        |        |   |     | |
| |                                                                     |
| *A    |                       |     |   |        |        |   |     | |
| |                                                                     |
| ttest |                       |     |   |        |        |   |     | |
| |                                                                     |
| ation |                       |     |   |        |        |   |     | |
| |                                                                     |
| R     |                       |     |   |        |        |   |     | |
| |                                                                     |
| eport |                       |     |   |        |        |   |     | |
| |                                                                     |
| B17G  |                       |     |   |        |        |   |     | |
| |                                                                     |
| 0006* |                       |     |   |        |        |   |     | |
| |                                                                     |
| made  |                       |     |   |        |        |   |     | |
| |                                                                     |
| 2     |                       |     |   |        |        |   |     | |
| |                                                                     |
| *su   |                       |     |   |        |        |   |     | |
| |                                                                     |
| ggest |                       |     |   |        |        |   |     | |
| |                                                                     |
| ions* |                       |     |   |        |        |   |     | |
| |                                                                     |
| that  |                       |     |   |        |        |   |     | |
| |                                                                     |
| are   |                       |     |   |        |        |   |     | |
| |                                                                     |
| not   |                       |     |   |        |        |   |     | |
| |                                                                     |
| tr    |                       |     |   |        |        |   |     | |
| |                                                                     |
| acked |                       |     |   |        |        |   |     | |
| |                                                                     |
| for   |                       |     |   |        |        |   |     | |
| |                                                                     |
| audit |                       |     |   |        |        |   |     | |
| |                                                                     |
| resol |                       |     |   |        |        |   |     | |
| |                                                                     |
| ution |                       |     |   |        |        |   |     | |
| |                                                                     |
| purp  |                       |     |   |        |        |   |     | |
| |                                                                     |
| oses. |                       |     |   |        |        |   |     | |
| |                                                                     |
|       |                       |     |   |        |        |   |     | |
| |                                                                     |
| *     |                       |     |   |        |        |   |     | |
| |                                                                     |
| Manag |                       |     |   |        |        |   |     | |
| |                                                                     |
| ement |                       |     |   |        |        |   |     | |
| |                                                                     |
| I     |                       |     |   |        |        |   |     | |
| |                                                                     |
| nform |                       |     |   |        |        |   |     | |
| |                                                                     |
| ation |                       |     |   |        |        |   |     | |
| |                                                                     |
| R     |                       |     |   |        |        |   |     | |
| |                                                                     |
| eport |                       |     |   |        |        |   |     | |
| |                                                                     |
| X17H  |                       |     |   |        |        |   |     | |
| |                                                                     |
| 0002* |                       |     |   |        |        |   |     | |
| |                                                                     |
| made  |                       |     |   |        |        |   |     | |
| |                                                                     |
| 53    |                       |     |   |        |        |   |     | |
| |                                                                     |
| re    |                       |     |   |        |        |   |     | |
| |                                                                     |
| comme |                       |     |   |        |        |   |     | |
| |                                                                     |
| ndati |                       |     |   |        |        |   |     | |
| |                                                                     |
| ons - |                       |     |   |        |        |   |     | |
| |                                                                     |
| 4 to  |                       |     |   |        |        |   |     | |
| |                                                                     |
| the   |                       |     |   |        |        |   |     | |
| |                                                                     |
| D     |                       |     |   |        |        |   |     | |
| |                                                                     |
| epart |                       |     |   |        |        |   |     | |
| |                                                                     |
| ment, |                       |     |   |        |        |   |     | |
| |                                                                     |
| 47 to |                       |     |   |        |        |   |     | |
| |                                                                     |
| FSA,  |                       |     |   |        |        |   |     | |
| |                                                                     |
| and 2 |                       |     |   |        |        |   |     | |
| |                                                                     |
|       |                       |     |   |        |        |   |     | |
| |                                                                     |
| to    |                       |     |   |        |        |   |     | |
| |                                                                     |
| both. |                       |     |   |        |        |   |     | |
| |                                                                     |
| (     |                       |     |   |        |        |   |     | |
| |                                                                     |
| Manag |                       |     |   |        |        |   |     | |
| |                                                                     |
| ement |                       |     |   |        |        |   |     | |
| |                                                                     |
| i     |                       |     |   |        |        |   |     | |
| |                                                                     |
| nform |                       |     |   |        |        |   |     | |
| |                                                                     |
| ation |                       |     |   |        |        |   |     | |
| |                                                                     |
| re    |                       |     |   |        |        |   |     | |
| |                                                                     |
| ports |                       |     |   |        |        |   |     | |
| |                                                                     |
| us    |                       |     |   |        |        |   |     | |
| |                                                                     |
| ually |                       |     |   |        |        |   |     | |
| |                                                                     |
| make  |                       |     |   |        |        |   |     | |
| |                                                                     |
| "su   |                       |     |   |        |        |   |     | |
| |                                                                     |
| ggest |                       |     |   |        |        |   |     | |
| |                                                                     |
| ions" |                       |     |   |        |        |   |     | |
| |                                                                     |
| in    |                       |     |   |        |        |   |     | |
| |                                                                     |
| stead |                       |     |   |        |        |   |     | |
| |                                                                     |
| of    |                       |     |   |        |        |   |     | |
| |                                                                     |
| recom |                       |     |   |        |        |   |     | |
| |                                                                     |
| menda |                       |     |   |        |        |   |     | |
| |                                                                     |
| tions |                       |     |   |        |        |   |     | |
| |                                                                     |
| that  |                       |     |   |        |        |   |     | |
| |                                                                     |
| are   |                       |     |   |        |        |   |     | |
| |                                                                     |
| not   |                       |     |   |        |        |   |     | |
| |                                                                     |
|       |                       |     |   |        |        |   |     | |
| |                                                                     |
| tr    |                       |     |   |        |        |   |     | |
| |                                                                     |
| acked |                       |     |   |        |        |   |     | |
| |                                                                     |
| for   |                       |     |   |        |        |   |     | |
| |                                                                     |
| audit |                       |     |   |        |        |   |     | |
| |                                                                     |
| resol |                       |     |   |        |        |   |     | |
| |                                                                     |
| ution |                       |     |   |        |        |   |     | |
| |                                                                     |
| purpo |                       |     |   |        |        |   |     | |
| |                                                                     |
| ses.) |                       |     |   |        |        |   |     | |
| |                                                                     |
|       |                       |     |   |        |        |   |     | |
| |                                                                     |
| *     |                       |     |   |        |        |   |     | |
| |                                                                     |
| Manag |                       |     |   |        |        |   |     | |
| |                                                                     |
| ement |                       |     |   |        |        |   |     | |
| |                                                                     |
| I     |                       |     |   |        |        |   |     | |
| |                                                                     |
| nform |                       |     |   |        |        |   |     | |
| |                                                                     |
| ation |                       |     |   |        |        |   |     | |
| |                                                                     |
| R     |                       |     |   |        |        |   |     | |
| |                                                                     |
| eport |                       |     |   |        |        |   |     | |
| |                                                                     |
| X19F  |                       |     |   |        |        |   |     | |
| |                                                                     |
| 0025* |                       |     |   |        |        |   |     | |
| |                                                                     |
| made  |                       |     |   |        |        |   |     | |
| |                                                                     |
| 2     |                       |     |   |        |        |   |     | |
| |                                                                     |
| s     |                       |     |   |        |        |   |     | |
| |                                                                     |
| ugges |                       |     |   |        |        |   |     | |
| |                                                                     |
| tions |                       |     |   |        |        |   |     | |
| |                                                                     |
| that  |                       |     |   |        |        |   |     | |
| |                                                                     |
| are   |                       |     |   |        |        |   |     | |
| |                                                                     |
| not   |                       |     |   |        |        |   |     | |
| |                                                                     |
| tr    |                       |     |   |        |        |   |     | |
| |                                                                     |
| acked |                       |     |   |        |        |   |     | |
| |                                                                     |
| for   |                       |     |   |        |        |   |     | |
| |                                                                     |
| audit |                       |     |   |        |        |   |     | |
| |                                                                     |
| resol |                       |     |   |        |        |   |     | |
| |                                                                     |
| ution |                       |     |   |        |        |   |     | |
| |                                                                     |
| purp  |                       |     |   |        |        |   |     | |
| |                                                                     |
| oses. |                       |     |   |        |        |   |     | |
| |                                                                     |
|       |                       |     |   |        |        |   |     | |
| |                                                                     |
| *     |                       |     |   |        |        |   |     | |
| |                                                                     |
| Manag |                       |     |   |        |        |   |     | |
| |                                                                     |
| ement |                       |     |   |        |        |   |     | |
| |                                                                     |
| I     |                       |     |   |        |        |   |     | |
| |                                                                     |
| nform |                       |     |   |        |        |   |     | |
| |                                                                     |
| ation |                       |     |   |        |        |   |     | |
| |                                                                     |
| R     |                       |     |   |        |        |   |     | |
| |                                                                     |
| eport |                       |     |   |        |        |   |     | |
| |                                                                     |
| X19G  |                       |     |   |        |        |   |     | |
| |                                                                     |
| 0003* |                       |     |   |        |        |   |     | |
| |                                                                     |
| made  |                       |     |   |        |        |   |     | |
| |                                                                     |
| 4     |                       |     |   |        |        |   |     | |
| |                                                                     |
| s     |                       |     |   |        |        |   |     | |
| |                                                                     |
| ugges |                       |     |   |        |        |   |     | |
| |                                                                     |
| tions |                       |     |   |        |        |   |     | |
| |                                                                     |
| that  |                       |     |   |        |        |   |     | |
| |                                                                     |
| are   |                       |     |   |        |        |   |     | |
| |                                                                     |
| not   |                       |     |   |        |        |   |     | |
| |                                                                     |
| tr    |                       |     |   |        |        |   |     | |
| |                                                                     |
| acked |                       |     |   |        |        |   |     | |
| |                                                                     |
| for   |                       |     |   |        |        |   |     | |
| |                                                                     |
| audit |                       |     |   |        |        |   |     | |
| |                                                                     |
| resol |                       |     |   |        |        |   |     | |
| |                                                                     |
| ution |                       |     |   |        |        |   |     | |
| |                                                                     |
| purp  |                       |     |   |        |        |   |     | |
| |                                                                     |
| oses. |                       |     |   |        |        |   |     | |
| |                                                                     |
|       |                       |     |   |        |        |   |     | |
| |                                                                     |
| *     |                       |     |   |        |        |   |     | |
| |                                                                     |
| Manag |                       |     |   |        |        |   |     | |
| |                                                                     |
| ement |                       |     |   |        |        |   |     | |
| |                                                                     |
| I     |                       |     |   |        |        |   |     | |
| |                                                                     |
| nform |                       |     |   |        |        |   |     | |
| |                                                                     |
| ation |                       |     |   |        |        |   |     | |
| |                                                                     |
| R     |                       |     |   |        |        |   |     | |
| |                                                                     |
| eport |                       |     |   |        |        |   |     | |
| |                                                                     |
| X19G  |                       |     |   |        |        |   |     | |
| |                                                                     |
| 0010* |                       |     |   |        |        |   |     | |
| |                                                                     |
| made  |                       |     |   |        |        |   |     | |
| |                                                                     |
| 3     |                       |     |   |        |        |   |     | |
| |                                                                     |
| s     |                       |     |   |        |        |   |     | |
| |                                                                     |
| ugges |                       |     |   |        |        |   |     | |
| |                                                                     |
| tions |                       |     |   |        |        |   |     | |
| |                                                                     |
| that  |                       |     |   |        |        |   |     | |
| |                                                                     |
| are   |                       |     |   |        |        |   |     | |
| |                                                                     |
| not   |                       |     |   |        |        |   |     | |
| |                                                                     |
| tr    |                       |     |   |        |        |   |     | |
| |                                                                     |
| acked |                       |     |   |        |        |   |     | |
| |                                                                     |
| for   |                       |     |   |        |        |   |     | |
| |                                                                     |
| audit |                       |     |   |        |        |   |     | |
| |                                                                     |
| resol |                       |     |   |        |        |   |     | |
| |                                                                     |
| ution |                       |     |   |        |        |   |     | |
| |                                                                     |
| purp  |                       |     |   |        |        |   |     | |
| |                                                                     |
| oses. |                       |     |   |        |        |   |     | |
| |                                                                     |
|       |                       |     |   |        |        |   |     | |
| |                                                                     |
| **[D  |                       |     |   |        |        |   |     | |
| |                                                                     |
| ESCRI |                       |     |   |        |        |   |     | |
| |                                                                     |
| PTION |                       |     |   |        |        |   |     | |
| |                                                                     |
| OF    |                       |     |   |        |        |   |     | |
| |                                                                     |
| A     |                       |     |   |        |        |   |     | |
| |                                                                     |
| LTERN |                       |     |   |        |        |   |     | |
| |                                                                     |
| ATIVE |                       |     |   |        |        |   |     | |
| |                                                                     |
| PRO   |                       |     |   |        |        |   |     | |
| |                                                                     |
| DUCTS |                       |     |   |        |        |   |     | |
| |                                                                     |
| ]{.un |                       |     |   |        |        |   |     | |
| |                                                                     |
| derli |                       |     |   |        |        |   |     | |
| |                                                                     |
| ne}** |                       |     |   |        |        |   |     | |
| |                                                                     |
|       |                       |     |   |        |        |   |     | |
| |                                                                     |
| *A    |                       |     |   |        |        |   |     | |
| |                                                                     |
| ttest |                       |     |   |        |        |   |     | |
| |                                                                     |
| ation |                       |     |   |        |        |   |     | |
| |                                                                     |
| rep   |                       |     |   |        |        |   |     | |
| |                                                                     |
| orts* |                       |     |   |        |        |   |     | |
| |                                                                     |
| c     |                       |     |   |        |        |   |     | |
| |                                                                     |
| onvey |                       |     |   |        |        |   |     | |
| |                                                                     |
| the   |                       |     |   |        |        |   |     | |
| |                                                                     |
| re    |                       |     |   |        |        |   |     | |
| |                                                                     |
| sults |                       |     |   |        |        |   |     | |
| |                                                                     |
| of    |                       |     |   |        |        |   |     | |
| |                                                                     |
| a     |                       |     |   |        |        |   |     | |
| |                                                                     |
| ttest |                       |     |   |        |        |   |     | |
| |                                                                     |
| ation |                       |     |   |        |        |   |     | |
| |                                                                     |
| e     |                       |     |   |        |        |   |     | |
| |                                                                     |
| ngage |                       |     |   |        |        |   |     | |
| |                                                                     |
| ments |                       |     |   |        |        |   |     | |
| |                                                                     |
| perf  |                       |     |   |        |        |   |     | |
| |                                                                     |
| ormed |                       |     |   |        |        |   |     | |
| |                                                                     |
| w     |                       |     |   |        |        |   |     | |
| |                                                                     |
| ithin |                       |     |   |        |        |   |     | |
| |                                                                     |
| the   |                       |     |   |        |        |   |     | |
| |                                                                     |
| co    |                       |     |   |        |        |   |     | |
| |                                                                     |
| ntext |                       |     |   |        |        |   |     | |
| |                                                                     |
| of    |                       |     |   |        |        |   |     | |
| |                                                                     |
| their |                       |     |   |        |        |   |     | |
| |                                                                     |
| s     |                       |     |   |        |        |   |     | |
| |                                                                     |
| tated |                       |     |   |        |        |   |     | |
| |                                                                     |
| scope |                       |     |   |        |        |   |     | |
| |                                                                     |
| and   |                       |     |   |        |        |   |     | |
| |                                                                     |
| obj   |                       |     |   |        |        |   |     | |
| |                                                                     |
| ectiv |                       |     |   |        |        |   |     | |
| |                                                                     |
| e(s). |                       |     |   |        |        |   |     | |
| |                                                                     |
| A     |                       |     |   |        |        |   |     | |
| |                                                                     |
| ttest |                       |     |   |        |        |   |     | |
| |                                                                     |
| ation |                       |     |   |        |        |   |     | |
| |                                                                     |
| e     |                       |     |   |        |        |   |     | |
| |                                                                     |
| ngage |                       |     |   |        |        |   |     | |
| |                                                                     |
| ments |                       |     |   |        |        |   |     | |
| |                                                                     |
| can   |                       |     |   |        |        |   |     | |
| |                                                                     |
| cover |                       |     |   |        |        |   |     | |
| |                                                                     |
| a     |                       |     |   |        |        |   |     | |
| |                                                                     |
| broad |                       |     |   |        |        |   |     | |
| |                                                                     |
| range |                       |     |   |        |        |   |     | |
| |                                                                     |
| of    |                       |     |   |        |        |   |     | |
| |                                                                     |
| fina  |                       |     |   |        |        |   |     | |
| |                                                                     |
| ncial |                       |     |   |        |        |   |     | |
| |                                                                     |
| and   |                       |     |   |        |        |   |     | |
| |                                                                     |
| non   |                       |     |   |        |        |   |     | |
| |                                                                     |
| -fina |                       |     |   |        |        |   |     | |
| |                                                                     |
| ncial |                       |     |   |        |        |   |     | |
| |                                                                     |
| sub   |                       |     |   |        |        |   |     | |
| |                                                                     |
| jects |                       |     |   |        |        |   |     | |
| |                                                                     |
| and   |                       |     |   |        |        |   |     | |
| |                                                                     |
| can   |                       |     |   |        |        |   |     | |
| |                                                                     |
| be    |                       |     |   |        |        |   |     | |
| |                                                                     |
| part  |                       |     |   |        |        |   |     | |
| |                                                                     |
| of a  |                       |     |   |        |        |   |     | |
| |                                                                     |
| fina  |                       |     |   |        |        |   |     | |
| |                                                                     |
| ncial |                       |     |   |        |        |   |     | |
| |                                                                     |
| audit |                       |     |   |        |        |   |     | |
| |                                                                     |
| or    |                       |     |   |        |        |   |     | |
| |                                                                     |
| p     |                       |     |   |        |        |   |     | |
| |                                                                     |
| erfor |                       |     |   |        |        |   |     | |
| |                                                                     |
| mance |                       |     |   |        |        |   |     | |
| |                                                                     |
| a     |                       |     |   |        |        |   |     | |
| |                                                                     |
| udit. |                       |     |   |        |        |   |     | |
| |                                                                     |
| They  |                       |     |   |        |        |   |     | |
| |                                                                     |
| in    |                       |     |   |        |        |   |     | |
| |                                                                     |
| clude |                       |     |   |        |        |   |     | |
| |                                                                     |
| the   |                       |     |   |        |        |   |     | |
| |                                                                     |
| ex    |                       |     |   |        |        |   |     | |
| |                                                                     |
| amina |                       |     |   |        |        |   |     | |
| |                                                                     |
| tion, |                       |     |   |        |        |   |     | |
| |                                                                     |
| re    |                       |     |   |        |        |   |     | |
| |                                                                     |
| view, |                       |     |   |        |        |   |     | |
| |                                                                     |
| or    |                       |     |   |        |        |   |     | |
| |                                                                     |
| p     |                       |     |   |        |        |   |     | |
| |                                                                     |
| erfor |                       |     |   |        |        |   |     | |
| |                                                                     |
| mance |                       |     |   |        |        |   |     | |
| |                                                                     |
| of    |                       |     |   |        |        |   |     | |
| |                                                                     |
| a     |                       |     |   |        |        |   |     | |
| |                                                                     |
| greed |                       |     |   |        |        |   |     | |
| |                                                                     |
| -upon |                       |     |   |        |        |   |     | |
| |                                                                     |
| proce |                       |     |   |        |        |   |     | |
| |                                                                     |
| dures |                       |     |   |        |        |   |     | |
| |                                                                     |
| on a  |                       |     |   |        |        |   |     | |
| |                                                                     |
| su    |                       |     |   |        |        |   |     | |
| |                                                                     |
| bject |                       |     |   |        |        |   |     | |
| |                                                                     |
| ma    |                       |     |   |        |        |   |     | |
| |                                                                     |
| tter, |                       |     |   |        |        |   |     | |
| |                                                                     |
| or an |                       |     |   |        |        |   |     | |
| |                                                                     |
| asse  |                       |     |   |        |        |   |     | |
| |                                                                     |
| rtion |                       |     |   |        |        |   |     | |
| |                                                                     |
| about |                       |     |   |        |        |   |     | |
| |                                                                     |
| a     |                       |     |   |        |        |   |     | |
| |                                                                     |
| su    |                       |     |   |        |        |   |     | |
| |                                                                     |
| bject |                       |     |   |        |        |   |     | |
| |                                                                     |
| m     |                       |     |   |        |        |   |     | |
| |                                                                     |
| atter |                       |     |   |        |        |   |     | |
| |                                                                     |
| and   |                       |     |   |        |        |   |     | |
| |                                                                     |
| repo  |                       |     |   |        |        |   |     | |
| |                                                                     |
| rting |                       |     |   |        |        |   |     | |
| |                                                                     |
| on    |                       |     |   |        |        |   |     | |
| |                                                                     |
| the   |                       |     |   |        |        |   |     | |
| |                                                                     |
| res   |                       |     |   |        |        |   |     | |
| |                                                                     |
| ults. |                       |     |   |        |        |   |     | |
| |                                                                     |
|       |                       |     |   |        |        |   |     | |
| |                                                                     |
| *     |                       |     |   |        |        |   |     | |
| |                                                                     |
| Audit |                       |     |   |        |        |   |     | |
| |                                                                     |
| clo   |                       |     |   |        |        |   |     | |
| |                                                                     |
| seout |                       |     |   |        |        |   |     | |
| |                                                                     |
| mem   |                       |     |   |        |        |   |     | |
| |                                                                     |
| orand |                       |     |   |        |        |   |     | |
| |                                                                     |
| a/let |                       |     |   |        |        |   |     | |
| |                                                                     |
| ters* |                       |     |   |        |        |   |     | |
| |                                                                     |
| are   |                       |     |   |        |        |   |     | |
| |                                                                     |
| i     |                       |     |   |        |        |   |     | |
| |                                                                     |
| ssued |                       |     |   |        |        |   |     | |
| |                                                                     |
| to    |                       |     |   |        |        |   |     | |
| |                                                                     |
| pr    |                       |     |   |        |        |   |     | |
| |                                                                     |
| ovide |                       |     |   |        |        |   |     | |
| |                                                                     |
| wr    |                       |     |   |        |        |   |     | |
| |                                                                     |
| itten |                       |     |   |        |        |   |     | |
| |                                                                     |
| no    |                       |     |   |        |        |   |     | |
| |                                                                     |
| tific |                       |     |   |        |        |   |     | |
| |                                                                     |
| ation |                       |     |   |        |        |   |     | |
| |                                                                     |
| to    |                       |     |   |        |        |   |     | |
| |                                                                     |
| aud   |                       |     |   |        |        |   |     | |
| |                                                                     |
| itees |                       |     |   |        |        |   |     | |
| |                                                                     |
| of    |                       |     |   |        |        |   |     | |
| |                                                                     |
| audit |                       |     |   |        |        |   |     | |
| |                                                                     |
| cl    |                       |     |   |        |        |   |     | |
| |                                                                     |
| osure |                       |     |   |        |        |   |     | |
| |                                                                     |
| when  |                       |     |   |        |        |   |     | |
| |                                                                     |
| the   |                       |     |   |        |        |   |     | |
| |                                                                     |
| dec   |                       |     |   |        |        |   |     | |
| |                                                                     |
| ision |                       |     |   |        |        |   |     | |
| |                                                                     |
| is    |                       |     |   |        |        |   |     | |
| |                                                                     |
| made  |                       |     |   |        |        |   |     | |
| |                                                                     |
| to    |                       |     |   |        |        |   |     | |
| |                                                                     |
| close |                       |     |   |        |        |   |     | |
| |                                                                     |
| an    |                       |     |   |        |        |   |     | |
| |                                                                     |
| assig |                       |     |   |        |        |   |     | |
| |                                                                     |
| nment |                       |     |   |        |        |   |     | |
| |                                                                     |
| wi    |                       |     |   |        |        |   |     | |
| |                                                                     |
| thout |                       |     |   |        |        |   |     | |
| |                                                                     |
| is    |                       |     |   |        |        |   |     | |
| |                                                                     |
| suing |                       |     |   |        |        |   |     | |
| |                                                                     |
| an    |                       |     |   |        |        |   |     | |
| |                                                                     |
| audit |                       |     |   |        |        |   |     | |
| |                                                                     |
| re    |                       |     |   |        |        |   |     | |
| |                                                                     |
| port. |                       |     |   |        |        |   |     | |
| |                                                                     |
|       |                       |     |   |        |        |   |     | |
| |                                                                     |
| *In   |                       |     |   |        |        |   |     | |
| |                                                                     |
| terim |                       |     |   |        |        |   |     | |
| |                                                                     |
| audit |                       |     |   |        |        |   |     | |
| |                                                                     |
| memor |                       |     |   |        |        |   |     | |
| |                                                                     |
| anda* |                       |     |   |        |        |   |     | |
| |                                                                     |
| are   |                       |     |   |        |        |   |     | |
| |                                                                     |
| used  |                       |     |   |        |        |   |     | |
| |                                                                     |
| to    |                       |     |   |        |        |   |     | |
| |                                                                     |
| n     |                       |     |   |        |        |   |     | |
| |                                                                     |
| otify |                       |     |   |        |        |   |     | |
| |                                                                     |
| Depar |                       |     |   |        |        |   |     | |
| |                                                                     |
| tment |                       |     |   |        |        |   |     | |
| |                                                                     |
| manag |                       |     |   |        |        |   |     | |
| |                                                                     |
| ement |                       |     |   |        |        |   |     | |
| |                                                                     |
| or    |                       |     |   |        |        |   |     | |
| |                                                                     |
| the   |                       |     |   |        |        |   |     | |
| |                                                                     |
| au    |                       |     |   |        |        |   |     | |
| |                                                                     |
| dited |                       |     |   |        |        |   |     | |
| |                                                                     |
| e     |                       |     |   |        |        |   |     | |
| |                                                                     |
| ntity |                       |     |   |        |        |   |     | |
| |                                                                     |
| of a  |                       |     |   |        |        |   |     | |
| |                                                                     |
| se    |                       |     |   |        |        |   |     | |
| |                                                                     |
| rious |                       |     |   |        |        |   |     | |
| |                                                                     |
| and   |                       |     |   |        |        |   |     | |
| |                                                                     |
| u     |                       |     |   |        |        |   |     | |
| |                                                                     |
| rgent |                       |     |   |        |        |   |     | |
| |                                                                     |
| cond  |                       |     |   |        |        |   |     | |
| |                                                                     |
| ition |                       |     |   |        |        |   |     | |
| |                                                                     |
| or    |                       |     |   |        |        |   |     | |
| |                                                                     |
| issue |                       |     |   |        |        |   |     | |
| |                                                                     |
| ident |                       |     |   |        |        |   |     | |
| |                                                                     |
| ified |                       |     |   |        |        |   |     | |
| |                                                                     |
| d     |                       |     |   |        |        |   |     | |
| |                                                                     |
| uring |                       |     |   |        |        |   |     | |
| |                                                                     |
| an    |                       |     |   |        |        |   |     | |
| |                                                                     |
| on-   |                       |     |   |        |        |   |     | |
| |                                                                     |
| going |                       |     |   |        |        |   |     | |
| |                                                                     |
| audit |                       |     |   |        |        |   |     | |
| |                                                                     |
| assig |                       |     |   |        |        |   |     | |
| |                                                                     |
| nment |                       |     |   |        |        |   |     | |
| |                                                                     |
| when  |                       |     |   |        |        |   |     | |
| |                                                                     |
| there |                       |     |   |        |        |   |     | |
| |                                                                     |
| is a  |                       |     |   |        |        |   |     | |
| |                                                                     |
| s     |                       |     |   |        |        |   |     | |
| |                                                                     |
| trong |                       |     |   |        |        |   |     | |
| |                                                                     |
| likel |                       |     |   |        |        |   |     | |
| |                                                                     |
| ihood |                       |     |   |        |        |   |     | |
| |                                                                     |
| that  |                       |     |   |        |        |   |     | |
| |                                                                     |
| wa    |                       |     |   |        |        |   |     | |
| |                                                                     |
| iting |                       |     |   |        |        |   |     | |
| |                                                                     |
| until |                       |     |   |        |        |   |     | |
| |                                                                     |
| the   |                       |     |   |        |        |   |     | |
| |                                                                     |
| audit |                       |     |   |        |        |   |     | |
| |                                                                     |
| rep   |                       |     |   |        |        |   |     | |
| |                                                                     |
| ort's |                       |     |   |        |        |   |     | |
| |                                                                     |
| iss   |                       |     |   |        |        |   |     | |
| |                                                                     |
| uance |                       |     |   |        |        |   |     | |
| |                                                                     |
| would |                       |     |   |        |        |   |     | |
| |                                                                     |
| r     |                       |     |   |        |        |   |     | |
| |                                                                     |
| esult |                       |     |   |        |        |   |     | |
| |                                                                     |
| in    |                       |     |   |        |        |   |     | |
| |                                                                     |
| the   |                       |     |   |        |        |   |     | |
| |                                                                     |
| loss  |                       |     |   |        |        |   |     | |
| |                                                                     |
| of an |                       |     |   |        |        |   |     | |
| |                                                                     |
| o     |                       |     |   |        |        |   |     | |
| |                                                                     |
| pport |                       |     |   |        |        |   |     | |
| |                                                                     |
| unity |                       |     |   |        |        |   |     | |
| |                                                                     |
| to    |                       |     |   |        |        |   |     | |
| |                                                                     |
| pr    |                       |     |   |        |        |   |     | |
| |                                                                     |
| event |                       |     |   |        |        |   |     | |
| |                                                                     |
| or    |                       |     |   |        |        |   |     | |
| |                                                                     |
| cu    |                       |     |   |        |        |   |     | |
| |                                                                     |
| rtail |                       |     |   |        |        |   |     | |
| |                                                                     |
| s     |                       |     |   |        |        |   |     | |
| |                                                                     |
| ignif |                       |     |   |        |        |   |     | |
| |                                                                     |
| icant |                       |     |   |        |        |   |     | |
| |                                                                     |
| harm  |                       |     |   |        |        |   |     | |
| |                                                                     |
| to    |                       |     |   |        |        |   |     | |
| |                                                                     |
| the   |                       |     |   |        |        |   |     | |
| |                                                                     |
| De    |                       |     |   |        |        |   |     | |
| |                                                                     |
| partm |                       |     |   |        |        |   |     | |
| |                                                                     |
| ent's |                       |     |   |        |        |   |     | |
| |                                                                     |
| inte  |                       |     |   |        |        |   |     | |
| |                                                                     |
| rest. |                       |     |   |        |        |   |     | |
| |                                                                     |
| *One  |                       |     |   |        |        |   |     | |
| |                                                                     |
| in    |                       |     |   |        |        |   |     | |
| |                                                                     |
| terim |                       |     |   |        |        |   |     | |
| |                                                                     |
| audit |                       |     |   |        |        |   |     | |
| |                                                                     |
| m     |                       |     |   |        |        |   |     | |
| |                                                                     |
| emora |                       |     |   |        |        |   |     | |
| |                                                                     |
| ndum* |                       |     |   |        |        |   |     | |
| |                                                                     |
| was   |                       |     |   |        |        |   |     | |
| |                                                                     |
| i     |                       |     |   |        |        |   |     | |
| |                                                                     |
| ssued |                       |     |   |        |        |   |     | |
| |                                                                     |
| d     |                       |     |   |        |        |   |     | |
| |                                                                     |
| uring |                       |     |   |        |        |   |     | |
| |                                                                     |
| the   |                       |     |   |        |        |   |     | |
| |                                                                     |
| SAR   |                       |     |   |        |        |   |     | |
| |                                                                     |
| 54    |                       |     |   |        |        |   |     | |
| |                                                                     |
| pe    |                       |     |   |        |        |   |     | |
| |                                                                     |
| riod. |                       |     |   |        |        |   |     | |
| |                                                                     |
| It is |                       |     |   |        |        |   |     | |
| |                                                                     |
| OIG   |                       |     |   |        |        |   |     | |
| |                                                                     |
| p     |                       |     |   |        |        |   |     | |
| |                                                                     |
| olicy |                       |     |   |        |        |   |     | |
| |                                                                     |
| to    |                       |     |   |        |        |   |     | |
| |                                                                     |
| in    |                       |     |   |        |        |   |     | |
| |                                                                     |
| clude |                       |     |   |        |        |   |     | |
| |                                                                     |
| in    |                       |     |   |        |        |   |     | |
| |                                                                     |
| terim |                       |     |   |        |        |   |     | |
| |                                                                     |
| audit |                       |     |   |        |        |   |     | |
| |                                                                     |
| memo  |                       |     |   |        |        |   |     | |
| |                                                                     |
| randa |                       |     |   |        |        |   |     | |
| |                                                                     |
| in    |                       |     |   |        |        |   |     | |
| |                                                                     |
| our   |                       |     |   |        |        |   |     | |
| |                                                                     |
| pr    |                       |     |   |        |        |   |     | |
| |                                                                     |
| oduct |                       |     |   |        |        |   |     | |
| |                                                                     |
| count |                       |     |   |        |        |   |     | |
| |                                                                     |
| but   |                       |     |   |        |        |   |     | |
| |                                                                     |
| not   |                       |     |   |        |        |   |     | |
| |                                                                     |
| in    |                       |     |   |        |        |   |     | |
| |                                                                     |
| divid |                       |     |   |        |        |   |     | |
| |                                                                     |
| ually |                       |     |   |        |        |   |     | |
| |                                                                     |
| ide   |                       |     |   |        |        |   |     | |
| |                                                                     |
| ntify |                       |     |   |        |        |   |     | |
| |                                                                     |
| them  |                       |     |   |        |        |   |     | |
| |                                                                     |
| in    |                       |     |   |        |        |   |     | |
| |                                                                     |
| SAR   |                       |     |   |        |        |   |     | |
| |                                                                     |
| Table |                       |     |   |        |        |   |     | |
| |                                                                     |
| 2,    |                       |     |   |        |        |   |     | |
| |                                                                     |
| nor   |                       |     |   |        |        |   |     | |
| |                                                                     |
| post  |                       |     |   |        |        |   |     | |
| |                                                                     |
| them  |                       |     |   |        |        |   |     | |
| |                                                                     |
| on    |                       |     |   |        |        |   |     | |
| |                                                                     |
| the   |                       |     |   |        |        |   |     | |
| |                                                                     |
| OIG   |                       |     |   |        |        |   |     | |
| |                                                                     |
| In    |                       |     |   |        |        |   |     | |
| |                                                                     |
| terne |                       |     |   |        |        |   |     | |
| |                                                                     |
| t/Int |                       |     |   |        |        |   |     | |
| |                                                                     |
| ranet |                       |     |   |        |        |   |     | |
| |                                                                     |
| we    |                       |     |   |        |        |   |     | |
| |                                                                     |
| bsite |                       |     |   |        |        |   |     | |
| |                                                                     |
| due   |                       |     |   |        |        |   |     | |
| |                                                                     |
| to    |                       |     |   |        |        |   |     | |
| |                                                                     |
| their |                       |     |   |        |        |   |     | |
| |                                                                     |
| pre-  |                       |     |   |        |        |   |     | |
| |                                                                     |
| decis |                       |     |   |        |        |   |     | |
| |                                                                     |
| ional |                       |     |   |        |        |   |     | |
| |                                                                     |
| and   |                       |     |   |        |        |   |     | |
| |                                                                     |
| in    |                       |     |   |        |        |   |     | |
| |                                                                     |
| terim |                       |     |   |        |        |   |     | |
| |                                                                     |
| na    |                       |     |   |        |        |   |     | |
| |                                                                     |
| ture. |                       |     |   |        |        |   |     | |
| |                                                                     |
|       |                       |     |   |        |        |   |     | |
| |                                                                     |
| *     |                       |     |   |        |        |   |     | |
| |                                                                     |
| Manag |                       |     |   |        |        |   |     | |
| |                                                                     |
| ement |                       |     |   |        |        |   |     | |
| |                                                                     |
| i     |                       |     |   |        |        |   |     | |
| |                                                                     |
| nform |                       |     |   |        |        |   |     | |
| |                                                                     |
| ation |                       |     |   |        |        |   |     | |
| |                                                                     |
| rep   |                       |     |   |        |        |   |     | |
| |                                                                     |
| orts* |                       |     |   |        |        |   |     | |
| |                                                                     |
| pr    |                       |     |   |        |        |   |     | |
| |                                                                     |
| ovide |                       |     |   |        |        |   |     | |
| |                                                                     |
| Depar |                       |     |   |        |        |   |     | |
| |                                                                     |
| tment |                       |     |   |        |        |   |     | |
| |                                                                     |
| manag |                       |     |   |        |        |   |     | |
| |                                                                     |
| ement |                       |     |   |        |        |   |     | |
| |                                                                     |
| with  |                       |     |   |        |        |   |     | |
| |                                                                     |
| i     |                       |     |   |        |        |   |     | |
| |                                                                     |
| nform |                       |     |   |        |        |   |     | |
| |                                                                     |
| ation |                       |     |   |        |        |   |     | |
| |                                                                     |
| de    |                       |     |   |        |        |   |     | |
| |                                                                     |
| rived |                       |     |   |        |        |   |     | |
| |                                                                     |
| from  |                       |     |   |        |        |   |     | |
| |                                                                     |
| a     |                       |     |   |        |        |   |     | |
| |                                                                     |
| udits |                       |     |   |        |        |   |     | |
| |                                                                     |
| (when |                       |     |   |        |        |   |     | |
| |                                                                     |
| the   |                       |     |   |        |        |   |     | |
| |                                                                     |
| iss   |                       |     |   |        |        |   |     | |
| |                                                                     |
| uance |                       |     |   |        |        |   |     | |
| |                                                                     |
| of an |                       |     |   |        |        |   |     | |
| |                                                                     |
| audit |                       |     |   |        |        |   |     | |
| |                                                                     |
| r     |                       |     |   |        |        |   |     | |
| |                                                                     |
| eport |                       |     |   |        |        |   |     | |
| |                                                                     |
| is    |                       |     |   |        |        |   |     | |
| |                                                                     |
| not   |                       |     |   |        |        |   |     | |
| |                                                                     |
| ap    |                       |     |   |        |        |   |     | |
| |                                                                     |
| propr |                       |     |   |        |        |   |     | |
| |                                                                     |
| iate) |                       |     |   |        |        |   |     | |
| |                                                                     |
| or    |                       |     |   |        |        |   |     | |
| |                                                                     |
| sp    |                       |     |   |        |        |   |     | |
| |                                                                     |
| ecial |                       |     |   |        |        |   |     | |
| |                                                                     |
| pro   |                       |     |   |        |        |   |     | |
| |                                                                     |
| jects |                       |     |   |        |        |   |     | |
| |                                                                     |
| that  |                       |     |   |        |        |   |     | |
| |                                                                     |
| may   |                       |     |   |        |        |   |     | |
| |                                                                     |
| be    |                       |     |   |        |        |   |     | |
| |                                                                     |
| u     |                       |     |   |        |        |   |     | |
| |                                                                     |
| seful |                       |     |   |        |        |   |     | |
| |                                                                     |
| in    |                       |     |   |        |        |   |     | |
| |                                                                     |
| its   |                       |     |   |        |        |   |     | |
| |                                                                     |
| pr    |                       |     |   |        |        |   |     | |
| |                                                                     |
| ogram |                       |     |   |        |        |   |     | |
| |                                                                     |
| admi  |                       |     |   |        |        |   |     | |
| |                                                                     |
| nistr |                       |     |   |        |        |   |     | |
| |                                                                     |
| ation |                       |     |   |        |        |   |     | |
| |                                                                     |
| or    |                       |     |   |        |        |   |     | |
| |                                                                     |
| co    |                       |     |   |        |        |   |     | |
| |                                                                     |
| nduct |                       |     |   |        |        |   |     | |
| |                                                                     |
| of    |                       |     |   |        |        |   |     | |
| |                                                                     |
| pr    |                       |     |   |        |        |   |     | |
| |                                                                     |
| ogram |                       |     |   |        |        |   |     | |
| |                                                                     |
| a     |                       |     |   |        |        |   |     | |
| |                                                                     |
| ctivi |                       |     |   |        |        |   |     | |
| |                                                                     |
| ties. |                       |     |   |        |        |   |     | |
| +-                                                                    |
| ------+-----------------------+-----+---+--------+--------+---+-----+ |
+-----------------------------------------------------------------------+

+-------+---+-------------------------------------------------+-----------+
| **    |   |                                                 |           |
| Table |   |                                                 |           |
| 3:    |   |                                                 |           |
| Other |   |                                                 |           |
| OIG   |   |                                                 |           |
| Re    |   |                                                 |           |
| ports |   |                                                 |           |
| on    |   |                                                 |           |
| Depar |   |                                                 |           |
| tment |   |                                                 |           |
| Pro   |   |                                                 |           |
| grams |   |                                                 |           |
| and   |   |                                                 |           |
| Ac    |   |                                                 |           |
| tivit |   |                                                 |           |
| ies** |   |                                                 |           |
|       |   |                                                 |           |
| **(Oc |   |                                                 |           |
| tober |   |                                                 |           |
| 1,    |   |                                                 |           |
| 2006, |   |                                                 |           |
| th    |   |                                                 |           |
| rough |   |                                                 |           |
| March |   |                                                 |           |
| 31,   |   |                                                 |           |
| 20    |   |                                                 |           |
| 07)** |   |                                                 |           |
+-------+---+-------------------------------------------------+-----------+
| *Se   |   |                                                 |           |
| ction |   |                                                 |           |
| 5(    |   |                                                 |           |
| a)(6) |   |                                                 |           |
| of    |   |                                                 |           |
| the   |   |                                                 |           |
| IG    |   |                                                 |           |
| Act,  |   |                                                 |           |
| as    |   |                                                 |           |
| am    |   |                                                 |           |
| ended |   |                                                 |           |
| req   |   |                                                 |           |
| uires |   |                                                 |           |
| a     |   |                                                 |           |
| li    |   |                                                 |           |
| sting |   |                                                 |           |
| of    |   |                                                 |           |
| each  |   |                                                 |           |
| r     |   |                                                 |           |
| eport |   |                                                 |           |
| comp  |   |                                                 |           |
| leted |   |                                                 |           |
| by    |   |                                                 |           |
| OIG   |   |                                                 |           |
| d     |   |                                                 |           |
| uring |   |                                                 |           |
| the   |   |                                                 |           |
| repo  |   |                                                 |           |
| rting |   |                                                 |           |
| per   |   |                                                 |           |
| iod.* |   |                                                 |           |
+-------+---+-------------------------------------------------+-----------+
| R     | R |                                                 | Date      |
| eport | e |                                                 |           |
| N     | p |                                                 | Issued    |
| umber | o |                                                 |           |
|       | r |                                                 |           |
|       | t |                                                 |           |
|       | T |                                                 |           |
|       | i |                                                 |           |
|       | t |                                                 |           |
|       | l |                                                 |           |
|       | e |                                                 |           |
+-------+---+-------------------------------------------------+-----------+
| # [F  |   |                                                 |           |
| SA]{. |   |                                                 |           |
| under |   |                                                 |           |
| line} |   |                                                 |           |
+-------+---+-------------------------------------------------+-----------+
| # L02 | R |                                                 | 3/12/07   |
| G0019 | e |                                                 |           |
|       | l |                                                 |           |
|       | o |                                                 |           |
|       | c |                                                 |           |
|       | a |                                                 |           |
|       | t |                                                 |           |
|       | i |                                                 |           |
|       | o |                                                 |           |
|       | n |                                                 |           |
|       | o |                                                 |           |
|       | f |                                                 |           |
|       | I |                                                 |           |
|       | r |                                                 |           |
|       | m |                                                 |           |
|       | a |                                                 |           |
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| # [OC |   |                                                 |           |
| IO]{. |   |                                                 |           |
| under |   |                                                 |           |
| line} |   |                                                 |           |
+-------+---+-------------------------------------------------+-----------+
| # L19 | C |                                                 | 2/16/07   |
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+-------+---+-------------------------------------------------+-----------+
| # [OE |   |                                                 |           |
| SE]{. |   |                                                 |           |
| under |   |                                                 |           |
| line} |   |                                                 |           |
+-------+---+-------------------------------------------------+-----------+
| S09   |   | An OIG Perspective on the Supplemental          | 11/28/06  |
| G0007 |   | Educational Services Provisions of the          |           |
|       |   | Elementary and Secondary Education Act          |           |
|       |   |                                                 |           |
|       |   | *(Special Project)*                             |           |
+-------+---+-------------------------------------------------+-----------+
| **[OM |   |                                                 |           |
| ]{.un |   |                                                 |           |
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| ne}** |   |                                                 |           |
+-------+---+-------------------------------------------------+-----------+
| I13-  | R |                                                 | 2/28/07   |
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+-------+---+-------------------------------------------------+-----------+
| **[D  |   |                                                 |           |
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| TABLE |   |                                                 |           |
| 3     |   |                                                 |           |
| PRO   |   |                                                 |           |
| DUCTS |   |                                                 |           |
| ]{.un |   |                                                 |           |
| derli |   |                                                 |           |
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| memor |   |                                                 |           |
| anda* |   |                                                 |           |
| are   |   |                                                 |           |
| pre   |   |                                                 |           |
| pared |   |                                                 |           |
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| rious |   |                                                 |           |
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| ition |   |                                                 |           |
| requ  |   |                                                 |           |
| iring |   |                                                 |           |
| imme  |   |                                                 |           |
| diate |   |                                                 |           |
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| manag |   |                                                 |           |
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| or is |   |                                                 |           |
| ident |   |                                                 |           |
| ified |   |                                                 |           |
| while |   |                                                 |           |
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| in    |   |                                                 |           |
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| lated |   |                                                 |           |
| to an |   |                                                 |           |
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| going |   |                                                 |           |
| assig |   |                                                 |           |
| nment |   |                                                 |           |
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| memo  |   |                                                 |           |
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| are   |   |                                                 |           |
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| we    |   |                                                 |           |
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| licly |   |                                                 |           |
| di    |   |                                                 |           |
| strib |   |                                                 |           |
| uted. |   |                                                 |           |
|       |   |                                                 |           |
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| spect |   |                                                 |           |
| ions* |   |                                                 |           |
| are   |   |                                                 |           |
| anal  |   |                                                 |           |
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| ev    |   |                                                 |           |
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| re    |   |                                                 |           |
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| forma |   |                                                 |           |
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| an    |   |                                                 |           |
| asses |   |                                                 |           |
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| effic |   |                                                 |           |
| iency |   |                                                 |           |
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| perat |   |                                                 |           |
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| perf  |   |                                                 |           |
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| in    |   |                                                 |           |
| accor |   |                                                 |           |
| dance |   |                                                 |           |
| with  |   |                                                 |           |
| the   |   |                                                 |           |
| 2005  |   |                                                 |           |
| P     |   |                                                 |           |
| resid |   |                                                 |           |
| ent's |   |                                                 |           |
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| uncil |   |                                                 |           |
| on    |   |                                                 |           |
| Inte  |   |                                                 |           |
| grity |   |                                                 |           |
| and   |   |                                                 |           |
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| iency |   |                                                 |           |
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| ality |   |                                                 |           |
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| tions |   |                                                 |           |
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| pprop |   |                                                 |           |
| riate |   |                                                 |           |
| to    |   |                                                 |           |
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| scope |   |                                                 |           |
| of    |   |                                                 |           |
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| tion. |   |                                                 |           |
|       |   |                                                 |           |
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| ecial |   |                                                 |           |
| proj  |   |                                                 |           |
| ects* |   |                                                 |           |
| are   |   |                                                 |           |
| work  |   |                                                 |           |
| that  |   |                                                 |           |
| r     |   |                                                 |           |
| esult |   |                                                 |           |
| in    |   |                                                 |           |
| the   |   |                                                 |           |
| iss   |   |                                                 |           |
| uance |   |                                                 |           |
| of a  |   |                                                 |           |
| pr    |   |                                                 |           |
| oduct |   |                                                 |           |
| or    |   |                                                 |           |
| r     |   |                                                 |           |
| eport |   |                                                 |           |
| that  |   |                                                 |           |
| is    |   |                                                 |           |
| not   |   |                                                 |           |
| cond  |   |                                                 |           |
| ucted |   |                                                 |           |
| in    |   |                                                 |           |
| full  |   |                                                 |           |
| compl |   |                                                 |           |
| iance |   |                                                 |           |
| with  |   |                                                 |           |
| the   |   |                                                 |           |
| a     |   |                                                 |           |
| udit, |   |                                                 |           |
| i     |   |                                                 |           |
| nspec |   |                                                 |           |
| tion, |   |                                                 |           |
| or    |   |                                                 |           |
| inv   |   |                                                 |           |
| estig |   |                                                 |           |
| ation |   |                                                 |           |
| stand |   |                                                 |           |
| ards. |   |                                                 |           |
+-------+---+-------------------------------------------------+-----------+

+---+-------------------------------------+----+-----------+---------+
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|   |                                     |    |           |         |
+---+-------------------------------------+----+-----------+---------+
|   |                                     | Nu | Ques      | Unsu    |
|   |                                     | mb | tioned^2^ | pported |
|   |                                     | er |           | ^3^     |
|   |                                     |    | Costs     |         |
|   |                                     |    |           | Costs   |
+---+-------------------------------------+----+-----------+---------+
| A | For which no management decision    | 56 | \$454,8   | 134,184 |
| . | has been made before the            |    | 70,025^4^ | ,860^4^ |
|   | commencement of the reporting       |    |           |         |
|   | period (as adjusted)                |    |           |         |
+---+-------------------------------------+----+-----------+---------+
| B | Which were issued during the        | 9  | \$56      | \$113,  |
| . | reporting period                    |    | 1,096,389 | 837,121 |
+---+-------------------------------------+----+-----------+---------+
|   | Subtotals (A + B)                   | 65 | \$1,01    | \$248,  |
|   |                                     |    | 5,966,414 | 021,981 |
+---+-------------------------------------+----+-----------+---------+
| C | For which a management decision was | 23 | \$3       | \$27,   |
| . | made during the reporting period    |    | 6,967,841 | 055,127 |
+---+-------------------------------------+----+-----------+---------+
|   |                                     | Nu | Q         | Unsu    |
|   |                                     | mb | uestioned | pported |
|   |                                     | er | Costs\*   | Costs   |
+---+-------------------------------------+----+-----------+---------+
|   | \(i\) Dollar value of disallowed    |    | \$3       | \$27,   |
|   | costs                               |    | 6,967,841 | 055,127 |
+---+-------------------------------------+----+-----------+---------+
|   | \(ii\) Dollar value of costs not    |    | \$0       | \$0     |
|   | disallowed                          |    |           |         |
+---+-------------------------------------+----+-----------+---------+
| D | For which no management decision    | 42 | \$97      | \$220,  |
| . | was made by the end of the          |    | 8,998,573 | 966,854 |
|   | reporting period                    |    |           |         |
+---+-------------------------------------+----+-----------+---------+
| E | For which no management decision    | 33 | \$41      | \$107,  |
| . | was made within six months of       |    | 7,902,184 | 129,733 |
|   | issuance                            |    |           |         |
+---+-------------------------------------+----+-----------+---------+
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| * |                                       |        |                |
+---+---------------------------------------+--------+----------------+
| * |                                       |        |                |
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| 5 |                                       |        |                |
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| s |                                       |        |                |
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| h |                                       |        |                |
| a |                                       |        |                |
| t |                                       |        |                |
| f |                                       |        |                |
| u |                                       |        |                |
| n |                                       |        |                |
| d |                                       |        |                |
| s |                                       |        |                |
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| p |                                       |        |                |
| u |                                       |        |                |
| t |                                       |        |                |
| t |                                       |        |                |
| o |                                       |        |                |
| b |                                       |        |                |
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| t |                                       |        |                |
| t |                                       |        |                |
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| r |                                       |        |                |
| u |                                       |        |                |
| s |                                       |        |                |
| e |                                       |        |                |
| b |                                       |        |                |
| y |                                       |        |                |
| m |                                       |        |                |
| a |                                       |        |                |
| n |                                       |        |                |
| a |                                       |        |                |
| g |                                       |        |                |
| e |                                       |        |                |
| m |                                       |        |                |
| e |                                       |        |                |
| n |                                       |        |                |
| t |                                       |        |                |
| . |                                       |        |                |
| * |                                       |        |                |
+---+---------------------------------------+--------+----------------+
| [ |                                       | #      | # Dollar Value |
| ] |                                       | Number |                |
| { |                                       |        |                |
| . |                                       |        |                |
| m |                                       |        |                |
| a |                                       |        |                |
| r |                                       |        |                |
| k |                                       |        |                |
| } |                                       |        |                |
+---+---------------------------------------+--------+----------------+
| A | For which no management decision has  | 5      | \              |
| . | been made before the commencement of  |        | $1,123,048,776 |
|   | the reporting period (as adjusted)    | ##     |                |
|   |                                       |        | ##             |
+---+---------------------------------------+--------+----------------+
| B | Which were issued during the          | ##  0  | ##  \$0        |
| . | reporting period                      |        |                |
|   |                                       | #      | ###            |
|   |                                       | ## []{ |                |
|   |                                       | .mark} |                |
+---+---------------------------------------+--------+----------------+
|   | Subtotals (A + B)                     | 5      | \              |
|   |                                       |        | $1,123,048,776 |
|   |                                       | ##     |                |
|   |                                       |        | ##             |
+---+---------------------------------------+--------+----------------+
| C | For which a management decision was   | ##     | ####           |
| . | made during the reporting period      |        |                |
|   |                                       | 2      | \$230,721,199  |
|   | > \(i\) Dollar value of               |        |                |
|   | > recommendations that were agreed to | ###    | \$0            |
|   | > by management                       |        |                |
|   | >                                     | 0      | ###            |
|   | > \(ii\) Dollar value of              |        |                |
|   | > recommendations that were not       | ###    |                |
|   | > agreed to by management             |        |                |
+---+---------------------------------------+--------+----------------+
| D | For which no management decision has  | ##  3  | \$892,327,577  |
| . | been made by the end of the reporting |        |                |
|   | period                                | ###    | ##             |
+---+---------------------------------------+--------+----------------+
| E | For which no management decision was  | ##  3  | \$892,327,577  |
| . | made within six months of issuance    |        |                |
|   |                                       | ###    | ##             |
+---+---------------------------------------+--------+----------------+
| \ |                                       |        |                |
| * |                                       |        |                |
| N |                                       |        |                |
| o |                                       |        |                |
| n |                                       |        |                |
| e |                                       |        |                |
| o |                                       |        |                |
| f |                                       |        |                |
| t |                                       |        |                |
| h |                                       |        |                |
| e |                                       |        |                |
| a |                                       |        |                |
| u |                                       |        |                |
| d |                                       |        |                |
| i |                                       |        |                |
| t |                                       |        |                |
| s |                                       |        |                |
| r |                                       |        |                |
| e |                                       |        |                |
| p |                                       |        |                |
| o |                                       |        |                |
| r |                                       |        |                |
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| e |                                       |        |                |
| d |                                       |        |                |
| i |                                       |        |                |
| n |                                       |        |                |
| t |                                       |        |                |
| h |                                       |        |                |
| i |                                       |        |                |
| s |                                       |        |                |
| t |                                       |        |                |
| a |                                       |        |                |
| b |                                       |        |                |
| l |                                       |        |                |
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| w |                                       |        |                |
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| r |                                       |        |                |
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| e |                                       |        |                |
| r |                                       |        |                |
| f |                                       |        |                |
| o |                                       |        |                |
| r |                                       |        |                |
| m |                                       |        |                |
| e |                                       |        |                |
| d |                                       |        |                |
| b |                                       |        |                |
| y |                                       |        |                |
| t |                                       |        |                |
| h |                                       |        |                |
| e |                                       |        |                |
| D |                                       |        |                |
| e |                                       |        |                |
| f |                                       |        |                |
| e |                                       |        |                |
| n |                                       |        |                |
| s |                                       |        |                |
| e |                                       |        |                |
| C |                                       |        |                |
| o |                                       |        |                |
| n |                                       |        |                |
| t |                                       |        |                |
| r |                                       |        |                |
| a |                                       |        |                |
| c |                                       |        |                |
| t |                                       |        |                |
| A |                                       |        |                |
| u |                                       |        |                |
| d |                                       |        |                |
| i |                                       |        |                |
| t |                                       |        |                |
| A |                                       |        |                |
| g |                                       |        |                |
| e |                                       |        |                |
| n |                                       |        |                |
| c |                                       |        |                |
| y |                                       |        |                |
| . |                                       |        |                |
+---+---------------------------------------+--------+----------------+

+---------+--------------------------------+--------+-------+---+--------+
| Table   |                                |        |       |   |        |
| 6:      |                                |        |       |   |        |
| Unr     |                                |        |       |   |        |
| esolved |                                |        |       |   |        |
| Reports |                                |        |       |   |        |
| Issued  |                                |        |       |   |        |
| Prior   |                                |        |       |   |        |
| to      |                                |        |       |   |        |
| October |                                |        |       |   |        |
| 1, 2006 |                                |        |       |   |        |
| \_\_\   |                                |        |       |   |        |
| _\_\_\_ |                                |        |       |   |        |
| \_\_\_\ |                                |        |       |   |        |
| _\_\_\_ |                                |        |       |   |        |
| \_\_\_\ |                                |        |       |   |        |
| _\_\_\_ |                                |        |       |   |        |
| \_\_\_\ |                                |        |       |   |        |
| _\_\_\_ |                                |        |       |   |        |
| \_\_\_\ |                                |        |       |   |        |
| _\_\_\_ |                                |        |       |   |        |
| \_\_\_\ |                                |        |       |   |        |
| _\_\_\_ |                                |        |       |   |        |
| \_\_\_\ |                                |        |       |   |        |
| _\_\_\_ |                                |        |       |   |        |
| \_\_\_\ |                                |        |       |   |        |
| _\_\_\_ |                                |        |       |   |        |
| \_\_\_\ |                                |        |       |   |        |
| _\_\_\_ |                                |        |       |   |        |
| \_\_\_\ |                                |        |       |   |        |
| _\_\_\_ |                                |        |       |   |        |
| \_\_\_\ |                                |        |       |   |        |
| _\_\_\_ |                                |        |       |   |        |
|         |                                |        |       |   |        |
| *S      |                                |        |       |   |        |
| ection* |                                |        |       |   |        |
| *5      |                                |        |       |   |        |
| (a)(10) |                                |        |       |   |        |
| of the  |                                |        |       |   |        |
| IG Act  |                                |        |       |   |        |
| as      |                                |        |       |   |        |
| amended |                                |        |       |   |        |
| r       |                                |        |       |   |        |
| equires |                                |        |       |   |        |
| a       |                                |        |       |   |        |
| listing |                                |        |       |   |        |
| of each |                                |        |       |   |        |
| report  |                                |        |       |   |        |
| issued  |                                |        |       |   |        |
| before  |                                |        |       |   |        |
| the     |                                |        |       |   |        |
| comme   |                                |        |       |   |        |
| ncement |                                |        |       |   |        |
| of the  |                                |        |       |   |        |
| re      |                                |        |       |   |        |
| porting |                                |        |       |   |        |
| period  |                                |        |       |   |        |
| for     |                                |        |       |   |        |
| which   |                                |        |       |   |        |
| no      |                                |        |       |   |        |
| man     |                                |        |       |   |        |
| agement |                                |        |       |   |        |
| de      |                                |        |       |   |        |
| cisions |                                |        |       |   |        |
| had     |                                |        |       |   |        |
| been    |                                |        |       |   |        |
| made by |                                |        |       |   |        |
| the end |                                |        |       |   |        |
| of the  |                                |        |       |   |        |
| re      |                                |        |       |   |        |
| porting |                                |        |       |   |        |
| period. |                                |        |       |   |        |
| (Status |                                |        |       |   |        |
| below   |                                |        |       |   |        |
| rep     |                                |        |       |   |        |
| resents |                                |        |       |   |        |
| c       |                                |        |       |   |        |
| omments |                                |        |       |   |        |
| p       |                                |        |       |   |        |
| rovided |                                |        |       |   |        |
| by the  |                                |        |       |   |        |
| Depa    |                                |        |       |   |        |
| rtment, |                                |        |       |   |        |
| c       |                                |        |       |   |        |
| omments |                                |        |       |   |        |
| agreed  |                                |        |       |   |        |
| to, or  |                                |        |       |   |        |
| do      |                                |        |       |   |        |
| cuments |                                |        |       |   |        |
| o       |                                |        |       |   |        |
| btained |                                |        |       |   |        |
| from    |                                |        |       |   |        |
| the     |                                |        |       |   |        |
| Depar   |                                |        |       |   |        |
| tment's |                                |        |       |   |        |
| t       |                                |        |       |   |        |
| racking |                                |        |       |   |        |
| system, |                                |        |       |   |        |
| A       |                                |        |       |   |        |
| ARTS.)* |                                |        |       |   |        |
|         |                                |        |       |   |        |
| <table> |                                |        |       |   |        |
| <co     |                                |        |       |   |        |
| lgroup> |                                |        |       |   |        |
| <col    |                                |        |       |   |        |
| style=" |                                |        |       |   |        |
| width:  |                                |        |       |   |        |
| 14%" /> |                                |        |       |   |        |
| <col    |                                |        |       |   |        |
| style=" |                                |        |       |   |        |
| width:  |                                |        |       |   |        |
| 46%" /> |                                |        |       |   |        |
| <col    |                                |        |       |   |        |
| style=" |                                |        |       |   |        |
| width:  |                                |        |       |   |        |
| 11%" /> |                                |        |       |   |        |
| <col    |                                |        |       |   |        |
| style=" |                                |        |       |   |        |
| width:  |                                |        |       |   |        |
| 13%" /> |                                |        |       |   |        |
| <col    |                                |        |       |   |        |
| style=" |                                |        |       |   |        |
| width:  |                                |        |       |   |        |
| 14%" /> |                                |        |       |   |        |
| </co    |                                |        |       |   |        |
| lgroup> |                                |        |       |   |        |
| <tbody> |                                |        |       |   |        |
| <tr     |                                |        |       |   |        |
| class   |                                |        |       |   |        |
| ="odd"> |                                |        |       |   |        |
| <td     |                                |        |       |   |        |
| ><p>Rep |                                |        |       |   |        |
| ort</p> |                                |        |       |   |        |
| <p>N    |                                |        |       |   |        |
| umber</ |                                |        |       |   |        |
| p></td> |                                |        |       |   |        |
| <td><p  |                                |        |       |   |        |
| >Report |                                |        |       |   |        |
| Ti      |                                |        |       |   |        |
| tle</p> |                                |        |       |   |        |
| <p      |                                |        |       |   |        |
| >(Prior |                                |        |       |   |        |
| SAR     |                                |        |       |   |        |
| Number  |                                |        |       |   |        |
| and     |                                |        |       |   |        |
| Page)</ |                                |        |       |   |        |
| p></td> |                                |        |       |   |        |
| <       |                                |        |       |   |        |
| td><p>D |                                |        |       |   |        |
| ate</p> |                                |        |       |   |        |
| <p>I    |                                |        |       |   |        |
| ssued</ |                                |        |       |   |        |
| p></td> |                                |        |       |   |        |
| <td><   |                                |        |       |   |        |
| p>Total |                                |        |       |   |        |
| Monet   |                                |        |       |   |        |
| ary</p> |                                |        |       |   |        |
| <p>Fin  |                                |        |       |   |        |
| dings</ |                                |        |       |   |        |
| p></td> |                                |        |       |   |        |
| <td     |                                |        |       |   |        |
| ><p>No. |                                |        |       |   |        |
| of</p>  |                                |        |       |   |        |
| <p>Reco |                                |        |       |   |        |
| mmen-da |                                |        |       |   |        |
| tions</ |                                |        |       |   |        |
| p></td> |                                |        |       |   |        |
| </tr>   |                                |        |       |   |        |
| <       |                                |        |       |   |        |
| /tbody> |                                |        |       |   |        |
| <       |                                |        |       |   |        |
| /table> |                                |        |       |   |        |
+---------+--------------------------------+--------+-------+---+--------+
| ### New |                                |        |       |   |        |
|  Since  |                                |        |       |   |        |
| Last Re |                                |        |       |   |        |
| porting |                                |        |       |   |        |
|  Period |                                |        |       |   |        |
+---------+--------------------------------+--------+-------+---+--------+
| **[FSA] |                                |        |       |   |        |
| {.under |                                |        |       |   |        |
| line}** |                                |        |       |   |        |
+---------+--------------------------------+--------+-------+---+--------+
| A       | Review of Financial Partners'  | 9      |       |   | #####  |
| 04E0009 | Monitoring and Oversight of    | /29/06 |       |   | ### 17 |
|         | Guaranty Agencies, Lenders,    |        |       |   |        |
| ######  | and Servicers *(OPE also       |        |       |   |        |
|         | designated as action           |        |       |   |        |
|         | official)* (SAR 53, pg 24)     |        |       |   |        |
+---------+--------------------------------+--------+-------+---+--------+
|         | ***Status:** FSA informed us   |        |       |   | ###    |
|         | that it does not concur with   |        |       |   | #####  |
|         | the recommendation, as         |        |       |   |        |
|         | explained in writing to the IG |        |       |   |        |
|         | from the COO.*                 |        |       |   |        |
+---------+--------------------------------+--------+-------+---+--------+
| A       | Special Allowance Payments to  | 9      | \$2   |   | ####   |
| 07F0017 | Nelnet for Loans Funded by     | /29/06 | 78,00 |   | #### 2 |
|         | Tax-Exempt Obligations (see    |        | 0,000 |   |        |
|         | note 1) (SAR 53, pg 24)        |        |       |   |        |
+---------+--------------------------------+--------+-------+---+--------+
|         | ***Status:** FSA informed us   |        |       |   |        |
|         | that based on the settlement   |        |       |   |        |
|         | agreement between the          |        |       |   |        |
|         | Department and Nelnet, this    |        |       |   |        |
|         | audit should be considered     |        |       |   |        |
|         | closed. Audit will be removed  |        |       |   |        |
|         | from the overdue listing after |        |       |   |        |
|         | all actions are completed in   |        |       |   |        |
|         | AARTS.*                        |        |       |   |        |
+---------+--------------------------------+--------+-------+---+--------+
| *       |                                |        |       |   |        |
| *[OCIO] |                                |        |       |   |        |
| {.under |                                |        |       |   |        |
| line}** |                                |        |       |   |        |
+---------+--------------------------------+--------+-------+---+--------+
| A       | System Security Review of the  | 9      | ####  |   | 14     |
| 11G0002 | Education Data Center FY2006   | /28/06 | ####  |   |        |
|         | (SAR 53, pg 25)                |        |       |   |        |
+---------+--------------------------------+--------+-------+---+--------+
| ######  | ***Status:** OCIO informed us  | #      | ####  |   | ###    |
|         | that resolution is pending,    | #####  | ####  |   | #####  |
|         | OIG concurrence with Finding   |        |       |   |        |
|         | 1, Rec 3.*                     |        |       |   |        |
+---------+--------------------------------+--------+-------+---+--------+
| *       |                                |        |       |   |        |
| *[OESE] |                                |        |       |   |        |
| {.under |                                |        |       |   |        |
| line}** |                                |        |       |   |        |
+---------+--------------------------------+--------+-------+---+--------+
| A       | New Haven School District's    | 4      | \     |   | 4      |
| 02F0005 | Administration of Title I,     | /11/06 | $3,78 |   |        |
|         | Part A Summer and After School |        | 0,000 |   |        |
|         | Programs (SAR 53, pg 25)       |        |       |   |        |
+---------+--------------------------------+--------+-------+---+--------+
|         | ***Status:** OESE informed us  |        |       |   |        |
|         | that the audit is pending      |        |       |   |        |
|         | resolution. Program reviewing  |        |       |   |        |
|         | voluminous workpapers and      |        |       |   |        |
|         | rebuttals submitted by         |        |       |   |        |
|         | Connecticut.*                  |        |       |   |        |
+---------+--------------------------------+--------+-------+---+--------+
| A       | Puerto Rico Department of      | 7      | ####  | 5 |        |
| 02F0017 | Education, Salinas School      | /25/06 | ####  |   |        |
|         | District's Administration of   |        |       |   |        |
|         | Title I Funds (SAR 53, pg 25)  |        | ##    |   |        |
|         |                                |        | ##### |   |        |
|         |                                |        | # \$2 |   |        |
|         |                                |        | 0,071 |   |        |
+---------+--------------------------------+--------+-------+---+--------+
|         | ***Status:** OESE informed us  |        |       |   |        |
|         | that the Risk Management Team  |        |       |   |        |
|         | (RMT) is resolving the audit.* |        |       |   |        |
+---------+--------------------------------+--------+-------+---+--------+

+---------+--------------------------------+--------+-------+---------+
| Report  | Report Title                   | Date   | Total | ####    |
| Number  |                                | Issued | Mon   | #### No |
|         | (Prior SAR Number and Page)    |        | etary | . of Re |
|         |                                |        | Fin   | commen- |
|         |                                |        | dings | dations |
+---------+--------------------------------+--------+-------+---------+
| A       | The School District of the     | 6      | \$93  | ###     |
| 05F0018 | City of Detroit's              | /22/06 | 0,448 | ##### 8 |
|         | Administration of Parental     |        |       |         |
|         | Involvement Funds Under the    | #      | ##    |         |
|         | *NCLB* (SAR 53, pg 25)         | #####  | ####  |         |
+---------+--------------------------------+--------+-------+---------+
| ######  | ***Status**: OESE informed us  |        |       | ###     |
|         | that the program determination |        |       | ######  |
|         | letter was signed and dated on |        |       |         |
|         | March 31, 2007. Audit will be  |        |       |         |
|         | removed from the overdue       |        |       |         |
|         | listing after all actions are  |        |       |         |
|         | completed in AARTS.*           |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| A       | Arkansas Department of         | 8      | \$87  | 2       |
| 06F0016 | Education's Migrant Education  | /22/06 | 7,000 |         |
|         | Program (SAR 53, pg 25)        |        |       |         |
+---------+--------------------------------+--------+-------+---------+
|         | ***Status:** OESE informed us  |        |       |         |
|         | that the audit is on           |        |       |         |
|         | administrative stay 5/22/07.   |        |       |         |
|         | AARTS data: does not show that |        |       |         |
|         | the audit is on administrative |        |       |         |
|         | stay. Anticipated resolution   |        |       |         |
|         | date is 5/22/2007.*            |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| A       | Data Quality Review of the     | 6/7/06 |       | 2       |
| 06F0021 | South Dakota Consolidated      |        |       |         |
|         | State Performance Report (SAR  |        |       |         |
|         | 53, pg 25)                     |        |       |         |
+---------+--------------------------------+--------+-------+---------+
|         | ***Status:** OESE informed us  |        |       |         |
|         | that the audit is a pending    |        |       |         |
|         | discussion with OIG.*          |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| #       |                                |        |       |         |
| ## Repo |                                |        |       |         |
| rted in |                                |        |       |         |
|  Previo |                                |        |       |         |
| us SARs |                                |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| **[FSA] |                                |        |       |         |
| {.under |                                |        |       |         |
| line}** |                                |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| A       | The University of the Virgin   | 4/8/05 | \$10  | 25      |
| 02E0003 | Islands' Administration of     |        | 2,077 |         |
|         | Title IV Student Financial     | ####   |       |         |
| ######  | Assistance Programs Needs      | #####  | ####  |         |
|         | Improvement (SAR 51, pg 25)    |        | ####  |         |
+---------+--------------------------------+--------+-------+---------+
|         | ***Status:** PDL was issued on |        |       |         |
|         | 9/25/2006. Audit will be       |        |       |         |
|         | removed from the overdue       |        |       |         |
|         | listing after all actions are  |        |       |         |
|         | completed in AARTS.*           |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| A       | School Eligibility Channel's   | 9      |       |         |
| 03F0001 | Initial Review and Quality     | /20/05 |       |         |
|         | Control Review Process for     |        |       |         |
|         | Electronic Submissions of      |        |       |         |
|         | Institutions' Financial        |        |       |         |
|         | Statements Through the         |        |       |         |
|         | Department's eZ-Audit System   |        |       |         |
|         | (SAR 51, pg 25)                |        |       |         |
+---------+--------------------------------+--------+-------+---------+
|         | ***Status:** No status change. |        |       |         |
|         | FSA informed us that OIG and   |        |       |         |
|         | FSA are negotiating over one   |        |       |         |
|         | corrective action on which OIG |        |       |         |
|         | has non-concurred.*            |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| A       | Review of Cash Management and  | 9      | \$99  | 7       |
| 04B0015 | Student Financial Assistance   | /26/02 | 7,313 |         |
|         | Refund Procedures at Bennett   |        |       |         |
| ###     | College                        | ####   |       |         |
| ######  |                                | #####  |       |         |
|         | *(OPE designated as collateral |        |       |         |
|         | action office for this         |        |       |         |
|         | report)* (SAR 45, pg 16)       |        |       |         |
+---------+--------------------------------+--------+-------+---------+
|         | ***Status**: FSA informed us   |        |       |         |
|         | it is currently working on     |        |       |         |
|         | this audit.*                   |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| A       | Advanced Career Training       | 9      | \     | 14      |
| 04B0019 | Institute's Administration of  | /25/03 | $7,47 |         |
|         | the Title IV *HEA* Programs    |        | 2,583 |         |
| ###     | (SAR 47, pg 13)                |        |       |         |
| ######  |                                |        |       |         |
+---------+--------------------------------+--------+-------+---------+
|         | ***Status:** FSA informed us   |        |       |         |
|         | that the audit should be       |        |       |         |
|         | closed by 9/30/2007 in AARTS.* |        |       |         |
+---------+--------------------------------+--------+-------+---------+

+---------+--------------------------------+--------+-------+---------+
| Report  | Report Title                   | Date   | Total | No. of  |
| Number  |                                | Issued | Mon   |         |
|         | (Prior SAR Number and Page)    |        | etary | Re      |
|         |                                |        | Fin   | commen- |
|         |                                |        | dings |         |
|         |                                |        |       | dations |
+---------+--------------------------------+--------+-------+---------+
| A       | Review of Student Enrollment   | 9      | \     | 7       |
| 04E0001 | and Professional Judgment      | /23/04 | $2,45 |         |
|         | Actions at Tennessee           |        | 8,347 |         |
| ###     | Technology Center at           |        |       |         |
| ######  | Morristown, TN (SAR 49, pg 14) |        |       |         |
+---------+--------------------------------+--------+-------+---------+
|         | ***Status:** FSA informed us   |        |       |         |
|         | that on 3/1/2007 OCFO-PAG      |        |       |         |
|         | signed the administrative stay |        |       |         |
|         | memo extending the             |        |       |         |
|         | administrative stay until      |        |       |         |
|         | 6/10/2007. Required            |        |       |         |
|         | administrative stay requests   |        |       |         |
|         | and/or extensions have not     |        |       |         |
|         | been generated through AARTS.* |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| A       | Audit of the Administration of | 2      | \     | 3       |
| 05E0013 | the Student Financial          | /25/05 | $1,64 |         |
|         | Assistance Programs at the Ivy |        | 5,160 | ##      |
| ##      | Tech State College Campus in   | ###    |       | ######  |
| ######  | Gary, Indiana, During the      | #####  | ##### |         |
|         | Period July 1, 2002, through   |        | ####  |         |
|         | June 30, 2003 (SAR 50, pg 21)  |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| ######  | ***Status:** FSA informed us   |        |       |         |
|         | that the audit is currently    |        |       |         |
|         | being reviewed by FSA Chicago  |        |       |         |
|         | Case Team.*                    |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| A       | Professional Judgment at Yale  | 3      | \$    | 3       |
| 0670005 | University (SAR 36, pg 18)     | /13/98 | 5,469 |         |
|         |                                |        |       | ##      |
| ###     |                                | ####   | ####  | ######  |
| ######  |                                | #####  | ####  |         |
+---------+--------------------------------+--------+-------+---------+
| ######  | ***Status:** FSA informed us   |        |       |         |
|         | that it is waiting on policy   |        |       |         |
|         | decision to address and        |        |       |         |
|         | resolve this finding in the    |        |       |         |
|         | final audit determination      |        |       |         |
|         | letter.*                       |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| A       | Professional Judgment at       | 7      | \$1   | 4       |
| 0670009 | University of Colorado (SAR    | /17/98 | 5,082 |         |
|         | 37, pg 17)                     |        |       | ##      |
| ###     |                                | ####   | ##### | ######  |
| ######  |                                | #####  | ####  |         |
+---------+--------------------------------+--------+-------+---------+
| ######  | ***Status:** FSA informed us   |        |       |         |
|         | that it is waiting on policy   |        |       |         |
|         | decision to address and        |        |       |         |
|         | resolve this finding in the    |        |       |         |
|         | final audit determination      |        |       |         |
|         | letter.*                       |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| A       | Audit of Saint Louis           | 2      | \     | 6       |
| 06D0018 | University's Use of            | /10/05 | $1,45 |         |
|         | Professional Judgment for the  |        | 8,584 | ##      |
| ##      | Two-Year Period from July 2000 | ####   |       | ######  |
| ######  | through June 2002 (SAR 50, pg  | #####  | ####  |         |
|         | 21)                            |        | ####  |         |
+---------+--------------------------------+--------+-------+---------+
|         | ***Status:** FSA informed us   |        |       |         |
|         | that on 3/1/2007 OCFO-PAG      |        |       |         |
|         | signed the administrative stay |        |       |         |
|         | memo extending the             |        |       |         |
|         | administrative stay until      |        |       |         |
|         | 6/23/2007. Required            |        |       |         |
|         | administrative stay extension  |        |       |         |
|         | request has not been generated |        |       |         |
|         | through AARTS.*                |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| A       | State of Missouri, Single      | 4/1/93 | \     | 18      |
| 0723545 | Audit Two Years Ended June 30, |        | $1,04 |         |
|         | 1991                           | ####   | 8,768 | ##      |
| ######  |                                | #####  |       | ######  |
|         |                                |        | ####  |         |
|         |                                |        | ####  |         |
+---------+--------------------------------+--------+-------+---------+
|         | ***Status:** FSA informed us   |        |       |         |
|         | that there is no change in     |        |       |         |
|         | status.*                       |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| A       | State of Missouri, Single      | 3/7/94 | \$18  | 18      |
| 0733123 | Audit Year Ended June 30, 1992 |        | 7,530 |         |
|         |                                | ###    |       | ##      |
| ######  |                                | #####  | ####  | ######  |
|         |                                |        | ####  |         |
+---------+--------------------------------+--------+-------+---------+
|         | ***Status:** FSA informed us   |        |       |         |
|         | that there is no change in     |        |       |         |
|         | status.*                       |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| A       | American River College's       | 1      | \     | 3       |
| 09D0024 | Compliance with Student        | 2/1/04 | $3,02 |         |
|         | Eligibility Requirements for   |        | 4,665 |         |
| ##      | Title IV Student Aid Programs  | ###    |       |         |
| ######  | (SAR 50, pg 21)                | #####  | ####  |         |
|         |                                |        | ####  |         |
+---------+--------------------------------+--------+-------+---------+
|         | ***Status:** FSA informed us   |        |       |         |
|         | that the audit is currently    |        |       |         |
|         | being reviewed by its San      |        |       |         |
|         | Francisco Case Team.*          |        |       |         |
+---------+--------------------------------+--------+-------+---------+

+---------+--------------------------------+--------+-------+---------+
| Report  | Report Title                   | Date   | Total | No. of  |
| Number  |                                | Issued | Mon   |         |
|         | (Prior SAR Number and Page)    |        | etary | Re      |
|         |                                |        | Fin   | commen- |
|         |                                |        | dings |         |
|         |                                |        |       | Dations |
+---------+--------------------------------+--------+-------+---------+
| A       | University of Phoenix's        | 12     | (see  | 3       |
| 09F0008 | Processing of Return of        | /22/05 | note  |         |
|         | Federal Student Aid for *HEA*, |        | 2)    |         |
|         | Title IV Programs (SAR 51, pg  |        |       |         |
|         | 26)                            |        |       |         |
+---------+--------------------------------+--------+-------+---------+
|         | ***Status:** FSA informed us   |        |       |         |
|         | that the audit is currently    |        |       |         |
|         | being reviewed by its San      |        |       |         |
|         | Francisco Case Team.*          |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| N       | Inspection of Parks College\'s | 2/9/00 | \$16  | 1       |
| 0690010 | Compliance with Student        |        | 9,390 |         |
|         | Financial Assistance           |        |       |         |
| ######  | Requirements (SAR 40, pg 18)   |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| ######  | ***Status:** FSA previously    |        |       |         |
|         | informed us that FSA Dallas    |        |       |         |
|         | Case Team denied school's      |        |       |         |
|         | recertification on December    |        |       |         |
|         | 31, 1999. School closed        |        |       |         |
|         | February 5, 2000.*             |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| *       |                                |        |       |         |
| *[OCFO] |                                |        |       |         |
| {.under |                                |        |       |         |
| line}** |                                |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| A       | U.S. Department of Education   | 6      | \     | 8       |
| 02E0008 | Funds Disbursed for New York   | /14/05 | $6,75 |         |
|         | City Department of Education   |        | 6,824 |         |
| ######  | Telecommunication Services     |        |       |         |
|         | (SAR 51, pg 26)                |        |       |         |
+---------+--------------------------------+--------+-------+---------+
|         | ***Status:*** *No comments     |        |       |         |
|         | were provided to OIG.*         |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| A       | The Education Leaders          | 1      | \$76  | ####    |
| 03F0010 | Council's Drawdown and         | /31/06 | 0,570 | #### 12 |
|         | Expenditure of Federal Funds   |        |       |         |
|         | (SAR 52, pg 8) *(OII also      | #      | ####  | ##      |
|         | designated as action           | #####  | ####  | ######  |
|         | official)*                     |        |       |         |
|         |                                |        |       | ######  |
+---------+--------------------------------+--------+-------+---------+
|         | ***Status:** No comments were  |        |       | ##      |
|         | provided to OIG.*              |        |       | ######  |
+---------+--------------------------------+--------+-------+---------+
| A       | University of Illinois at      | 12     | \$22  | 8       |
| 05D0041 | Chicago's Upward Bound Project | /20/04 | 3,057 |         |
|         | *(OPE also designated as       |        |       | ##      |
| ##      | action official)* (SAR 50, pg  | ###    | ####  | ######  |
| ######  | 22)                            | #####  | ####  |         |
+---------+--------------------------------+--------+-------+---------+
| ######  | ***Status:** OCFO informed us  |        |       |         |
|         | that it is reviewing           |        |       |         |
|         | additional information         |        |       |         |
|         | provided by the auditee.*      |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| A       | Audit of the University of     | 12     | \$26  | 6       |
| 05E0002 | Illinois at Chicago's Student  | /15/04 | 0,050 |         |
|         | Support Services Program *(OPE |        |       | ##      |
| ###     | also designated as action      | ###    | ####  | ######  |
| ######  | official)* (SAR 50, pg 22)     | #####  | ####  |         |
+---------+--------------------------------+--------+-------+---------+
| ######  | ***Status:** OCFO informed us  |        |       |         |
|         | that it is reviewing           |        |       |         |
|         | additional information         |        |       |         |
|         | provided by the auditee.*      |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| A       | University of Illinois at      | 12     | \$27  | 7       |
| 05E0018 | Chicago's Upward Bound Math    | /17/04 | 4,493 |         |
|         | and Science Project *(OPE also |        |       | ##      |
| ##      | designated as action           | ###    | ####  | ######  |
| ######  | official)* (SAR 50, pg 22)     | #####  | ####  |         |
+---------+--------------------------------+--------+-------+---------+
| ######  | ***Status:** OCFO informed us  |        |       |         |
|         | that it is reviewing           |        |       |         |
|         | additional information         |        |       |         |
|         | provided by the auditee.*      |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| A       | Audit of the Talent Search     | 7      | \$21  | 5       |
| 07D0002 | Program at Case Western        | /11/03 | 2,428 |         |
|         | Reserve University (SAR 47, pg |        |       | ##      |
| ###     | 14)                            | ###    | ####  | ######  |
| ######  |                                | #####  | ####  |         |
+---------+--------------------------------+--------+-------+---------+
|         | ***Status:** OCFO informed us  |        |       |         |
|         | that it is continuing to work  |        |       |         |
|         | with OPE to resolve the        |        |       |         |
|         | monetary findings in the audit |        |       |         |
|         | report.*                       |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| A       | Pittsburg Pre-School and       | 3      | ###   | ####    |
| 09F0010 | Community Council, Inc.'s Use  | /17/06 | ##### | #### 21 |
|         | of Early Reading First and     |        |  \$91 |         |
|         | Migrant Education Even Start   |        | 0,217 |         |
|         | Grant Funds (SAR 52, pg 9)     |        |       |         |
|         | *(OESE also designated as      |        | ####  |         |
|         | action official)*              |        | ####  |         |
+---------+--------------------------------+--------+-------+---------+
|         | ***Status:** OCFO informed us  |        |       |         |
|         | that it has been working with  |        |       |         |
|         | OGC in drafting questions for  |        |       |         |
|         | the auditee to respond to.*    |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| Report  | Report Title                   | Date   | Total | No. of  |
| Number  |                                | Issued | Mon   |         |
|         | (Prior SAR Number and Page)    |        | etary | Re      |
|         |                                |        | Fin   | commen- |
|         |                                |        | dings |         |
|         |                                |        |       | dations |
+---------+--------------------------------+--------+-------+---------+
| A       | Sheldon Jackson College's      | 2      |       | 2       |
| 09F0020 | Administration of Fund for the | /24/06 |       |         |
|         | Improvement of Postsecondary   |        |       |         |
|         | Education Grants (SAR 52, pg   |        |       |         |
|         | 11) *(OPE also designated as   |        |       |         |
|         | action official)*              |        |       |         |
+---------+--------------------------------+--------+-------+---------+
|         | ***Status:** OCFO informed us  |        |       |         |
|         | that it has been working with  |        |       |         |
|         | OGC and OPE in preparing a     |        |       |         |
|         | draft program determination    |        |       |         |
|         | letter.*                       |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| *       |                                |        |       |         |
| *[OESE] |                                |        |       |         |
| {.under |                                |        |       |         |
| line}** |                                |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| A       | Wyandanch Union Free School    | 9      | \     | 8       |
| 02E0031 | District's *ESEA*, Title I,    | /14/05 | $6,80 |         |
|         | Part A and Title II Non-Salary |        | 2,887 | ##      |
| ######  | Expenditures for the Period    | #      |       | ######  |
|         | July 1, 1999, through June 30, | #####  | (see  |         |
|         | 2004 (SAR 51, pg 27)           |        | note  |         |
|         |                                |        | 3)    |         |
|         |                                |        |       |         |
|         |                                |        | ####  |         |
|         |                                |        | ####  |         |
+---------+--------------------------------+--------+-------+---------+
|         | ***Status:** Previously        |        |       |         |
|         | reported, the Program          |        |       |         |
|         | Determination Letter (PDL) was |        |       |         |
|         | issued on 9/30/2006. Audit     |        |       |         |
|         | will be removed from the       |        |       |         |
|         | overdue listing after all      |        |       |         |
|         | actions are completed in       |        |       |         |
|         | AARTS.*                        |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| A       | Audit of the Georgia           | 1      |       | 7       |
| 04F0011 | Department of Education's      | /12/06 |       |         |
|         | Migrant Education Program (SAR |        |       |         |
|         | 52, pg 4)                      |        |       |         |
+---------+--------------------------------+--------+-------+---------+
|         | ***Status:** OESE informed us  |        |       |         |
|         | that the audit is pending a    |        |       |         |
|         | Departmental review.*          |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| A       | Audit of East Cleveland City   | 9      | \$34  | 9       |
| 05C0012 | Schools\' Administration of    | /18/02 | 9,637 |         |
|         | the 21st Century Community     |        |       | ##      |
| ##      | Learning Centers Grant at Kirk | ###    | ####  | ######  |
| ######  | Middle School for the Period   | #####  | ####  |         |
|         | June 1, 1998, through December |        |       |         |
|         | 31, 2001 (SAR 45, pg 18)       |        |       |         |
+---------+--------------------------------+--------+-------+---------+
|         | ***Status:** OESE informed us  |        |       |         |
|         | that the audit is pending a    |        |       |         |
|         | Departmental review.*          |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| A       | Audit of the Title I Funds     | 2      | \$    | 7       |
| 06E0008 | Administered by the Orleans    | /16/05 | 73,93 |         |
|         | Parish School Board for the    |        | 6,273 | ##      |
|         | Period July1, 2001, through    | ####   |       | ######  |
|         | December 31, 2003 (SAR 50, pg  | #####  | ####  |         |
|         | 23)                            |        | ####  |         |
+---------+--------------------------------+--------+-------+---------+
| ######  | ***Status:** OESE informed us  |        |       |         |
|         | that the audit is pending a    |        |       |         |
|         | Departmental review.*          |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| A       | Audit of the Title I Funds     | 1      | \$48  | 1       |
| 06E0012 | Administered by the Caddo      | 2/7/04 | 8,314 |         |
|         | Parish School District, for    |        |       |         |
|         | the Period July 1, 2001,       | ###    |       |         |
|         | through December 31, 2003 (SAR | #####  |       |         |
|         | 50, pg 23)                     |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| ######  | ***Status:** OESE informed us  |        |       |         |
|         | that OIG has concurred with    |        |       |         |
|         | the PDL. Program Office is     |        |       |         |
|         | finalizing the PDL.*           |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| A       | Title I Funds Administered by  | 12     | \$54  | 5       |
| 06E0017 | the Beauregard Parish School   | /16/04 | 0,443 |         |
|         | District, for the Period July  |        |       |         |
| ###     | 1, 2001, through December 31,  |        |       |         |
| ######  | 2003 (SAR 50, pg 23)           |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| ##      | ***Status:** OESE informed us  |        |       |         |
| ######  | that OIG has concurred with    |        |       |         |
|         | the PDL. Program is finalizing |        |       |         |
|         | the PDL.*                      |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| A       | Title I Funds Administered by  | 6/8/05 | \$14  | 4       |
| 06E0018 | the East Baton Rouge Parish    |        | 8,246 |         |
|         | School District for the Period | #      |       |         |
| ##      | July 1, 2001, through December | #####  | (see  |         |
| ######  | 31, 2003 (SAR 51, pg 27)       |        | note  |         |
|         |                                |        | 4)    |         |
|         |                                |        |       |         |
|         |                                |        | ####  |         |
|         |                                |        | ####  |         |
+---------+--------------------------------+--------+-------+---------+
| ######  | ***Status:** OESE informed us  |        |       |         |
|         | that the audit is pending a    |        |       |         |
|         | Departmental review.*          |        |       |         |
+---------+--------------------------------+--------+-------+---------+

+---------+--------------------------------+--------+-------+---------+
| Report  | Report Title                   | Date   | Total | No. of  |
| Number  |                                | Issued | Mon   |         |
|         | (Prior SAR Number and Page)    |        | etary | Re      |
|         |                                |        | Fin   | commen- |
|         |                                |        | dings |         |
|         |                                |        |       | dations |
+---------+--------------------------------+--------+-------+---------+
| A       | Oklahoma State Department of   | 3      | \$50  | 3       |
| 06F0013 | Education's Migrant Education  | /21/06 | 9,000 |         |
|         | Program (SAR 52, pg 4)         |        |       |         |
+---------+--------------------------------+--------+-------+---------+
|         | ***Status:** Pending           |        |       |         |
|         | resolution due to Oklahoma     |        |       |         |
|         | implementing a corrective      |        |       |         |
|         | action plan for MEP as it      |        |       |         |
|         | pertains to a defect rate on   |        |       |         |
|         | its child eligibility          |        |       |         |
|         | determination.*                |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| A       | The U.S. Department of         | 12     |       | 4       |
| 07F0014 | Education's Activities         | /29/05 |       |         |
|         | Relating to Consolidating      |        |       |         |
|         | Funds in Schoolwide Programs   |        |       |         |
|         | Provisions (SAR 52, pg 10)     |        |       |         |
+---------+--------------------------------+--------+-------+---------+
|         | ***Status:** Internal Audit.   |        |       |         |
|         | OESE informed us its response  |        |       |         |
|         | was submitted to OIG 12/28/05. |        |       |         |
|         | Ongoing Corrective Action      |        |       |         |
|         | (CAP) status. Final Audit      |        |       |         |
|         | Report was issued on           |        |       |         |
|         | 12/29/2005. OIG agreed with    |        |       |         |
|         | the proposed corrective action |        |       |         |
|         | plan on 2/2/07, but the audit  |        |       |         |
|         | has not been submitted for     |        |       |         |
|         | resolution through AARTS.*     |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| **[OPE] |                                |        |       |         |
| {.under |                                |        |       |         |
| line}** |                                |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| A       | Audit of Valencia Community    | 5/8/03 | \     | 5       |
| 07B0011 | College's Gaining Early        |        | $1,82 |         |
|         | Awareness and Readiness for    | ###    | 2,864 |         |
| ##      | Undergraduate Programs         | #####  |       |         |
| ######  | Matching Requirement (SAR 47,  |        |       |         |
|         | pg 15)                         |        |       |         |
+---------+--------------------------------+--------+-------+---------+
|         | ***Status:** OPE informed us   |        |       |         |
|         | it continues to work on this   |        |       |         |
|         | audit.*                        |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| **      |                                |        |       |         |
| [OSERS] |                                |        |       |         |
| {.under |                                |        |       |         |
| line}** |                                |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| A       | Audit of the Puerto Rico       | 6      | \$    | 5       |
| 02B0014 | Vocational Rehabilitation      | /26/02 | 15,80 |         |
|         | Administration (SAR 45, pg 18) |        | 0,000 | ##      |
| ###     |                                | ###    |       | ######  |
| ######  |                                | #####  | ####  |         |
|         |                                |        | ####  |         |
+---------+--------------------------------+--------+-------+---------+
|         | ***Status:** OSERS agrees that |        |       |         |
|         | the audit is open.*            |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| A       | The Virgin Islands Department  | 9      |       | 17      |
| 02E0020 | of Health's Administration of  | /28/05 |       |         |
|         | the Infants and Toddlers       |        |       |         |
| ##      | Program *(see note 5)* (SAR    | ###    |       |         |
| ######  | 51, pg 28)                     | #####  |       |         |
+---------+--------------------------------+--------+-------+---------+
| ##      | ***Status:** OSERS agrees that |        |       |         |
| ######  | the audit is open.*            |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| Note 1  | Audit Report A07F0017          |        |       |         |
| -       | contained a one-time better    |        |       |         |
|         | use of funds (BUF) of          |        |       |         |
|         | \$882,000,000                  |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| Note 2  | Audit Report A09F0008          |        |       |         |
| -       | identified a one-time BUF of   |        |       |         |
|         | \$10,000,000                   |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| Note 3  | Audit Report A02E0031          |        |       |         |
| -       | identified recommended         |        |       |         |
|         | adjustments of \$5,913,394     |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| Note 4  | Audit Report A06E0018 reported |        |       |         |
| -       | that \$1,000 related to a      |        |       |         |
|         | check writing error was        |        |       |         |
|         | recovered during the audit.    |        |       |         |
|         | This money was not included in |        |       |         |
|         | questioned or unsupported      |        |       |         |
|         | costs                          |        |       |         |
+---------+--------------------------------+--------+-------+---------+
| Note 5  | We identified \$327,577 in     |        |       |         |
| -       | one-time BUF in audit A02E0020 |        |       |         |
+---------+--------------------------------+--------+-------+---------+

+--------------------------------------------------------+-------------+
| # Table 7: S                                           | Six-Month   |
| tatistical Profile: October 1, 2006, to March 31, 2007 | Period      |
|                                                        | Ending      |
|                                                        | 3/31/2007   |
+--------------------------------------------------------+-------------+
| **OIG Audit Reports Issued**                           | 34          |
+--------------------------------------------------------+-------------+
| # Questioned Costs                                     | \$          |
|                                                        | 447,259,268 |
+--------------------------------------------------------+-------------+
| # Unsupported Costs                                    | \$          |
|                                                        | 113,837,121 |
+--------------------------------------------------------+-------------+
| # Recommendations for Better Use of Funds              | \$0         |
+--------------------------------------------------------+-------------+
| **Other OIG Products Issued**                          | 12          |
|                                                        |             |
| *(2 Alert Memoranda, 2 Attestation Reports, 1 Audit    |             |
| Closeout Letter, 1 Inspection, 1 Interim Audit         |             |
| Memorandum, 4 Management Information Reports, 1        |             |
| Special Project)*                                      |             |
+--------------------------------------------------------+-------------+
| **OIG Audit Reports Resolved By Program Managers**     | 44          |
+--------------------------------------------------------+-------------+
| Questioned Costs Sustained                             | \$9,912,714 |
+--------------------------------------------------------+-------------+
| Unsupported Costs Sustained                            | \           |
|                                                        | $27,055,127 |
+--------------------------------------------------------+-------------+
| Additional Disallowances Identified by Program         | \           |
| Managers                                               | $14,314,236 |
+--------------------------------------------------------+-------------+
| Management Commitment to the Better Use of Funds       | \$          |
|                                                        | 230,721,199 |
+--------------------------------------------------------+-------------+
| **Investigative Case Activity**                        |             |
+--------------------------------------------------------+-------------+
| Cases Opened                                           | 87          |
+--------------------------------------------------------+-------------+
| Cases Closed                                           | 71          |
+--------------------------------------------------------+-------------+
| Cases Active at the End of the Reporting Period        | 382         |
+--------------------------------------------------------+-------------+
| Prosecutorial Decisions                                | 191         |
|                                                        |             |
| -   Accepted                                           | 92          |
|                                                        |             |
| -   Denied                                             | 99          |
+--------------------------------------------------------+-------------+
| **Investigative Results**                              |             |
+--------------------------------------------------------+-------------+
| Indictments/Informations                               | 57          |
+--------------------------------------------------------+-------------+
| Convictions/Pleas                                      | 59          |
+--------------------------------------------------------+-------------+
| Fines Ordered                                          | \$12,600    |
+--------------------------------------------------------+-------------+
| Restitution Payments Ordered                           | \$3         |
|                                                        | ,373,295.95 |
+--------------------------------------------------------+-------------+
| Civil Settlements/Judgements (number)                  | 6           |
+--------------------------------------------------------+-------------+
| Civil Settlements/Judgements (amount)                  | \$482,452   |
+--------------------------------------------------------+-------------+
| Recoveries                                             | \$91,324.50 |
+--------------------------------------------------------+-------------+
| Forfeitures/Seizures                                   | 0           |
+--------------------------------------------------------+-------------+
| Savings                                                | \           |
|                                                        | $246,620.69 |
+--------------------------------------------------------+-------------+