# ![](media/image1.png)

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Office of Inspector General

FY 2006 Work Plan

**Table of Contents**

  --------------------------------------------------------------------------------------- -- -- -------- --------- ---- ------------- --
  [**Introduction**](#Introduction)                                                             **iv**                                

                                                                                                                                      

  [**PROGRAM PERFORMANCE AND ACCOUNTABILITY**](#program-performance-accountability)             1                                     

  [State Education Agencies Monitoring of LEAs and State Oversight                                                 1                  
  agencies](#state-education-agencies-monitoring-of-leas-and-state-oversight-agencies)                                                

  [Review of Virtual Charter Schools](#ReviewofCharter_Schools)                                                    1                  

  [Title I, Part A Comparability Requirement](#title-i-part-a-comparability-requirement)                           2                  

  [Errors in the Scoring of State Assessments](#Errors_inScoring_StateAssessments)                                 2                  

  [Corrective Action and Restructuring of Title I Schools In                                                       3                  
  Improvement](#Corrective_Actionand_Restructuring)                                                                                   

  [Reading First](#reading-first)                                                                                  3                  

  [Audit of Congressionally Directed Grants](#Congressionally_Directed_Grants)                                     4                  

  [Review of the Implementation of Schoolwide Plans](#Implementationof_SchoolwidePlans)                            5                  

  [State Administration of the Vocational Rehabilitation State Grant                                               5                  
  Program](#StateAdmin_VocRehabState_Grantprogram)                                                                                    

  [Review of the Costs for Adult Education Basic Grant                                                             6                  
  Program](#AdultEducation_BasicGrant_Program)                                                                                        

  [Grant Pre-award Audits](#Grant_PreawardAudits)                                                                  6                  

  [Department Management and Monitoring of Discretionary Grant                                                     7                  
  Products](#DeptMgmt_Monitof_Grantproducts)                                                                                          

  [Oversight of ED Programs and Sharing of Program Information across ED                                           7                  
  Components/Units](#section-6)                                                                                                       

  [Department Use of Administrative Stays in Audit Resolution](#Administrative_Stays)                              7                  

  [Review of the Transition to Teaching Program](#TransitiontoTeaching)                                            8                  

  [Data Quality of Economically Disadvantaged Student Subgroup Counts under No Child Left                          8                  
  Behind (NCLB)](#Student_SubgroupCounts_underNCLB)                                                                                   

  [Late Applications for Impact Aid Funding](#LateApplicationsforImpAid)                                           9                  

  [Data Assessment Initiative](#Data_Assessment_Initiative)                                                        9                  

  [Review of Potential Research Grant Misconduct](#Research_Grant_Misconduct)                                      10                 

  [Audits of High--Risk Grantees](#HighRisk_Grantees)                                                              10                 

  [Review of the Department's Discretionary Grant Award                                                            10                 
  Process](#Discretionary_GrantAward_Process)                                                                                         

  [Investigation of Participants in State and Local Programs](#section-9)                                          11                 

                                                                                                                                      

  [**FEDERAL STUDENT AID**](#federal-student-aid)                                               **12**                                

  [Special Allowance Payments for Loans Funded by Tax-exempt                                             12                           
  Obligations](#Loans_Fundedby_TaxexemptOblig)                                                                                        

  [Accuracy of Lender Interest and Special Allowance                                                     12                           
  Payments](#accuracy-of-lender-interest-and-special-allowance-payments)                                                              

  [Voluntary Flexible Agreements](#voluntary-flexible-agreements)                                        12                           

  [Accuracy of Default Claims Payments by Guaranty                                                       13                           
  Agencies](#accuracy-of-default-claims-payments-by-guaranty-agencies)                                                                

  [Controls Over Improper Payments in the FFEL                                                           13                           
  Program](#controls-over-improper-payments-in-the-ffel-program)                                                                      

  [NSLDS Death Disbursement Evaluation](#nslds-death-disbursement-evaluation)                            14                           

  [Review of the D.C. Tuition Assistance Grant Program (DCTAGP)](#Reviewof_DCTAGP)                       14                           

  [Controls for Safeguarding Student                                                                     14                           
  Information](#controls-for-safeguarding-student-information)                                                                        

  [Effectiveness of School Verification of FAFSA Data](#SchoolVerif_ofFAFASAdata)                        15                           

  [FSA Edit Resolution at Distance Learning Postsecondary                                                15                           
  Institutions](#fsa-edit-resolution-at-distance-learning-postsecondary-institutions)                                                 

  [Department Controls Over Title IV Policy Guidance Provided to Postsecondary                           16                           
  Institutions](#DeptControls_OverTitleIVPolicy)                                                                                      

  [Foreign Medical School FFELP Eligibility](#foreign-medical-school-ffelp-eligibility)                  16                           

  [School-as-Lender- Process Inducements](#school-as-lender-process-and-inducements)                     16                           

  [Audits of Selected Postsecondary                                                                      17                           
  Institutions](#audits-of-selected-postsecondary-institutions)                                                                       

  [Investigation of Institutional Fraud](#investigation-of-institutional-fraud)                          17                           

  [Investigation of Recipients Fraud](#investigation-of-recipient-fraud)                                 17                           

  [Investigation of Financial Aid                                                                        18                           
  Preparers/Clients](#investigation-of-financial-aid-preparersclients)                                                                

  [Investigations of Identity Theft](#investigations-of-identity-theft)                                  18                           

                                                                                                                                      

  [**INFORMATION TECHNOLOGY**](#information-technology)                                         **19**                                

  [Information Systems Controls at Data                                                                  19                           
  Centers](#information-systems-controls-at-data-centers)                                                                             

  [Security of Oracle Financial Reporting                                                                19                           
  Systems](#security-of-oracle-financial-reporting-systems)                                                                           

  [Federal Information Security Management Act Evaluation Report](#FISMA_EvalReport)                     20                           

  [Department's Grant Administration Payment System Implementation](#GAPS_Implementation)                20                           

  [Cybercrime Investigations](#Cybercrime_Investigations)                                                21                           

                                                                                                                                      

  [**PROCUREMENT**](#Procurement)                                                               **22**                                

  [Review of the Department's Competitive Sourcing/A-76                                                  22                           
  Competitions](#CompSourcing_A76Compet)                                                                                              

  [Review of the Department's Procurement Function](#Depts_ProcurementFunction)                          22                           

  [Review of Compliance with Contract Terms -- Private Collection Agency (PCA)                           23                           
  Contractors](#PCA_Contractors)                                                                                                      

  [Preawards and Closeouts](#Preawards_Closeouts)                                                        23                           

  [Audits of High-Risk Contractors](#HighRisk_Contractors)                                               24                           

                                                                                                                                      

  [**FINANCIAL MANAGEMENT**](#Fin_Mgmt)                                                         **25**                                

  [Oversight of the Department's Reimbursable Work Authorization (RWA)                                   25                           
  Process](#RWA_Process)                                                                                                              

  [Accuracy and Completeness of Accounting Information in Financial Management Systems                   25                           
  under Development](#FinMgmt_Systems_UnderDevelopment)                                                                               

  [Digital Analysis of Department Disbursement                                                           26                           
  Activity](#Digital_Analysis_DisbursActivity)                                                                                        

  [Department's Recovery Audit Efforts -- Overpaid Interest                                              26                           
  Penalty](#RecoveryAuditEfforts_OverpaidInterestPen)                                                                                 

  [Review of the Department's Physical Inventory                                                         26                           
  Procedures](#PysicalInventory_Procedures)                                                                                           

  [Accounting for Drug Control Funds](#Drug_Contro_Funds)                                                27                           

  [Audit of the Department of Education's Financial                                                      27                           
  Statements](#EDs_Financial_Statements)                                                                                              

  [Audit of Federal Student Aid's Financial Statements](#FSAs_FinStatements)                             28                           

  [Audit of the Department's Special Purpose Financial Statements (Closing                               29                           
  Package)](#SpecialPurp_FinStatements_ClosingPackage)                                                                                

  [Audit of the Department Intragovernmental Activities and                                              29                           
  Balances](#Intragovernm_Activities_Balances)                                                                                        

                                                                                                                                      

  [**HUMAN CAPITAL**](#human-capital)                                                           **31**                                

  [Review of the Department's Implementation of its Human Capital Management                             31                           
  Plan](#review-of-the-departments-implementation-of-its-human-capital-management-plan)                                               

  [Audit of the Department's Human Capital Management](#Auditof_HumCap_Mgmt)                             31                           

                                                                                                                                      

  [**NON-FEDERAL AUDIT QUALITY**](#Non_Federal_AuditQuality)                                                            **33**        

  [Special Project to Statistically Measure the Quality of Single                                        33                           
  Audits](#Qualityof_SingleAudits)                                                                                                    

  [Quality Reviews of Audits](#Quality_Reviews_ofAudits)                                                 33                           

  [Preparation and Issuance of Audit Guidance for Non-Federal                                            33                           
  Auditors](#AuditGuidance_forNonFed_Auditors)                                                                                        

  [Technical Assistance and Cognizant Agency for Audit                                                   34                           
  Functions](#TA_forCognizant_Agency)                                                                                                 

  [Survey of CPA Firms Testing of Special Allowance Billings of                                          34                           
  Lenders](#SpecialAllowance_BillingsofLenders)                                                                                       

                                                                                                                                      

  [**APPENDIX**](#Appendix)                                                                              **A-1**                      
  --------------------------------------------------------------------------------------- -- -- -------- --------- ---- ------------- --

[]{#Introduction .anchor}**Introduction**

Our Office of Inspector General (OIG) Work Plan serves as a guide for
allocating OIG resources for fiscal year 2006. We distribute our
resources to audit, investigation, and inspection projects that are
critical to the mission of the Department, as well as those which
identify vulnerabilities in the department's programs and activities.
Our planned work reflects suggestions from the OIG, the Department of
Education (Department or ED), the Office of Management and Budget (OMB)
and Congress. While the Work Plan provides a framework for OIG work, we
retain the flexibility to divert resources to other priorities as they
arise.

The Work Plan is guided by the OIG mission statement:

> *To promote the efficiency, effectiveness, and integrity of the
> Department's programs and operations, we conduct independent and
> objective audits, investigations, inspections, and other activities.*

This mission is accomplished by providing independent and objective
assistance to the Congress and the Secretary in assuring continuous
improvement in program delivery, effectiveness, and integrity. To
achieve our mission, we have three strategic goals:

1.  To improve the Department's programs and operations.

2.  To protect the integrity of the Department's programs and
    operations.

3.  To ensure quality and excellence in our organization.

Projects in the Work Plan focus on the first two goals of improvement
and integrity. Chart 1 illustrates the allocation of resources to
achieve these two strategic goals.

Chart 1

![](media/image2.wmf)

The Work Plan is organized by the Department's program and operation
areas and the corresponding OIG work groups responsible for these areas.
Projects are also arranged into more specific categories under each
program or operation area. Chart 2 projects how OIG staff time and
contracts will be allocated among the Department's program and operation
areas.

Chart 2

![](media/image3.wmf)

The Plan reflects the Department's strategic goals (chart 3) and the
President's Management Agenda (chart 4). The Appendix describes the PMA
and the Department's Strategic Goals. The Appendix also provides a
crosswalk between each workplan project and the PMA, Department goals
and OIG's goals.

Chart 3 ![](media/image4.wmf) Chart 4

![](media/image5.wmf)

# **Program Performance & Accountability**

## **State Education Agencies Monitoring of LEAs and State Oversight Agencies** 

State Education Agencies (SEA) are responsible for, among other things,
the distribution and administration of U.S. Department of Education (ED)
funds to Local Education Agencies (LEA) located throughout the state.
Grantees must monitor sub-grant supported activities to assure
compliance with applicable Federal requirements and that performance
goals are being achieved. Grantee monitoring must cover each program,
function, or activity. Furthermore, each state is required to have
procedures for reviewing and approving applications for sub-grants and
amendments to those applications, for providing technical assistance,
for evaluating projects, and for performing other administrative
responsibilities the State has determined are necessary to ensure
compliance with applicable statutes and regulations.

State oversight agencies offer school districts cost-effective shared
services, including career training for high-school students and adults,
special education, alternative schools, technology education,
transportation, and teacher training, as well as dozens of programs to
expand educational opportunity and help districts operate more
efficiently. Nationwide, 30 states offer cooperative educational
services, comprising 776 cooperative educational service centers, which
serve local school districts and receive ED funds.

[Anticipated Objectives:]{.underline}

1.  Determine if SEAs are properly monitoring subrecipients of ED
    program funds.

2.  Determine if SEAs are properly monitoring the ED funding received by
    the state oversight agencies.

3.  Determine if state oversight agencies are administering ED funds in
    accordance with laws and regulations

# **Review of Virtual Charter Schools**

[]{#ReviewofCharter_Schools .anchor}

Between 40,000 and 50,000 students in 37 states are currently enrolled
in virtual charter schools. Some of these students are taking only one
class (such as advanced placement history in the case of high school
students). For others, this is their entire school day for grades K-12.
In various areas, charges have been made concerning the reported minimal
amount of money spent on the students in order to maximize the
for-profit elements of the program. The virtual programs are to provide
the computer connection, necessary equipment and materials to those
participating.

# 

# [Anticipated Objectives**:**]{.underline}

1.  Determine whether states are adequately monitoring virtual charter
    schools, including whether states have processes in place to
    follow-up on complaints.

2.  Determine whether selected virtual charter schools use Federal funds
    in accordance with applicable laws and regulations.

# **Title I, Part A Comparability Requirement**

An LEA may receive funds under Title I, Part A only if State and local
funds will be used in participating schools to provide services that,
taken as a whole, are at least comparable to services that the LEA is
providing in schools not receiving Title I, Part A funds. An LEA is
considered to have met the statutory comparability requirements if it
has implemented (1) an LEA-wide salary schedule; (2) a policy to ensure
equivalence among schools in teachers, administrators, and other staff;
and (3) a policy to ensure equivalence among schools in the provision of
curriculum materials and instructional supplies. An LEA may also use
other measures to determine comparability, such as comparing the average
number of students per instructional staff or the average staff salary
per student in each school receiving Title I, Part A funds with those in
schools that do not receive Title I, Part A funds. If all schools are
served by Title I, Part A, an LEA must use State and local funds to
provide services that, taken as a whole, are substantially comparable in
each school. Determinations may be made on either a district-wide or
grade-span basis.

Each LEA must develop procedures for complying with the comparability
requirements and implement the procedures annually. They must maintain
records that are updated biennially documenting compliance with the
comparability requirements. The SEA, however, is ultimately responsible
for ensuring that LEAs remain in compliance with the comparability
requirement

# [Anticipated Objectives:]{.underline}

1.  Determine whether a sample of SEAs are determining if LEAs in its
    state are complying with the comparability requirement.

2.  Determine whether a sample of LEAs in each of the states selected
    developed procedures for complying with the comparability
    requirements and maintained records documenting compliance with the
    comparability requirement.

3.  Determine whether the comparability determinations in a sample of
    LEAs in each state selected are accurate.

## **Errors in the Scoring of State Assessments** 

[]{#Errors_inScoring_StateAssessments .anchor}

The Elementary and Secondary Education Act (ESEA) requires each LEA
receiving funds under subpart A of Title I to use the results of the
State assessment system to review annually the progress of each school
served under subpart A of Title I to determine whether the school is
making adequate yearly progress. In February 2004, the Office of
Inspector General (OIG) issued a Management Information Report (State
and Local No. 04-01) to the Assistant Secretary for Elementary and
Secondary Education suggesting the need for developing and issuing best
practices for management controls over scoring of state assessments
required by ESEA. During this past year, two states were identified by
news reports as experiencing test scoring errors for their state
assessments. In addition, a May 2003 study indicated that test scoring
errors were a systemic issue that should be monitored closely.

[Anticipated Objective:]{.underline}

-   Determine whether states have taken action when necessary to correct
    state assessment error results and whether there is a need for
    federal oversight to help ensure errors in scoring high stakes tests
    are prevented, detected, and disclosed publicly.

# **Corrective Action and Restructuring of Title I Schools in Improvement**

[]{#Corrective_Actionand_Restructuring .anchor}

# The ESEA §§ 1116(b)(7) and 1116(b)(8) respectively require an LEA to take corrective action when a school fails to make adequate yearly progress (AYP) after two years of undergoing school improvement (Year 3 in improvement), and action to restructure a school when it continues to fail AYP after a year of corrective action (Year 4 in improvement). 

### Anticipated Objective:

-   Determine whether SEAs and LEAs within the state are implementing
    corrective action and restructuring for applicable Title I schools
    in improvement in accordance with applicable laws and regulations.

### **Reading First**

The No Child Left Behind Act of January 8, 2002 established Reading
First as a new, high quality evidence-based program for the students of
America. Reading First builds on the findings of years of scientific
research compiled by a National Reading Panel to ensure that more
children receive effective reading instruction in the early grades.

A State educational agency that desires to receive a Reading First grant
must submit an application to a panel convened by the Secretary, in
consultation with the National Institute for Literacy. SEAs award
sub‑grants to local educational agencies (LEAs) on the basis of a simple
competitive process.

In the April 2002, the Department of Education (ED) contracted with RMC
Research Corporation (RMC) to provide technical assistance to SEAs to
assist in preparing their Reading First grant applications. ED
contracted with RMC in June 2003, to provide transitional technical
assistance to SEAs after the termination of the application-related
technical assistance and prior to the commencement of the technical
assistance activities of the National Center for Reading First, to
ensure continuity of technical assistance services to SEAs. In September
2003, ED also contracted with RMC to run the National Centers for
Reading First Technical Assistance (NCRFTA) and to manage regional
Technical Assistance Centers (TACs), which provides technical assistance
to states in preparing the grant applications.

We plan to perform several audits to look at the technical assistance
contracts and the process for reviewing state applications. We also plan
to select several states to review the process used to award subgrants
to LEAs.

######## Reading First Technical Assistance Centers Contracts

> [Anticipated Objectives:]{.underline}

1.  Determine whether the regional Technical Assistance Centers (TAC)
    contracts were appropriately awarded.

2.  Determine whether RMC Corporation and its subcontractors (regional
    TACs) provided appropriate assistance, relating to scientifically
    based reading research materials, to SEAs and LEAs in the
    preparation of grant application documents.

3.  Determine whether RMC Corporation and its subcontractors (regional
    TACs) employees complied with their own and\\or the contracts
    conflict of interest requirements.

4.  Determine whether RMC Corporation provided appropriate guidance and
    information to the regional TACs.

#########  Reading First State Application Approval Process

[Anticipated Objectives:]{.underline}

1.  Determine if the Department selected the expert review panel in
    accordance with the No Child Left Behind Act of 2001, Section
    1203(c) and if the Department adequately screened the panel members
    for conflicts of interest.

2.  Determine if the expert panel reviewed the applications in
    accordance with established criteria and applied the criteria
    consistently.

3.  Determine if the expert panel adequately documented their reasons
    for rejecting the applications.

######## State's Process for Approving LEA Reading First Applications

[Anticipated Objectives:]{.underline}

1.  Determine the basis for the State's decision to approve, or request
    revisions to, the LEA's applications and assess the appropriateness
    of the State's decision.

2.  Determine whether the State developed and used criteria for
    selecting the scientifically based reading research (SBRR) programs
    in compliance with laws, regulations, and guidance.

### 

### **Audit of Congressionally Directed Grants** 

[]{#Congressionally_Directed_Grants .anchor}

The Fund for the Improvement of Postsecondary Education (FIPSE) provides
for innovative programs that improve access to and the quality of
postsecondary education. The Fund for the Improvement of Education (FIE)
supports programs of national significance. In recent years, Congress
has elected to direct the awarding of grants to specific entities
through legislation. Congressionally directed grantees do not compete
for awards, and the grants are not based on any formula. Instead,
Congress, through the law, specifically identifies to whom the grants
are to be awarded, and the amount of the awards. In FY 2005,
approximately \$162 million was appropriated for the FIPSE program and
\$257 million was appropriated for the FIE program.

# [Anticipated Objective:]{.underline}

-   Determine if the activities supported by FIPSE and FIE directed
    grants are in accordance with the program's legislation and that
    funded activities are carried out.

## **Review of the Implementation of Schoolwide Plans**

[]{#Implementationof_SchoolwidePlans .anchor}

The No Child Left Behind Act (NCLB) expands the schoolwide program
approach and makes it easier for Title I schools to operate such
programs. In the final rules issued in December 2002, the Department
reorganized the provision (sections 200.25 -- 200.29) governing the
planning and implementation of schoolwide programs to make them easier
to understand. A schoolwide program permits a school to use funds from
Title I, Part A and other Federal education programs funds and resources
to upgrade the entire educational program of the school to raise
academic achievement for all students. Schoolwide plans must include how
the school will implement the mandatory schoolwide program components
and use resources from Title I and other sources to implement those
components. It must also include a list of federal, state and local
programs that will be consolidated in the schoolwide program.

### Anticipated Objective:

-   Determine if schools participating in schoolwide programs are
    implementing the requirements of the plan.

# **State Administration of the Vocational Rehabilitation State Grant Program**

[]{#StateAdmin_VocRehabState_Grantprogram .anchor}

# The Vocational Rehabilitation (VR) Program, authorized by the Rehabilitation Act of 1973, as amended, provides grants to assist states in helping those with disabilities become employed and integrated into the community. States directly provide or purchase from providers services such as guidance, counseling, training, therapy, and any other goods or services that can reasonably be expected to help a disabled individual become gainfully employed. Federal funds may be used to pay for up to 78.7 percent of a state's cost of providing those services. In 2004, the Department provided \$2.6 billion in VR State Grants. VR client employment outcomes are a key performance measure of the success of a State's VR program.

Section 101(a) of the Rehabilitation Act and 34 CFR § 361.53(a)(1)
require state agencies to include in their state plans assurances that
they will determine whether comparable services and benefits exist under
any other program and whether those services and benefits are available
to the individual. 34 CFR § 361.53(a)(2) specifies that a State unit
must use comparable services or benefits available under any other
program to meet, in whole or in part, the cost of vocational
rehabilitation services. Examples of comparable services and benefits
are Medicare, Medicaid, and private insurance.

### Anticipated Objectives:

1.  Determine whether selected states have enhanced their administration
    of the VR program in ways that have resulted in increased employment
    outcomes for VR clients, and

2.  Determine whether selected states have utilized comparable services
    and benefits to meet the cost of providing VR services.

## 

## **Review of the Costs for Adult Education Basic Grant Program**

[]{#AdultEducation_BasicGrant_Program .anchor}

The Adult Education Basic Grant Program, authorized by the Adult
Education and Family Literacy Act and regulated by 34 C.F.R. § 361, is a
cooperative effort between the Federal government and the states to
provide education to adults. Those grant appropriations for fiscal year
2004 amounted to over \$564 million. A state that desires to participate
in the program is to designate it the SEA as the sole state agency
responsible for the administration and supervision of the program.
Federal funds are granted to the SEA on a formula basis, and the SEA
provides funds to various public or private nonprofit entities. Eligible
entities must apply for funds on the basis of need and available
resources. They should strive to expand or improve the quality of
existing programs, initiate new high-quality programs, or, if necessary,
maintain programs. Those programs should include assistance for adults
who have educational disadvantages or limited English.

### Anticipated Objective:

-   Determine whether grant funds have been used in accordance with
    applicable laws and regulations to pay for unallowable or
    unsupported costs.

## **Grant Pre-award Audits**

[]{#Grant_PreawardAudits .anchor}

The Department's program offices have a need for audit services related
to their responsibilities in awarding grants. These needs include
providing assistance to help the program offices determine if applicants
have the capability to administer Departmental programs. This is
particularly important with first-time applicants, and applicants who
have not participated in Department programs in recent years.

#####  Anticipated Objective:

-   Objectives will be defined on a case-by-case basis to conform to the
    precise needs of the program office.

## **Department Management and Monitoring of Discretionary Grant Products**

[]{#DeptMgmt_Monitof_Grantproducts .anchor}

One of the goals of the Secretary's Blueprint for Management Excellence
is achieving an "Accountability for Results" Culture. However, the
Department does not always hold grantees accountable for what they
promised to deliver in their grant application. Although annual
performance reports are required by each grantee, there is no certainty
that program officers adequately review each report. We found that even
though an LEA reported that it was not meeting the goals of the grant in
its annual performance reports, it continued to receive funding for a
total of over \$ 2 million in four years.

Prior OIG work also found grant files that did not contain items
produced under specific grants, which made it impossible for us to
evaluate the products and to determine whether those products were ever
produced.

[Anticipated Objective:]{.underline}

-   Determine whether the Department's monitoring/management of
    discretionary grant products is sufficient to ensure that the
    grantee is performing the work as stated in its proposal
    to/agreement with the Department.

# **Oversight of ED Programs and Sharing of Program Information across ED Components/Units**

#  

# The Department awards numerous discretionary direct grants to various entities. While the Office of the Chief Financial Officer (OCFO) provides some centralized oversight of the grants, the individual program offices select the grantees and monitor grant performance. The Department's Grant Administration and Payment System (GAPS) maintains records on grantees and individual grants. While GAPS has a module to record information on grantees that have been designated as "high risk," the system does not capture information on grant performance for other grantees. Information on past performance is essential to "link funding decisions to results" (Department's Strategic Plan Goal 6.5).

# [Anticipated Objectives:]{.underline}

1.  Review the Department's program oversight to identify weaknesses in
    the administration of funds.

2.  Determine whether the Department has procedures in place to share
    information on grantee performance on discretionary grants and
    whether such information is considered in the selection of grantees
    and monitoring of the grants.

## 

## **Department Use of Administrative Stays in Audit Resolution**

[]{#Administrative_Stays .anchor} 

Office of Management and Budget (OMB) Circular A-50 requires resolution
of audits within six months. The Department developed an "administrative
stay process" not provided for in OMB A-50 guidance to allow additional
time for audit resolution without considering audits overdue.

** **

[Anticipated Objectives:]{.underline}

 

1.  Assess the appropriateness of the Department's use of the
    administrative stay process.

2.  Determine whether stays are requested and granted in accordance with
    established policy and procedures.

## **Review of the Transition to Teaching Program**

[]{#TransitiontoTeaching .anchor}

The Transition to Teaching program is intended to help mitigate the
shortage of qualified licensed or certified teachers by encouraging the
development and expansion of alternative routes to certification.
Program grants are provided to SEAs, LEAs, institutions of higher
education, and for profit or non-profit agencies to help recruit, train,
and place individuals in teaching positions and to support them during
their first years in the classroom. The program focuses on: (1)
mid-career professionals with substantial career experience, including
highly qualified para-professionals; and (2) recent college graduates.
In FY 2004, over \$45 million was awarded through 32 grants.

### Anticipated Objectives:

1.  Assess application approval, grant monitoring, and record keeping
    procedures.

2.  Determine whether select grantees are using the funds in accordance
    with grant terms and applicable laws and regulations.

# **Data Quality of Economically Disadvantaged Student Subgroup Counts under No Child Left Behind (NCLB)**

[]{#Student_SubgroupCounts_underNCLB .anchor}

The accuracy of student counts is particularly important in ensuring
that schools are being assessed fully and properly, and that their Title
I allocations are being distributed fairly. Under No Child Left Behind,
subgroups have specific minimum thresholds for student counts to ensure
that subgroup measurements are statistically reliable. For instance, a
state may allow subgroups with fewer than 40 students to be excluded in
a school's adequate yearly progress measure under NCLB. LEAs count
students in the Economically Disadvantaged Student subgroup using data
from the National School Lunch Program, which is run by the U.S.
Department of Agriculture. The School Lunch Program allows LEAs to
certify student counts once every four years or longer. Although
students are tested annually under NCLB, the program allows LEAs to
assume that these counts remain the same at schools for the duration of
this certification.

[Anticipated Objectives:]{.underline}

1.  Determine whether states have adequate mechanisms for tracking
    student subgroup counts for Economically Disadvantaged Students.

2.  Determine whether LEAs can accurately record the number of students
    transferring and advancing over several years using a limited set of
    School Lunch Program data.

# **Late Applications for Impact Aid Funding**

[]{#LateApplicationsforImpAid .anchor} 

The Impact Aid program, Title VIII of the Elementary and Secondary
Education Act, compensates LEAs for substantial and continuing financial
burden resulting from federal activities.  In order for an LEA to
receive a payment under the Impact Aid program it must timely file a
completed application for funding with the Secretary of Education (as
set forth in Title 34, C.F.R. 222.3 & Title 34, C.F.R 222.4). Over the
last several years the Department has required that LEAs file their
applications electronically by a set deadline.  As a result LEAs must
also send the required signature sheets via regular mail to the
Department by this deadline.  In recent years the number of applicants
that have not timely filed has increased (i.e., last year 63 school
districts missed the application deadline for various reasons). 

 

### Anticipated Objective:

 

-   Determine whether the Impact Aid application process is
    unintentionally impeding school districts from filing their
    applications on time.

## **Data Assessment Initiative**

[]{#Data_Assessment_Initiative .anchor}

Historically, the OIG has made extensive use of data maintained on ED's
internal systems in support of numerous audit and investigative
initiatives. OIG has expended extensive resources on continual
evaluation of small segments of the data in these systems relating to
both the FSA and S&L areas. With the creation within OIG of the
Information Technology Audits and Computer Crime Investigations (ITACCI)
component, OIG will endeavor to more systematically identify, acquire
and utilize current and new sources of data to provide information to
the OIG on a wide range of products. Working with ITACCI investigators
and auditors, the Advanced Techniques Team (COORDs) will undertake a
project to identify data available throughout the Department, obtain an
in-depth understanding of the process or interrelationship of the data,
and develop new techniques to analyze and correlate the data. We
anticipate providing significant enhancement to the OIG audit and
investigation activities through the development of risk profiles and
producing management improvement reports to the Department, based on the
conditions that careful evaluation will likely identify. We plan to
repeat this effort in subsequent years, focusing on different systems,
data sets and/or data relationships each year.

[Anticipated Objectives:]{.underline}

1.  Develop and implement data matching strategies and techniques to
    obtain more effective materials for use by OIG components using
    emerging data modeling methodologies.

2.  Advise the Department of data monitoring they could address on an
    ongoing basis, and of other data quality issues identified.

3.  Conduct specific data matches.

[]{#Research_Grant_Misconduct .anchor}**Review of Potential Research
Grant Misconduct**

Since December 6, 2001, the Department has been required to follow the
Federal Policy on Research Misconduct, issued by the Office of Science
and Technology in December 2000. The Department has not yet developed a
research misconduct implementation plan; however, even in the absence of
such a plan, it is obliged to follow the policy. The policy defines
research misconduct as the "fabrication, falsification, or plagiarism in
proposing, performing, or reviewing research, or in reporting research
results." The Institute of Education Sciences (IES) is the primary
department entity that awards research grants. In FY 04, IES awarded
approximately \$150 million in educational research grants. Even a low
incidence of plagiarism can have significant financial impact. For
example, the National Science Foundation recently looked at its grant
applications and discovered that 2-3% contained plagiarism. If a similar
situation exists in the Department, IES could have awarded
\$3,000,000-4,5000,000 to ineligible recipients.

[Anticipated Objectives:]{.underline}

1.  Determine whether IES has a process in place and has been
    implementation that process to review research grant applications
    for plagiarism.

2.  Determine whether IES has a process in place and has been
    implementing that process to review research grant products for
    plagiarism.

[]{#HighRisk_Grantees .anchor}**Audits of High-Risk Grantees**

Periodically, program officials within the Department request OIG to
audit or investigate grantees where the office has identified the
possibility of fraud, waste or abuse of federal funds. In addition, OIG
receives hot-line calls or other information alleging fraud or misuse of
federal funds.

### Anticipated Objective: 

# Determine if high-risk grantees are in compliance with applicable laws, regulations, grant terms, and contract terms.

# 

###### Review of the Department's Discretionary Grant Award Process

[]{#Discretionary_GrantAward_Process .anchor}

# A discretionary grant awards Federal funds on the basis of a competitive process, where specific participation criteria has been established in law or regulation. For example, it may specify that awardees must have 20% of their undergraduate headcount be composed of a certain ethic group, or that 5% of their enrollees (or their parents) must have adjusted gross incomes of less than \$10,000 to qualify to receive the grant. The Department reviews applications in light of the legislative and regulatory requirements established for the program. The review process gives the Department discretion to determine which applications best address the program requirements and are qualified to receive funding. 

[Anticipated Objectives:]{.underline}

1.  Determine if the Department has an adequate process for evaluating
    competing discretionary grant applications.

2.  Determine if all grants awards of this type made in FY 2004-2005
    were made to appropriately qualified entities.

###### Investigation of Participants in State and Local Programs

# 

OIG will devote investigative resources to investigative allegations of
fraud in State and Local programs. Recent investigative focus in this
area include falsification of eligibility for Migrant Education funds
and unauthorized expenditures of title I funds by State and Local
entities.

# **Federal Student Aid**

# **Special Allowance Payments for Loans Funded by Tax-exempt Obligations**

[]{#Loans_Fundedby_TaxexemptOblig .anchor}

# Special allowance payments are made to lenders to ensure an equitable return on the Federal Family Education Loan (FFEL) Program loans. In general, the amount of a special allowance payment is the difference between the amount of interest the lender receives from the borrower or the government and the amount that is provided under the Higher Education Act (HEA). The HEA includes a separate special allowance calculation for loans that were funded by tax-exempt obligations issued before October 1, 1993. The quarterly special allowance payment for these loans may not be less than 9.5 percent, minus the interest the lender receives from the borrower or the government, divided by 4. Lenders have been prolonging or expanding the eligibility of their loans for the 9.5 percent floor calculation, and have been receiving large special allowance payments to which they may not be entitled. 

# [Anticipated Objective:]{.underline} 

# Determine whether selected lenders are billing for special allowance payments, under the 9.5 percent floor calculation, in compliance with requirements in the HEA, regulations, and other guidance issued by the Department.

# **Accuracy of Lender Interest and Special Allowance Payments** 

Over 3,000 lenders participate in the FFEL program by providing private
funds to finance the loans, insured by guaranty agencies on behalf of
the Department against default. Lenders originate approximately \$40
billion in new loans, and submit quarterly billings to the Department
for interest and special allowance on the outstanding loans. The risks
presented by lenders are the billions of dollars annually paid in
subsidy costs billed at aggregate amounts. Errors in billings can result
in millions in improper subsidy payments

[Anticipated Objective:]{.underline}

-   Determine the accuracy of selected lenders' interest and special
    allowance billings.

##### 

##### Voluntary Flexible Agreements

As authorized in the 1998 Amendments, as many as six guaranty agencies
may enter into Voluntary Flexible Agreements (VFA) with the Secretary. A
VFA incorporates and modifies the guaranty agreements under section
428(b) and (c) of the HEA. A VFA is intended to enhance program
integrity, increase cost efficiencies, and improve the availability and
delivery of student financial aid. The approved VFAs are required to be
cost neutral to the Department.

[Anticipated Objectives]{.underline}:

1.  Determine if selected guaranty agencies VFAs are enhancing program
    integrity and improving the availability and delivery of student
    loans.

2.  Assess the Department's oversight of the Voluntary Flexible
    Agreements.

3.  Assess the methodology used by the Department to assure cost neutral
    agreements.

## **Accuracy of Default Claims Payments by Guaranty Agencies** 

Under Section 428(c)(1) of the HEA of 1965, as amended, the Department
reimburses a guaranty agency participating in the FFEL program for the
losses resulting from the default payments to lenders. The Department
must pay the guaranty agency promptly upon receipt of an accurate and
complete request for reimbursement. During FY 2004 limited surveys at
five of the largest guaranty agencies found they were not obtaining
sufficient information to assure the proper due diligence was performed
by lenders, prior to paying the default claims.

[Anticipated Objectives]{.underline}:

1.  Determine the sufficiency of support for default claims payments to
    lenders at selected guaranty agencies.

2.  Verify the accuracy of default and reinsurance claims.

# **Controls over Improper Payments in the FFEL Program**

A component of the President's Management Agenda is the initiative to
reduce erroneous payments. The Improper Payments Information Act of 2002
(Act) requires agencies to review annually all programs and activities
they administer and identify those which may be susceptible to
significant erroneous payments. FSA considered only \$131 million of
sustained liabilities from audits and program reviews for the FFEL
program in May 2004, as improper payments. The Department does not have
a systematic process for estimating and reporting all improper payments
in the FFEL program. For example, we have become aware of liabilities
being waived by FSA for lenders and guaranty agencies and identified
significant adjustments to billings to correct past improper payments.

## 

[Anticipated Objectives]{.underline}:

1.  Assess the controls over the process for waiving liabilities.

2.  Assess the controls over reviewing adjustments for previous
    over-billings.

3.  Determine the amount of waivers and adjustments not reported by FSA
    as improper payments in the FFEL program.

# 

# 

# **NSLDS Death Disbursement Evaluation** 

Extensive data on FFEL and Direct Loans is available on the National
Student Loan Data System (NSLDS). Data is available on loan activity
including the current loan status as well as each individual
disbursement dates associated with the loan population. Loan repayment
obligations for borrowers can be waived for a number of reasons. One
such reason is the reported death of the borrower. Periodic inquiries to
the NSLDS have identified a condition where disbursement(s) of loan
proceeds apparently have been made on behalf of borrowers after the
reported date of death.

# [Anticipated Objectives]{.underline}:

1.  Identify the volume of disbursement activity associated with
    previously deceased borrowers.

2.  Identify possible controls that could be implemented within the
    NSLDS by FSA to identify the condition early on and possible
    follow-up courses of action.

3.  Determine if entities on any level are delaying reporting of
    significant events in the loan process (delay reporting status
    change) for their own benefit.

## **Review of the D.C. Tuition Assistance Grant Program (DCTAGP)**

[]{#Reviewof_DCTAGP .anchor}

The D.C. College Access Act of 1999, as amended, created a tuition grant
program for D.C. residents. The DCTAGP provides grants to D.C. residents
who attend public and eligible private colleges outside D.C. In general,
for students attending public colleges, the DCTAGP grant amount is the
difference in tuition for in-state and out-of-state residents. While the
DCTAGP is not a Department program, under the law, ED OIG is responsible
for oversight. Congress makes available \$17 million annually to the
DCTAGP through a direct appropriation to D.C.

[Anticipated Objective]{.underline}:

-   Determine if management controls over the DCTAGP protect the federal
    interest.

# **Controls for Safeguarding Student Information** 

FSA uses Social Security Numbers (SSNs) as student identifiers in many
of its systems to operate and support the programs. Many financial
institutions have been moving away from using SSNs as primary
identifiers, but the cost of the transition may be significant.
Postsecondary institutions download personal and parent data from FSA
systems to award Title IV funds, and also maintain students' personal
identification information in electronic files. Without procedures in
place to safeguard the information, students and parents may be at risk
for identity theft. There have been recent news reports of student
information being stolen from institutions through unauthorized online
access, server malfunctions, employees placing data in unsecured
folders, and stolen computers.

[Anticipated Objectives:]{.underline}

-   Determine whether the internal controls at selected institutions are
    adequate to safeguard information from unauthorized use.

[]{#SchoolVerif_ofFAFASAdata .anchor}Effectiveness of School
Verification of FAFSA data

A fundamental control over the accuracy of the data submitted by
students and parents for determining eligibility for Title IV Assistance
reported on the Free Application for Federal Student Aid (FAFSA) is to
select for verification by schools key data elements. The majority of
the selections are made to verify data expected to have a high-risk of
being incorrect. Changes to these key fields directly affect the amount
of Title IV Assistance awarded.

Prior OIG audit reports of schools and FSA revealed weaknesses in the
data included in Management Information System (MIS) reports and no
integration with payment data to target individuals with uncompleted
verifications or schools which may not be adequately verifying data. The
Department had responded to the reports that the Common Origination
Disbursement (COD) system would allow them to address those weaknesses.
The Department has been using COD for a number of years and is now
moving to a new system (Advance) intended to further integrate
application and payment

[Anticipated Objectives:]{.underline}

1.  Determine whether sample schools are completing verification in
    accordance with the regulations and submitting the required
    corrections.

2.  Determine if documents currently provide proof of identity.

# **FSA Edit Resolution at Distance Learning Postsecondary Institutions**

Students can now submit their applications for Title IV Assistance in an
entirely automated environment, substantially reducing human error, but
increasing the risk of fraud in the Title IV programs. Technology has
allowed for students to enroll and receive Title IV Assistance at
postsecondary institutions without ever setting foot on an actual campus
allowing access to an education, which previously may have been
unattainable, based on geographic location, family commitments or other
factors.

# 

# During the application process, FSA runs several checks against various government databases, such as the Social Security Administration, Immigration and Naturalization Service (or ICE), Selective Service, and the National Student Loan Database System. If these "soft edits" reveal a conflict, discretion is given to the financial aid officer to resolve the problem, usually by requesting additional documentation of the aid applicant that substantiates the information reported on the student's FAFSA. 

# [Anticipated Objective:]{.underline} 

# Determine if edits are being sufficiently resolved by distance-learning institutions.

[]{#DeptControls_OverTitleIVPolicy .anchor}**Department Controls Over
Title IV Policy Guidance Provided to Postsecondary Institutions**

# The Office of Postsecondary Education (OPE) is responsible for formulating Title IV policy while FSA is responsible for oversight of the Title IV programs. Institutions may obtain interpretations of the HEA and regulations and clarification of Title IV policy through direct inquiries to various OPE and FSA headquarters personnel, or from technical assistance provided by FSA regional staff. Without adequate controls, institutions may receive guidance that is improper or inconsistent with the HEA and regulations. Also, institutions could "policy shop" by making multiple inquiries. Too much reliance may be placed on technical assistance provided by FSA for clarification of the HEA and regulations.

# [Anticipated Objective:]{.underline} 

# Determine if the Department has adequate controls to ensure that appropriate and consistent policy guidance is provided in response to inquiries from institutions and during technical assistance contacts. 

## **Foreign Medical School FFELP Eligibility**

Work by our investigators indicates that some foreign schools may be
circumventing the institutional eligibility process and securing FFELP
funds for their students by aligning themselves with eligible stateside
institutions. These ineligible foreign schools arrange for their
students to enroll in a distance education or off-site program offered
by an eligible stateside institution.

[Anticipated Objectives]{.underline}:

1.  Assess management controls over the foreign school eligibility
    determination process.

2.  Identify eligible institutions having contracts with ineligible
    foreign institutions to determine whether the programs offered by
    the eligible institutions exist.

## 

## **School-as-Lender -- Process and Inducements**

The number of schools-as-lenders has grown over the last couple of
years. We will review the process for a school to become a lender and
review agreements between schools and other lenders to determine if
illegal inducements have occurred in the FFEL program.

[Anticipated Objectives]{.underline}:

1.  Assess the management controls over the process for approving
    schools as lenders.

2.  Select school as lenders for review to determine if arrangements
    with other eligible lenders may have violated the prohibited
    inducement provisions of the HEA.

## 

## **Audits of Selected Postsecondary Institutions** 

Continued developments in the modes of education delivery
([e.g.]{.underline}, non-tradition terms, distance education) and
virtual paperless electronic delivery of program funds, brings new
challenges to ensure adequate oversight to identify and manage risks. As
part of the ongoing OIG/FSA Joint Fraud Project, we are examining
patterns of fraud and abuse, and developing profiles of risk indicators
to use in proactively identifying abusive school practices through data
mining and other analyses. Specific areas of compliance that we
anticipate covering in our postsecondary institutional audits include:
distance education, course length, cash management, disbursements, use
of professional judgment, and return of Title IV aid.

[Anticipated Objective]{.underline}:

-   Determine if selected schools are in compliance with the HEA and
    regulations, and alert the Department to any emerging and systemic
    areas of abuse.

## **Investigation of Institutional Fraud**

OIG will continue to devote investigative resources to institutions that
participate in the Title IV programs. Historically, OIG has devoted a
significant portion of its investigative resources and effort toward
investigating alleged fraud in this area. Institutional fraud continues
and current trends consist of the following:

-   Failure to refund tuition money

-   Falsification of documents for eligibility purposes

-   Ineligible locations and programs

-   Embezzlement of Federal funds

-   Falsified student aid applications

## **Investigation of Recipient Fraud**

OIG will continue to devote investigative resources to student
beneficiary recipients that fraudulently apply for or are involved in
Title IV fraud. Historically, OIG has devoted a significant portion of
its investigative resources and effort toward investigating alleged
fraud in this area. The recipient fraud continues, and we are
proactively targeting student beneficiaries and parents who have
allegedly fraudulently reported their income or assets on their FAFSA.

## **Investigation of Financial Aid Preparers/Clients**

OIG will continue its investigative efforts in the area of Title IV
consultant/client fraud. Some consultants/preparers advise their
clients, for a fee, to submit false income, and other information to the
Department in an effort to obtain Title IV Assistance for which they are
not entitled. The majority of these cases are pursued under the
Department of Justice Affirmative Civil Enforcement (ACE) program.
Typical allegations in consultant/preparer fraud include:

-   FAFSAs that understate parental income

-   Misstated parental marital status

-   Falsified independent/dependent student status

-   Inflated number of family members enrolled in college.

## **Investigations of Identity Theft**

###### OIG is currently proactively targeting identity theft, which is one of the fastest growing crimes in the United Sates. This is an area that has the potential for even greater abuse with the on-set of electronic commerce and the move to an e-government environment.

#  {#section-17 .unnumbered}

# **Information Technology**

# 

# **Information Systems Controls at Data Centers** 

The E-Government Act of 2002 including Title III, "Federal Information
Security Management Act of 2002" (FISMA) requires the Department to
conduct an annual program review to assess the effectiveness of its
overall information security. FISMA also requires the OIG to perform
annual independent evaluations of the agency-wide security program.
Historical audit results revealed that the Department is in the early
stages of developing and implementing an agency-wide information
security program as required by law. In addition, we discovered
significant deficiencies in the following security program areas: 1)
security awareness and technical training; 2) incident response and
reporting; 3) security life cycle management; 4) security of contractor
provided services; and 5) performance results of the principal offices'
information security practices.

[Anticipated Objectives:]{.underline}

1.  Determine whether the Department is in compliance with the statutory
    requirements of FISMA.

2.  Monitor the development and implementation of the Department's
    agency-wide information security plans, program and practices.
    Determine whether components of the security program are meeting
    applicable OMB and National Institute of Security and Technology
    (NIST) requirements.

3.  Determine whether the Department's corrective actions effectively
    mitigate security weaknesses identified in prior OIG/Government
    Accountability Office (GAO) audits and other independent
    evaluations.

## **Security of Oracle Financial Reporting Systems**

During fiscal year 2005, the Office of the Chief Financial Officer and
FSA began re-implementing and updating their respective Oracle Financial
System (version 11i). As with any new system, the Oracle reporting
package and related databases have not been subjected to the same level
of security testing as established Department operating systems and
networks. Consequently, the potential exists for these systems to be
compromised because of system misconfigurations, system complexities,
insecure password usage and unrecognized system backdoors. Accordingly,
the other mission critical systems would be vulnerable to intruders who
gain access to an unsecured Oracle database.

## [Anticipated Objectives:]{.underline}

> 1\. Determine whether Oracle Federal Financial Reporting System is
> configured to prevent unauthorized access, alteration, or disclosure
> of mission critical data.
>
> 2\. Determine whether effective technical security controls have been
> implemented to ensure that the confidentiality, integrity, and
> availability controls are in place and in accordance with industry
> best practices and applicable NIST guidance.

[]{#FISMA_EvalReport .anchor}**Federal Information Security Management
Act Evaluation Report**

The E-Government Act of 2002 including Title III, "Federal Information
Security Management Act of 2002" (FISMA) requires the Department to
conduct an annual program review to assess the effectiveness of its
overall information security. FISMA also requires the OIG to perform
annual independent evaluations of the agency-wide security program.

[Anticipated Objective:]{.underline}

-   Prepare the OIG report response to the FISMA statutory requirement
    based upon a consolidation of completed FISMA Audit efforts.

[]{#GAPS_Implementation .anchor}**Department\'s Grant Administration
Payment System Implementation**

GAPS is a centralized and integrated grant administration and payment
system, eliminating the need for duplicate data entry and providing easy
funds access to grant and direct loan recipients. GAPS is a custom-built
PowerBuilder application and supports the planning, pre-award, award
management and post-award stages of the Department grant programs
including discretionary, formula, fellowship, and block grants.
Additionally, it has the capability to make payments for FSA programs
such as Pell and Campus based grants. The e-Grants portion of GAPS
allows for the electronic dissemination, completion, receipt, and
evaluation of grant applications, as well as performance monitoring of
awarded grants.

Because of the functionality limitations of GAPS, the Department plans
to retire the legacy system and replace it with an integrated Grant
Management solution in FY 2007. While developing the new Grant
Management system, the Department intends to redesign all business
processes supporting grant administration and grant payments to ensure
that process redundancies are eliminated. Implementing sound system
development practices is critical to ensure that all of the functional
system requirements are sufficiently defined and that the integrated
Grant Management system will meet end user requirements.

[Anticipated Objectives:]{.underline}

1.  Determine whether deficiencies within the current GAPS system have
    been adequately identified to assist in developing functional
    requirements for the integrated Grant Management system.

2.  Determine whether the function requirements for the integrated Grant
    Management system will ensure the system adequately meets end user
    requirements and effectively supports the Department\'s operations.

> 3\. Determine whether meaningful performance measures have been
> established to measure the efficiency and effectiveness of the
> integrated Grant Management system.

[]{#Cybercrime_Investigations .anchor}**Cybercrime Investigations**

OIG will devote resources in the performance of felonious cybercrime
investigations in response to attacks against, as well as unauthorized
access of, Department of Education information systems networks,
computer systems, or databases. In addition to network investigative
activity, the OIG will perform forensic analysis of computer media in
support of traditional criminal investigations by OIG Investigation
Services.

[]{#Procurement .anchor}**Procurement**

# **Review of the Department's Competitive Sourcing/A-76 Competitions** 

[]{#CompSourcing_A76Compet .anchor}

In April 2003, the Department announced its decision to competitively
source two business functions \-- Human Resources and Training, and
Payment Processing\-- under OMB Circular A-76 requirements. The
Department subsequently awarded the contracts to the employee teams
proposed (Most Efficient Organizations) under each of the two functions.
When competitions are held, the Department's competitive sourcing
efforts should demonstrate cost savings and result in efficient
operations and improved performance. A-76 requires agencies to monitor
the selected service provider's[^1] performance against baseline metrics
to determine if services are being provided at established levels. The
Department is required to report to OMB on the results of competitive
sourcing.

# [Anticipated Objective:]{.underline}

-   Determine if the Department's competitive sourcing efforts resulted
    in cost savings and improved operations, in accordance with the
    MEOs' proposals.

# **Review of the Department's Procurement Function** 

[]{#Depts_ProcurementFunction .anchor}

Audits of Department contracts have noted problems in acquisition
processes, including definition of requirements, definition of roles and
responsibilities of contract and program office staff, and the ability
to write effective statements of work. GAO prepared and issued an
exposure draft entitled *[AN EVALUATION FRAMEWORK FOR IMPROVING THE
PROCUREMENT FUNCTION]{.underline}* to enable high-level, qualitative
assessments of the strengths and weaknesses of an agency's procurement
functions. Specifically, the framework provides general guidance to
audit agencies in evaluating an agency's procurement function and in
identifying areas that need improvement. Using specific cornerstones for
assessment, the framework allows the audit agency to assess the overall
procurement environment related to:

-   Organizational Leadership and Alignment

-   Policies and Processes

-   Human Capital

-   Knowledge and Information Management

-   Financial Management Systems

[Anticipated Objective:]{.underline}

-   Evaluate the Department's procurement function in accordance with
    Federal Acquisition Regulations, GAO's framework and other best
    practice guidance to identify areas needing improvement.

# **Review of Compliance with Contract Terms -- Private Collection Agency (PCA) Contractors**

[]{#PCA_Contractors .anchor}

Since 1981, Federal Student Aid (FSA) has utilized PCA contractors to
support collection and resolution of defaulted student loans maintained
by the Department. The contractors are paid commissions and bonuses
based on their collection activity. FSA currently has contracts with
approximately a dozen different firms. In a recent internal audit of the
Department's monitoring of these contracts, OIG found that FSA needs to
improve its monitoring of PCA contractor activities in that it not
effectively track complaints, perform desk audits, conduct site visits
for technical assistance and training, review deliverables, or maintain
contract files. In a related internal audit, OIG found that the
Department made incentive payments to PCA contractors that were not
consistent with the terms of the task orders, and that FSA needed to
improve its internal control over the invoice preparation process.

# 

Internal audit work has shown that weaknesses exist in the Department's
monitoring of the PCA contractors. Past audit and investigative work has
shown that the contractors were not appropriately performing their
responsibilities. This project is proposed to perform external audits on
selected contractors to evaluate compliance with contract terms.

# 

# [Anticipated Objective:]{.underline}

-   Evaluate performance of selected contractors, especially with
    respect to funds collected and remitted to the Department, to
    determine whether performance is in accordance with contract terms.

## **Preawards and Closeouts**

[]{#Preawards_Closeouts .anchor}

ED's Contracts & Acquisitions Management Office has a need for audit
services related to their responsibilities to administer ED's contracts.
These needs include the following areas of work:

-   Preaward -- to provide field pricing support and other information
    needed prior to awarding a contract.

-   Closeout -- to provide audits of incurred costs before closeout of
    the contract.

-   Indirect Cost -- to resolve issues relating to ED's role as
    cognizant agency for certain entities in approving indirect cost
    rates.

[Anticipated Objective:]{.underline}

-   Our objectives will be defined on a case-by-case basis to conform to
    the precise needs of the Contracts & Acquisition Management Office.

###### Audits of High-Risk Contractors

[]{#HighRisk_Contractors .anchor}

Periodically, program officials within the Department request OIG to
audit or investigate contractors where the office has identified the
possibility of fraud, waste or abuse of federal funds. In addition, OIG
receives hot-line calls alleging fraud or misuse of federal funds.

[Anticipated Objective:]{.underline}

-   Determine if high-risk contractors are in compliance with applicable
    laws, regulations, and contract terms.

**Financial** []{#Fin_Mgmt .anchor}**Management**

# **Oversight of the Department's Reimbursable Work Authorization (RWA) Process** 

[]{#RWA_Process .anchor}

According to information provided by the General Services Administration
(GSA) Boston Service Center, Federal legislation gives GSA the
responsibility to manage the Government's real property, including
"providing for repairs and alterations of Government owned or leased
space on a reimbursable basis." This function is the basis for the
Reimbursable Work Authorization (RWA) program which was established to
capture and bill the costs of altering, renovating, repairing, or
providing services in space managed by GSA over and above the basic
operations financed through rent.

[Anticipated Objectives:]{.underline}

1.  Determine the adequacy of the Department's oversight of the RWA
    process.

2.  Determine if RWA funds are tracked and accounted for properly.

3.  Determine if a systemic issue exists with the tracking and
    accounting of the RWA funds.

## **Accuracy and Completeness of Accounting Information in Financial Management Systems under Development**

> []{#FinMgmt_Systems_UnderDevelopment .anchor} 

 The Department Offices of Chief Financial Officer and Federal Student
Aid are proceeding with significant upgrades of their respective
Financial Management Systems, with FSA implementing an \"upgrade in
place\" in late Fall 2005, and OCFO targeting completion of a
significant \"reimplementation\" of its system by October 1, 2006. Both
systems will be expected to process financial transactions more
seamlessly than in the past. As part of its development, OCFO is
conducting several rounds of tests, and involving the help of an IV&V
contractor to ensure it has accurately captured functional requirements,
and development is consistent with these requirements. OIG will review
the Department\'s requirements and design of both systems to ensure that
they substantially comply with federal financial management system
requirements.

 

# [Anticipated Objectives:]{.underline}

1.  Determine whether significant system modifications are occurring to
    the Oracle COTS package that might impact on its certification as
    JFMIP compliant and whether the Department's implementation plans,
    including testing, adequately address the risks of modification.

2.  Determine whether the Department's implementation plans, including
    testing, adequately address integration of FSA's accounting with
    FMSS (the OCFO managed Department books of record) to ensure
    accurate recording of financial information.

 

# 

# **Digital Analysis of Departmental Disbursement Activity**

> []{#Digital_Analysis_DisbursActivity .anchor} 

Digital analysis is an audit technique designed to uncover abnormal
duplications of specific digits or digit combinations in large sets of
data. Unusual patterns of number occurrence may be indicative of poor
controls or fraud. Using Benford's Law as the expected digital
frequencies against which to compare the Department's data, we could
efficiently identify unusual transactions for further review. The
technique lends itself to analyzing contract payments and purchase card
transactions.

 

# [Anticipated Objectives:]{.underline}

1.  Identify unusual or unexpected payment occurrences indicative of
    weak controls or fraud.

2.  Determine effectiveness of controls related to suspect
    disbursements.

3.  Apply lessons learned to identify other complex data sets within the
    Department that would lend themselves to digital analysis, such as
    FSA program payment activities.

[]{#RecoveryAuditEfforts_OverpaidInterestPen .anchor}**Department's
Recovery Audit Efforts -- Overpaid Interest Penalty**

The Department obtained contract services for recovery auditing of
interest penalty payments to vendors. The contractor's September 2004
status report states that the Department overpaid interest penalties in
fiscal years 2002 and 2003 in the amounts of \$263,331 and \$262,808, on
1,128 and 1,249 invoices, respectfully.

[Anticipated Objectives:]{.underline}

1.  To determine the methodology used by the contractor to identify the
    erroneous payments.

2.  To determine whether the identified exceptions were accurately
    assessed as overpayments.

3.  To determine if the Department achieved their objectives and the
    contractor delivered services as set forth in the contract.

 

[]{#PysicalInventory_Procedures .anchor}**Review of the Department's
Physical Inventory Procedures**

In accordance with Government Accountability Office guidelines and
federal property management requirements, the Office of Management (OM)
is required to conduct a physical inventory of accountable personal
property within the Department of Education nationwide. This inventory
process is designed to collect and/or validate data on all applicable
equipment at Department of Education sites and to provide computerized
files to the Department for the purpose of updating physical inventory
systems to ensure data is current, complete, and accurate. OM plans to
contract for these services each year. Two physical inventories were
conducted between September and November 2002. The second inventory was
performed because of the Department's concerns with the validity of the
first inventory's results.

The Department's asset management system is in the process of being
reengineered. The new system is to be in place starting October 2005.

[Anticipated Objectives:]{.underline}

1.  To evaluate controls over the Department's physical inventory
    process.

2.  Verify whether selected assets are accounted for.

[]{#Drug_Contro_Funds .anchor}**Accounting for Drug Control Funds**

Section 1704(d) of Title 21 of the United States Code requires the
National Drug Control Program agencies to annually provide a detailed
accounting and authentication of all funds expended on National Drug
Control Program activities during the previous fiscal year. The
accounting and authentication will be conducted in accordance with ONDCP
circulars. The Department's Budget Service accounts for drug control
funds obligated by the Department and provides written assertions about
the information contained in the report. The Office of Inspector General
will perform procedures under the American Institute of Certified Public
Accountants' attestation standards.

[Anticipated Objective:]{.underline}

-   The Office of Inspector General will express a conclusion about the
    reliability of Department management's assertions related to the
    National Drug Control Program activities, as stated in the current
    ONDCP circular.

[]{#EDs_Financial_Statements .anchor}**Audit of the Department of
Education's Financial Statements**

The Government Management Reform Act of 1994 requires an annual audit of
the Department of Education's financial statements. The submission date
for accountability reports is November 15 following the fiscal year
audited. Audits of the Department's fiscal year 2004 and 2003 financial
statements resulted in unqualified opinions for both fiscal years.

The Chief Financial Officers Act indicates that financial statements
shall be audited in accordance with applicable generally accepted
government auditing standards by the agency's Inspector General or by an
independent external auditor, as determined by the Inspector General.
The Office of Inspector General has determined that it is more efficient
and effective to have an Independent Public Accountant perform the
financial audit, an area where they have substantial expertise and
flexibility, and allow OIG staff to focus on other important issues. The
Office of Inspector General will oversee the work performed by the
Independent Public Accountant.

[Anticipated Objectives:]{.underline}

1.  Provide an opinion on whether the Department-wide financial
    statements are fairly presented in all material respects.

2.  Report on internal controls that are intended to ensure that
    transactions are properly recorded to permit the preparation of
    reliable financial statements; maintain accountability for
    safeguarding of assets; and ensure that data supporting performance
    measures are properly recorded.

3.  Report on compliance with laws and regulations that could have a
    direct and material effect on the financial statements.

4.  Report on control issues identified during the Department's
    financial audit that warrants management's attention but are not
    required to be reported in the three primary audit reports.

###### Audit of Federal Student Aid's Financial Statements

[]{#FSAs_FinStatements .anchor}

The 1998 Higher Education Act Amendments established Student Financial
Assistance, now Federal Student Aid, as a performance-based organization
responsible for managing the operational functions supporting the
programs authorized under Title IV of the Act. To fulfill it's annual
reporting requirements, FSA financial statements will be audited each
year in compliance with the Government Management Reform Act of 1994 and
the Chief Financial Officer's Act of 1990. FSA received an unqualified
opinion for fiscal years 2004 and 2003. FSA's timeline for reporting
must match the Department's, therefore FSA's will also report by
November 15.

The Chief Financial Officers Act indicates that financial statements
shall be audited in accordance with applicable generally accepted
government auditing standards by the agency's Inspector General or by an
independent external auditor, as determined by the Inspector General.
The Office of Inspector General has determined that it is more efficient
and effective to have an Independent Public Accountant perform the
financial audit, an area where they have substantial expertise and
flexibility, and allow OIG staff to focus on other important issues. The
Office of Inspector General will oversee the work performed by the
Independent Public Accountant.

[Anticipated Objectives:]{.underline}

1.  Provide an opinion on whether FSA's financial statements are fairly
    presented in all material respects.

2.  Report on internal controls that are intended to ensure that
    transactions are properly recorded to permit the preparation of
    reliable financial statements; maintain accountability for
    safeguarding of assets; and ensure that data supporting performance
    measures are properly recorded.

3.  Report on compliance with laws and regulations that could have a
    direct and material effect on the financial statements.

4.  Report on control issues identified during the FSA financial audit
    that warrants management's attention but are not required to be
    reported in the three primary audit reports.

[]{#SpecialPurp_FinStatements_ClosingPackage .anchor}Audit of the
Department's Special Purpose Financial Statements (Closing Package)

The Government Management Reform Act of 1994 requires the Secretary of
the Treasury, in coordination with the Director of the Office of
Management and Budget (OMB), to annually prepare and submit to the
President and the Congress an audited financial statement for the
preceding fiscal year for the executive branch of the United States
Government. The Department of the Treasury's Financial Management
Service (FMS) prepares the Financial Report (FR) using special-purpose
financial statements submitted by the significant entities to the FR[^2]
and adjusted trial balances from the remainder of the entities included
in the FR. The special-purpose financial statements are required to be
audited and reports submitted to the FMS, OMB and General Accounting
Office. The financial statements shall be audited in accordance with
applicable generally accepted government auditing standards.

[Anticipated Objective:]{.underline}

-   Provide an opinion on whether the Department's special purpose
    financial statements are fairly presented in all material respects.

###### Audit of the Department Intragovernmental Activities and Balances

[]{#Intragovernm_Activities_Balances .anchor}

The Government Management Reform Act (GMRA) of 1994 mandates that the
Federal Government publish a consolidated audited FR. The Budget and
Accounting Procedures Act of 1950 allows the Secretary of the Treasury
to stipulate the format and requirements of executive agencies to
furnish financial and operational information to the President and the
Congress to comply with the GMRA. The Secretary of the Treasury
developed guidance in the U.S. Department of Treasury's Financial Manual
(TFM) Chapter 4700 to provide agencies with instructions to meet the
requirements of GMRA.

TFM Chapter 4700 requires Chief Financial Officers (CFOs) of verifying
agencies to prepare a "closing package" and the Inspectors General (IGs)
of the verifying agencies to provide assurance as to the consistency of
the closing package information with the agencies\' comparative,
audited, consolidated department-level financial statements. In
addition, the TFM requires the IGs to perform an agreed-upon procedures
engagement on the Intragovernmental transactions and balances contained
in the closing package. Those required procedures are set forth in the
TFM.

[Anticipated Objective:]{.underline}

-   Perform the agreed-upon procedures related to the Department's
    reported intragovernmental activity/balances, as discussed in the
    TFM.

# **Human Capital**

# **Review of the Department's Implementation of its Human Capital Management Plan**

# The Department released its Human Capital Management Plan in September 2004. By the end of 3^rd^ quarter FY 05, 37 action steps to implement improvement initiatives are scheduled to be completed. These actions include "revise performance award policy to focus cash awards on highest performing staff" and "strategically invest in training required to build and develop employees' skills in mission critical areas---include requirements in 2007 budget." The actions focus on ensuring "that future leaders are prepared to lead and manage our workforce, that we can recruit, develop, retrain and assign our employees to achieve our most critical priorities; and that we continue to strengthen our results- oriented culture of accountability." (Rod Paige)

# Considerable staff time went into the creation of the Human Capital Management plan which the Office of Personnel Management (OPM) requires the Department to have in place. It is critical that not only are the planned actions completed, but that the actions have the desired effect on staff.

# [Anticipated Objectives:]{.underline}

1.  Determine if the Department has completed the action steps
    identified.

2.  Determine if the action steps were completed in a timely manner.

3.  Determine if Department staff see impact from the completion of the
    action steps.

# **Audit of the Department's Human Capital Management**

[]{#Auditof_HumCap_Mgmt .anchor} 

The President's Management Agenda (2001) (PMA) is an aggressive strategy
for improving management in five government-wide initiatives and
includes Human Capital. OMB and OPM evaluate federal departments on a
quarterly basis, on their status in executing the human capital
initiatives, as well as their progress in meeting planned actions and
other milestones. OMB issues a "traffic light" grading system: green for
success, yellow for mixed results, and red for unsatisfactory. These
scores are based on standards of success defined by OMB and OPM. OPM has
developed a *Human Capital Assessment and Accountability Framework* that
provides consolidated guidance on human capital. The framework sets six
human capital standards for success: strategic alignment, workforce
planning and deployment, leadership and knowledge management, results
oriented performance culture, talent and accountability. The Framework
also provides guidance on achieving these standards, such as critical
success factors, suggested performance indicators, and other best
practices for human capital management. The Department in 2004 received
a yellow score and in 2005 received a green score from OMB.

 

A review of the Department's implementation of it's Human Capital
Management Plan is appropriate at this point to reaffirm the
Department's accomplishments in progressing in the PMA.

# [Anticipated Objectives:]{.underline}

 

1.  Assess the Department's internal controls, processes, and procedures
    for addressing the PMA, specifically evaluating the processing of
    personnel actions and annual performance appraisals.

2.  Measure the Department's recruitment actions and averages to the OPM
    hiring model benchmarks.

**Non-Federal Audit** []{#Non_Federal_AuditQuality .anchor}**Quality**

### **Special Project to Statistically Measure the Quality of Single Audits**

[]{#Qualityof_SingleAudits .anchor}

The OIG will continue to lead, and bring to completion, a national
project to statistically measure the quality of single audits of
grantees and sub grantees of Federal programs. These are the audits
required under the Federal Single Audit Act and OMB Circular A-133.
Federal agencies, including OMB, Health and Human Services (HHS),
Housing and Urban Development (HUD), Labor, Transportation, the
Environmental Protection Agency (EPA), and the National Science
Foundation and the State Auditors of Georgia, Illinois, and Virginia
have worked together with OIG to plan and conduct this interagency
project. It involves performance of over 200 Quality Control Reviews
(QCRs) conducted by the participating Federal agencies, and contractors.
The QCRs will be completed early in the fiscal year, with the report
planned to be issued later in the fiscal year.

### **Quality Reviews of Audits**

[]{#Quality_Reviews_ofAudits .anchor}

We will conduct a program of QCRs of approximately 100 non-Federal
audits, including OMB Circular A-133 audits and audits of proprietary
schools, lenders and guaranty agencies (and their servicers). When
appropriate, we will make referrals to state licensing boards and
professional organizations for disciplinary actions and initiate
suspension and debarment actions.

[Anticipated Objective:]{.underline}

-   To determine if the non-federal audits are conducted in accordance
    with appropriate audit standards.

### **Preparation and Issuance of Audit Guidance for Non-Federal Auditors**

[]{#AuditGuidance_forNonFed_Auditors .anchor}

The OIG publishes audit guides relating to audits of the Department's
FSA programs administered by proprietary postsecondary institutions,
lenders and guaranty agencies, and their servicers. OIG also coordinates
with and assists Department program officials and OMB in updating the
OMB Single Audit Compliance Supplement, with respect to Department
programs. By doing this, we ensure that auditors have up-to-date and
relevant guidance that they need to properly audit the Department's
programs.

In FY 2006, we plan to issue revised versions of two audit guides that
have been under development:

*\"Compliance Audits for Lenders and Lender Servicers Participating in
the Federal Family Education Loan Program\"* and

*\"Audits of Federal Student Financial Assistance Programs at
Participating Institutions and Institution Servicers.\"*

### **Technical Assistance and Cognizant Agency for Audit Functions**

[]{#TA_forCognizant_Agency .anchor}

We respond to questions from non-federal auditors, program officials,
and others concerning audit requirements pertaining to audits of
Department programs. We coordinate with the Department's OCFO, FSA, and
program offices to provide technical assistance needed by them arising
from audit resolution activities. We maintain a website which provides
copies of audit guides issued by our office and links to sites with
other guidance pertinent to non-federal audits.

### 

The Department has been designated as Cognizant Agency for Audit (CAA)
for over 400 entities, pursuant to OMB Circular A-133, which implements
the Single Audit Act. OIG fulfills several key CAA responsibilities,
including audit quality review and provision of technical assistance to
the entities and their auditors. OIG also coordinates with the other
Department offices that perform CAA responsibilities, including the
Department's OCFO.

# **Survey of CPA Firms Testing of Special Allowance Billings of Lenders** 

> []{#SpecialAllowance_BillingsofLenders .anchor}

During a series of compliance audits from 1998 -- 2001 audits, a CPA
firm failed to properly test special allowance billings. During this
time, secondary market through its servicer over-billed the Department
by more than \$10.3 million. When the billing error was self-reported,
it repaid the \$10.3 million. Although the funds were recouped, the
question remains as to whether CPA firms are routinely missing such
over-billings due to poor testing during their audits. Since the
Department relies heavily upon CPAs firms to protect program integrity,
this proposed survey will assess the degree of reliance the Department
can place on these audits.

[Anticipated Objective:]{.underline}

-   Determine whether CPA firms are properly assessing the billing
    practices of its lenders and servicer clients.

[]{#Appendix .anchor}**Appendix**

**GOAL DESCRIPTIONS**

**[The President's Management Agenda]{.underline}**

**Issue #1:** Strategic Management of Human Capital

**Issue #2:** Competitive Sourcing

**Issue #3:** Improved Financial Performance

**Issue #4:** Expanded Electronic Government

**Issue #5:** Budget and Performance Integration

**[The Department's Strategic Plan]{.underline}**

**Goal One:** Create a Culture of Achievement

**Goal Two:** Improve Student Achievement

**Goal Three:** Develop Safe Schools and Strong Characters

**Goal Four:** Transform Education into an Evidence-Based Field

**Goal Five:** Enhance the Quality of and Access to Postsecondary and
Adult Education

**Goal Six:** Establish Management Excellence

**[OIG's Strategic Plan Goals]{.underline}**

**Goal One:** To Improve the Department's Programs and Operations

**Goal Two:** To Protect the Integrity of the Department's Programs and
Operations

+----------------------------------------------------------+---+---+---+
| **Title of Project**                                     | * |   |   |
|                                                          | * |   |   |
|                                                          | G |   |   |
|                                                          | o |   |   |
|                                                          | a |   |   |
|                                                          | l |   |   |
|                                                          | N |   |   |
|                                                          | u |   |   |
|                                                          | m |   |   |
|                                                          | b |   |   |
|                                                          | e |   |   |
|                                                          | r |   |   |
|                                                          | * |   |   |
|                                                          | * |   |   |
+----------------------------------------------------------+---+---+---+
|                                                          | * | * | * |
|                                                          | * | * | * |
|                                                          | P | D | O |
|                                                          | M | e | I |
|                                                          | A | p | G |
|                                                          | * | t | * |
|                                                          | * | . | * |
|                                                          |   | * |   |
|                                                          |   | * |   |
+----------------------------------------------------------+---+---+---+
| **PROGRAM PERFORMANCE AND ACCOUNTABILITY**               |   |   |   |
+----------------------------------------------------------+---+---+---+
| State Education Agencies Monitoring of LEAs and State    |   | 1 | 2 |
| Oversight Agencies                                       | 5 |   |   |
+----------------------------------------------------------+---+---+---+
| Review of Virtual Charter Schools                        | 5 | 1 | 2 |
+----------------------------------------------------------+---+---+---+
| Title I, Part A Comparability Requirement                | 5 | 2 | 2 |
+----------------------------------------------------------+---+---+---+
| Errors in the Scoring of State Assessments               | 5 | 1 | 1 |
+----------------------------------------------------------+---+---+---+
| Corrective Action and Restructuring of Title I Schools   | 5 | 2 | 1 |
| In Improvement                                           |   |   |   |
+----------------------------------------------------------+---+---+---+
| Reading First                                            | 5 | 2 | 1 |
+----------------------------------------------------------+---+---+---+
| Audit of Congressionally Directed Grants                 | 5 | 2 | 2 |
+----------------------------------------------------------+---+---+---+
| Review of the Implementation of Schoolwide Plans         | 5 | 1 | 1 |
+----------------------------------------------------------+---+---+---+
| State Administration of the Vocational Rehabilitation    | 5 | 1 | 2 |
| State Grant Program                                      |   |   |   |
+----------------------------------------------------------+---+---+---+
| Review of the Costs for Adult Education Basic Grant      | 5 | 1 | 2 |
| Program                                                  |   |   |   |
+----------------------------------------------------------+---+---+---+
| Grant Pre-award Audits                                   | 5 | 6 | 2 |
+----------------------------------------------------------+---+---+---+
| Department Management and Monitoring of Grant Products   | 5 | 6 | 1 |
+----------------------------------------------------------+---+---+---+
| Oversight of ED Programs and Sharing of Program          | 5 | 6 | 1 |
| Information across ED Components/Units                   |   |   |   |
+----------------------------------------------------------+---+---+---+
| Department Use of Administrative Stays in Audit          | 5 | 6 | 1 |
| Resolution                                               |   |   |   |
+----------------------------------------------------------+---+---+---+
| Review of the Transition to Teaching Program             | 5 | 6 | 2 |
+----------------------------------------------------------+---+---+---+
| Data Quality of Economically Disadvantaged Student       | 5 | 6 | 1 |
| Subgroup Counts under No Child Left Behind (NCLB)        |   |   |   |
+----------------------------------------------------------+---+---+---+
| Late Applications for Impact Aid Funding                 |   | 6 | 1 |
|                                                          | 5 |   |   |
+----------------------------------------------------------+---+---+---+
| Data Assessment Initiative                               | 4 | 6 | 2 |
+----------------------------------------------------------+---+---+---+
| Review of Potential Research Grant Misconduct            | 2 | 6 | 2 |
+----------------------------------------------------------+---+---+---+
| Audits of High--Risk Grantees                            |   | 1 | 2 |
|                                                          | 5 |   |   |
+----------------------------------------------------------+---+---+---+
| Review of the Department's Discretionary Grant Award     | 1 | 1 | 5 |
| Process                                                  |   |   |   |
+----------------------------------------------------------+---+---+---+
| Investigation of Participants in State and Local         | 5 | 6 | 2 |
| Programs                                                 |   |   |   |
+----------------------------------------------------------+---+---+---+
|                                                          |   |   |   |
+----------------------------------------------------------+---+---+---+
| **FEDERAL STUDENT AID**                                  |   |   |   |
+----------------------------------------------------------+---+---+---+
| Special Allowance Payments for Loans Funded by           | 6 | 6 | 2 |
| Tax-exempt Obligations                                   |   |   |   |
+----------------------------------------------------------+---+---+---+
| Accuracy of Lender Interest and Special Allowance        | 6 | 6 | 2 |
| Payments                                                 |   |   |   |
+----------------------------------------------------------+---+---+---+
| Voluntary Flexible Agreements                            | 6 | 6 | 1 |
+----------------------------------------------------------+---+---+---+
| Accuracy of Default Claims Payments by Guaranty Agencies | 6 | 6 | 2 |
+----------------------------------------------------------+---+---+---+
| Controls Over Improper Payments in the FFEL Program      | 6 | 6 | 1 |
+----------------------------------------------------------+---+---+---+
| NSLDS Death Disbursement Evaluation                      | 6 | 6 | 1 |
+----------------------------------------------------------+---+---+---+
| Review of the D.C. Tuition Assistance Grant Program      | 6 | 6 | 1 |
| (DCTAGP)                                                 |   |   |   |
+----------------------------------------------------------+---+---+---+
| Controls for Safeguarding Student Information            | 6 | 6 | 1 |
+----------------------------------------------------------+---+---+---+
| Effectiveness of School Verification of FAFSA Data       | 6 | 6 | 2 |
+----------------------------------------------------------+---+---+---+
| FSA Edit Resolution at Distance Learning Postsecondary   | 6 | 6 | 1 |
| Institutions                                             |   |   |   |
+----------------------------------------------------------+---+---+---+
| Department Controls Over Title IV Policy Guidance        | 6 | 6 | 1 |
| Provided to Postsecondary Institutions                   |   |   |   |
+----------------------------------------------------------+---+---+---+
| Foreign Medical School FFELP Eligibility                 | 6 | 6 | 1 |
+----------------------------------------------------------+---+---+---+
| School-as-Lender- Process Inducements                    | 6 | 6 | 1 |
+----------------------------------------------------------+---+---+---+
| Audits of Selected Postsecondary Institutions            | 6 | 6 | 2 |
+----------------------------------------------------------+---+---+---+
| Investigation of Institutional Fraud                     | 6 | 6 | 2 |
+----------------------------------------------------------+---+---+---+
| Investigation of Recipients Fraud                        | 6 | 6 | 2 |
+----------------------------------------------------------+---+---+---+
| Investigation of Financial Aid Preparers/Clients         | 6 | 6 | 2 |
+----------------------------------------------------------+---+---+---+
| Investigations of Identity Theft                         | 6 | 6 | 2 |
+----------------------------------------------------------+---+---+---+
|                                                          |   |   |   |
+----------------------------------------------------------+---+---+---+
| **INFORMATION TECHNOLOGY**                               |   |   |   |
+----------------------------------------------------------+---+---+---+
| Information Systems Controls at Data Centers             | 4 | 6 | 1 |
+----------------------------------------------------------+---+---+---+
| Security of Oracle Financial Reporting Systems           | 4 | 6 | 1 |
+----------------------------------------------------------+---+---+---+
| Federal Information Security Management Act Evaluation   | 4 | 6 | 1 |
| Report                                                   |   |   |   |
+----------------------------------------------------------+---+---+---+
| Department's Grant Administration Payment System         | 1 | 6 | 1 |
| Implementation                                           |   |   |   |
+----------------------------------------------------------+---+---+---+
| Cybercrime Investigations                                | 4 | 6 | 2 |
+----------------------------------------------------------+---+---+---+
|                                                          |   |   |   |
+----------------------------------------------------------+---+---+---+
| **PROCUREMENT**                                          |   |   |   |
+----------------------------------------------------------+---+---+---+
| Review of the Department's Competitive Sourcing/A-76     | 2 | 6 | 1 |
| Competitions                                             |   |   |   |
+----------------------------------------------------------+---+---+---+
| Review of the Department's Procurement Function          | 1 | 6 | 1 |
+----------------------------------------------------------+---+---+---+
| Review of Compliance with Contract Terms -- Private      | 6 | 6 | 2 |
| Collection Agency (PCA) Contractors                      |   |   |   |
+----------------------------------------------------------+---+---+---+
| Preawards and Closeouts                                  | 2 | 6 | 2 |
+----------------------------------------------------------+---+---+---+
| Audits of High Risk-Contractors                          | 2 | 6 | 2 |
+----------------------------------------------------------+---+---+---+
|                                                          |   |   |   |
+----------------------------------------------------------+---+---+---+
| **FINANCIAL MANAGEMENT**                                 |   |   |   |
+----------------------------------------------------------+---+---+---+
| Oversight of the Department's Reimbursable Work          | 3 | 6 | 1 |
| Authorization (RWA) Process                              |   |   |   |
+----------------------------------------------------------+---+---+---+
| Accuracy and Completeness of Accounting Information in   | 3 | 6 | 1 |
| Financial Management Systems under Development           |   |   |   |
+----------------------------------------------------------+---+---+---+
| Digital Analysis of Department Disbursement Activity     | 3 | 6 | 1 |
+----------------------------------------------------------+---+---+---+
| Department's Recovery Audit Efforts -- Overpaid Interest | 3 | 6 | 2 |
| Penalty                                                  |   |   |   |
+----------------------------------------------------------+---+---+---+
| Review of the Department's Physical Inventory Procedures | 3 | 6 | 1 |
+----------------------------------------------------------+---+---+---+
| Accounting for Drug Control Funds                        | 3 | 6 | 1 |
+----------------------------------------------------------+---+---+---+
| Audit of the Department of Education's Financial         | 3 | 6 | 1 |
| Statements                                               |   |   |   |
+----------------------------------------------------------+---+---+---+
| Audit of Federal Student Aid's Financial Statements      | 3 | 6 | 1 |
+----------------------------------------------------------+---+---+---+
| Audit of the Department's Special Purpose Financial      | 3 | 6 | 1 |
| Statements (Closing Package)                             |   |   |   |
+----------------------------------------------------------+---+---+---+
| Audit of the Department Intragovernmental Activities and | 3 | 6 | 1 |
| Balances                                                 |   |   |   |
+----------------------------------------------------------+---+---+---+
|                                                          |   |   |   |
+----------------------------------------------------------+---+---+---+
| **HUMAN CAPITAL**                                        |   |   |   |
+----------------------------------------------------------+---+---+---+
| Review of the Department's Implementation of its Human   | 1 | 6 | 2 |
| Capital Management Plan                                  |   |   |   |
+----------------------------------------------------------+---+---+---+
| Audit of the Department's Human Capital Management       | 1 | 6 | 1 |
+----------------------------------------------------------+---+---+---+
|                                                          |   |   |   |
+----------------------------------------------------------+---+---+---+
| ###### NON-FEDERAL AUDIT QUALITY                         |   |   |   |
+----------------------------------------------------------+---+---+---+
| Special Project to Statistically Measure the Quality of  | 3 | 6 | 1 |
| Single Audits                                            |   |   |   |
+----------------------------------------------------------+---+---+---+
| Quality Reviews of Audits                                | 3 | 6 | 2 |
+----------------------------------------------------------+---+---+---+
| Preparation and Issuance of Audit Guidance for           | 6 | 6 | 1 |
| Non-Federal Auditors                                     |   |   |   |
+----------------------------------------------------------+---+---+---+
| Technical Assistance and Cognizant Agency for Audit      | 3 | 6 | 1 |
| Functions                                                |   |   |   |
+----------------------------------------------------------+---+---+---+
| Survey of CPA Firms Testing of Special Allowance         | 6 | 6 | 1 |
| Billings of Lenders                                      |   |   |   |
+----------------------------------------------------------+---+---+---+

[^1]: Service provider refers to a private sector contractor or employee
    team.

[^2]: The significant entities to the Financial Report of the U.S.
    Government are identified in the Financial Management Service's
    Treasury Financial Manual Chapter 4700.