UNITED STATES DEPARTMENT OF EDUCATION

OFFICE OF SPECIAL EDUCATION AND

REHABILITATIVE SERVICES

REHABILITATION SERVICES ADMINISTRATION

WASHINGTON, D.C. 20202

INFORMATION MEMORANDUM

RSA-IM-91-22

RSM-1001

DATE: June 5, 1991

ADDRESSEES: STATE VOCATIONAL REHABILITATION AGENCIES (GENERAL)

STATE VOCATIONAL REHABILITATION AGENCIES (BLIND)

CLIENT ASSISTANCE PROGRAM GRANTEES

RSA RECIPIENTS OF DISCRETIONARY FUNDS

RSA SENIOR MANAGEMENT TEAM

SUBJECT : ACCOUNTABILITY FOR UNLIQUIDATED OBLIGATIONS UNDER STATE
VOCATIONAL REHABILITATION PROGRAMS

CONTENT: Accurate and timely accounting records of unliquidated
obligations are

especially important for the State vocational rehabilitation programs

> because of the provision for reallotment of program funds under 34 CFR
> Part 361.87. In particular, the accurate and timely determination of
> all unliquidated obligations by State vocational rehabilitation
> agencies is needed. Over-statements of reported unliquidated
> obligations adversely affect reallotment decisions to the extent that
> the excess program funds reflected in the overstatements could have
> been given up during the reallotment process and used by other State
> agencies in need of additional funds.

The Rehabilitation Service Manual in Section 1001.10 provides that a

State vocational rehabilitation program should document its unliquidated

obligations as follows:

\"Invoices or other evidence of indebtedness which remain unpaid at the
end of a reporting period are generally listed by name of the vendor and
the amount direct from the obligating documents. This list is the
schedule of unliquidated obligations.\"

As in the past, RSA will monitor the reallotment process. However, to be

realistic in terms of the resources and time required to assess

accountability, RSA will concentrate its monitoring efforts on \"high
risk\"

grantees as defined under 34 CFR 80.12(a).

**- 2 -**

\"A grantee or subgrantee may be considered \"high risk\" if an awarding
agency determines that a grantee or subgrantee: (1) Has a history of
unsatisfactory performance, or (2) Is not financially stable, or (3) Has
a management system which does not meet the management standards set
forth in this part \...\" A grantee that has a history of overreporting
unliquidated obligations would meet the definition of \"high risk\".

High risk grantees are known candidates for accountability improvements,
as determined by RSA from potential information sources that include but
are not limited to:

-program and financial reports

-monitoring activities

-independent audits

-program evaluations, and

-telephone calls, correspondence or site visits

Information sources may indicate past problems or current or potential
problems. In addition, available audit or evaluation findings or data on
the financial stability of a State agency may indicate close scrutiny of
the agency is required. A State agency that has a sudden or
unanticipated problem or change may require RSA follow-up, as well.

For high risk grantees, RSA may impose \"Special conditions or
restrictions in the grant award (which) may include:\... (3) Requiring
additional, more detailed financial reports; (4) Additional project
monitoring\...\" (34 CFR 80.12(b).

RSA may request additional information to ensure reliable and timely
information for reallotments. RSA\'s request will be on a case-specific
basis and may include requiring a submittal of a schedule of
unliquidated obligations as described under Section 1001.10 of the RSA
manual (cited earlier). In addition, RSA will compare year-end obligated
balances with amounts reported in the final report, and schedule high
priority reviews accordingly.

**RELATED REGULATORY AUTHORITIES:**

34 CFR 76.260, .261, .702, .730, and .731 and 34 CFR 80.20, .41, and .50

**INQUIRIES TO:** RSA Regional Commissioners

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Commissioner