NATIONAL ENDOWMENT FOR THE HUMANITIES

				OFFICE OF INSPECTOR GENERAL

				   SEMIANNUAL REPORT
				OF THE INSPECTOR GENERAL
				   TO THE CONGRESS

	OCTOBER 1, 1995 TO MARCH 31, 1996

	REPORT NUMBER 14

	"Democracy demands wisdom and vision in its citizens"
	- National Foundation on the Arts and the Humanities Act of 1965

	April 30, 1996

The Honorable Sheldon Hackney
Chairman
National Endowment for the Humanities
Washington, DC  20506

Dear Chairman Hackney:

I am submitting herewith the fourteenth Semiannual Report on the activities of the Endowment's 
Office of Inspector General (OIG) for the by period ending March 31, 1996.  The report, which is 
required by the Inspector General Act as amended, provides an overview of the activities of the 
Office during this six-month period.  The Act requires that you transmit this report, along with 
any comments you may wish to make and other statistical tables and reports required by the law, 
to the appropriate Congressional committee and subcommittee within thirty days from receipt of 
this letter.

This six-month period has been very challenging for both the NEH and the OIG.  The agency 
provided Reduction-in-Force papers to staff in October 1995 and those staff separated on December
4, 1995.  This was followed by the furlough brought about by the disagreement over the budget 
by the President and the Congress.  Next the Blizzard of 1996 caused staff to miss several days 
from work.  Finally, the Endowment reduced its office space and all offices were effected.  In 
total, we lost more than twenty five days of work during this reporting period.  Further, our 
auditor-investigator retired in the beginning of February 1996.  Since March 1995, our staff has 
been reduced by an auditor, an auditor-investigator and a  clerk typist.  We will continue to 
carry out our mission by working with you and your staff to build a better agency.

For the fiscal year 1996, the Congress has made deep cuts in the Endowment and was considering 
eliminating the agency entirely.  You leave no doubt about the importance of the National 
Endowment for the Humanities and its mission to the American taxpayer.  You have taken 
significant steps to downsize the agency; however, more needs to be done to reinvent and 
reorganize the agency.  The Enterprise Office is a positive a step in that direction.  Creating 
a leaner more efficient, more cost-effective organization should be a top priority.  Best 
practices for process improvement by each office and division should be looked into.

Please consider the OIG as an objective outsider regarding management operating concerns.  We 
welcome every opportunity to assist you in improving NEH operations.

I appreciate the cooperation of all NEH employees in the conduct of the OIG activities.

					Sincerely,

					Sheldon L. Bernstein
					Inspector General
Enclosure	

					TABLE OF CONTENTS

LETTER TO THE CHAIRMAN
		

EXECUTIVE SUMMARY									1
REPORTING REQUIREMENTS OF THE SEMIANNUAL REPORT						2

AUDITS AND SURVEYS									3
Significant Problems, Abuses, and Deficiencies
Summary of Audit Reports								3
Cognizant Audit Agency Reviews								3

INVESTIGATIONS										4
Hotline and Prevention Activities							4
Staffing										5

OTHER ACTIVITIES									6
Indirect Cost Rate Negotiations/Reviews							6
Attending Meetings, Panels, Etc								6
Peer Review										6
Strategic Planning for the OIG								6
Participation on the Executive Council on
  Integrity and Efficiency								7
Regulatory and Legislative Reviews							7
Federal Managers' Financial Integrity Act Reviews					7
Training										7
Audit Resolution and Follow-Up								7

REPORTS WITH OUTSTANDING MANAGEMENT DECISIONS						8

SUMMARY OF AUDIT REPORTS ISSUED BEFORE THE COMMENCEMENT
  OF THE REPORTING PERIOD FOR WHICH NO MANAGEMENT DECISION HAS BEEN MADE		9

AGENCY REFUSAL TO PROVIDE INFORMATION OR ASSISTANCE					10

SIGNIFICANT REVISED MANAGEMENT DECISIONS MADE DURING
  THE REPORTING PERIOD									10

SIGNIFICANT MANAGEMENT DECISIONS WHICH THE INSPECTOR GENERAL
  IS IN DISAGREEMENT									10

LIST OF AUDIT REPORTS									11
External Audit/Survey Reports Issued							11
Indirect Cost Rate Desk Review Reports Issued						11
Cognizant Audit Agency Review Reports Issued						12

TABLE I - INSPECTOR GENERAL-ISSUED REPORTS
WITH QUESTIONED COSTS									13

TABLE II - INSPECTOR GENERAL-ISSUED REPORTS WITH
RECOMMENDATIONS THAT FUNDS BE PUT TO BETTER USE						13

GLOSSARY OF AUDIT TERMINOLOGY								14

APPENDIX 1 - OVERVIEW OF THE NATIONAL ENDOWMENT
FOR THE HUMANITIES									15

APPENDIX 2 - ESTABLISHMENT OF THE 
OFFICE OF INSPECTOR GENERAL								15

					EXECUTIVE SUMMARY

This is the fourteenth semiannual report issued by the Office of Inspector General (OIG) of the 
National Endowment for the Humanities (NEH) pursuant to the Inspector General Act of 1978, as 
amended.  The report summarizes the major activities and accomplishments of the office from 
October 1, 1995 to March 31, 1996.

DOWNSIZING/REDUCTION-IN-FORCE/FURLOUGHS

A major phase of activity for the agency during the current reporting period was the 
implementation of a reduction-in-force of employees due to a reduced appropriation level for
fiscal year 1996.  The results of this activity is a smaller agency with reduced funding, but 
one that will be responsive to the American taxpayer and the humanities community.  Questions 
were brought to our attention regarding NEH staff size for each office and we were not provided 
information to audit.  The OIG was unable to review the documentation relative to the 
reduction-in-force plans made by management since the Senior Humanities advisor informed us he 
does not have written documentation available for review.  

We will not be able to provide the same level of services to the NEH as in prior periods; 
therefore, we are planning more inspections/evaluations, reviews, and questionnaire surveys to 
help us overcome the shortage of staff.  We are constantly reviewing the risks of NEH and OIG 
priorities.

INTERNAL AUDITS/INSPECTIONS

We began work on several projects this period that in a normal period would have been completed.
These are: (1)  a review of the effectiveness of the management of telephone costs; (2) a limited
audit of compensation charges to media grantees; and, (3)  a user survey for Humanities Magazine.

EXTERNAL/GRANTEE AUDITS/SURVEYS

We issued a report on our desk audits of sixteen state humanities councils' gift certificate 
letters.  This is the third and last desk audit that now has covered all of the state humanities 
councils within a two year period.  Our review revealed that initially only four state humanities
councils provided us with adequate documentation.  The councils had to obtain documentation or 
substitute gifts from other donors.

PEER REVIEW

The OIG is currently undergoing a peer review being conducted by the National Archives Records 
Administration's OIG.  All government audit organizations must under go at least one external 
quality control review every three years.

INVESTIGATION ACTIVITY

During this period, we received over twenty Hotline contacts.  We completed one internal 
investigation and provided a report to management.

Most matters concerned personnel issues stemming from the agency's downsizing.  One matter that 
was open at the beginning of the period remains open.  This involves a grantee.  Two 
investigative matters remain open as of March 31, 1996; both pertain to grantees.

				REPORTING REQUIREMENTS OF THE
				   SEMIANNUAL REPORT 
				OF THE OFFICE OF INSPECTOR GENERAL

Indexed below are the specific reporting requirements prescribed by the Inspector General Act 
of 1978, as amended (Public Law 100-504).

																							page

Section 4(a)(2) -- Review of Legislation and 
  Regulations										*

Section 5(a)(1) -- Significant Problems, Abuses, 
  and Deficiencies									3

Section 5(a)(2) -- Recommendations with Respect to 
  Significant Problems, Abuses, and Deficiencies					3

Section 5(a)(3) -- Significant Un-implemented Recommendations
  Described in Previous Semiannual Reports						6

Section 5(a)(4) -- Matters Referred to Prosecutive
  Authorities										*

Section 5(a)(5) and 6(b)(2) -- Summary of Instances Where 
  Information Was Refused								4

Section 5(a)(6) -- Listing of Audit Reports Showing Number
  of Reports and Dollar Value of Questioned 
  Costs											8

Section 5(a)(7) -- Summary of Significant Reports					3

Section 5(a)(8) -- Statistical Table Showing Number of 
  Reports and Dollar Value of Questioned Costs						14

Section 5(a)(9) -- Statistical Table Showing Number of
  Reports and Dollar Value of Recommendations that
  Funds Be Put to Better Use								14

Section 5(a)(10) -- Summary of Audit Reports Issued Before
  the Commencement of the Reporting Period for Which No Management
  Decision Has Been Made By the End of the Reporting Period  				7

Section 5(a)(11) -- Significant Revised Management 
  Decisions Made During the Reporting Period							

Section 5(a)(12) -- Significant Management Decisions with
  which the Inspector General Is in Disagreement							

             
*	None.

					AUDITS AND SURVEYS

			SIGNIFICANT PROBLEMS, ABUSES, AND DEFICIENCIES

One report was issued this period that disclosed significant problems.

Audit of the Gift Certification Letters from State Humanities Councils [96-01 (EA)]

We completed the third and final round of desk audits in a series of follow-up audits of 
sixteen state humanities councils' records and documentation supporting gift certification 
letters.

The audit was performed to evaluate the adequacy of the councils'  1)  records supporting gifts 
certified and matched, and 2)  documentation used to decide eligibility of the gifts certified 
to NEH for release of federal matching funds.  The audit also reviewed the guidance provided to 
the councils by NEH as it relates to determining eligibility.

As in our first two audits OIG-94-03, and OIG 95-03, issued September 29, 1994, and May 19, 1995,
the current audit revealed that 1)  the procedures used by some councils for determining 
eligibility are inadequate, and 2)  some councils continue to certify third-party donations that 
have inadequate documentation or that are ineligible for releasing federal matching funds.  

From a universe of $1,073,327 of gifts certified, we questioned $228,004.  Of this amount 
$ 112,384 has been resolved, and $ 115,620 remains unresolved.  Thirteen councils where 
eligibility problems were disclosed have provided the OIG with adequate documentation supporting
eligibility for donations certified or have substituted other gifts.  Three councils submitted 
$ 115,620 of gifts received from regrantees that were received after the regrant periods ended.  
We have referred this matter to the NEH Grants office who will determine the eligibility of the 
gifts.

				SUMMARY OF AUDIT REPORTS

				    EXTERNAL ACTIVITY

Audit of the Gift Certification Letters From State Humanities Councils [96-01(EA)]

See Significant Problems, Abuses, and Deficiencies (above)

				COGNIZANT AUDIT AGENCY REVIEWS

We receive audit reports on NEH grantee organizations from other federal agencies, state and 
local government auditors, and independent public accountants.  These reports generally are the 
result of A-128 or A-133 audits.  In most instances, the cognizant agency is the Department of 
Health and Human Services, the federal agency with the predominant financial interest.  The 
reports are reviewed by OIG staff and the results of the review are submitted to NEH management 
for action, if needed, or for information purposes.  During this period we reviewed seventy 
reports.

					INVESTIGATIONS

The Inspector General Act of 1978, as amended, provides that the Inspector General may receive 
and investigate complaints or information concerning the possible existence of an activity 
constituting a violation of law, rules, or regulations; mismanagement; gross waste of funds; or 
abuse of authority.  The OIG does not employ special investigators.  Should the need arise, 
either the matter would be referred to the Federal Bureau of Investigation or assistance would 
be contracted with another federal Office of Inspector General.  The results of investigations 
may be referred to the appropriate federal, state, or local prosecutive authorities for action.

As of October 1, 1995, we had two files open, one continues to be open as of March 31, 1996, pending 
information from a grantee.

During the six-month period October 1, 1995 to March 31, 1996, we received more then twenty 
"Hotline"  contacts.  Most are not included in our summary (below) because they were dismissed 
or referred immediately.  We looked into two personnel issues concerning NEH employees and two 
issues involving grantee matters.

Concerning a personnel issue that was open on October 1, 1995, we have conducted an investigation
and closed the matter. This involved an anonymous allegation concerning questionable personnel 
procedures within the Office of the Chairman.  The anonymous source alleged that certain 
individuals were promoted in order to protect them from possible reduction-in-force actions that 
may take place in the near future.  The source alleged that nine staff were promoted with no 
change in job responsibilities; only their job title changed in some minor manner.  In addition, 
the person predicted that three staff in the chairman's office would be promoted in fiscal year 
1996.  The OIG found that the allegation was unfounded.

One of the current personnel issues was an allegation that the Endowment did not have a 
competition for an office director position.  Our investigation disclosed that NEH followed 
federal rules and regulations in the selection process.  Therefore, we closed the case.

One allegation concerned a grantee plagiarizing another grantee's application.  Working with 
program staff, it was determined that while the form was the same as a prior grantee, the 
intellectual content was not plagiarized.  This matter is closed.  In the other situation 
involving a grantee, an anonymous caller said the executive director of a grant organization was 
misusing federal funds.  We are looking into this matter.

As of March 31, 1996, two cases remain open; both involve grantees.

				HOTLINE AND PREVENTION ACTIVITIES

Due to budget restraints we have closed our 800 hot line number and the rented post office box 
that we have had since January 1993.  We are maintaining our local hotline phone number, agency 
E-mail address, and an Internet address.  We maintain all three to provide additional 
confidentiality for those persons bringing matters to the attention of the OIG.

We issued two memorandums through the agency E-mail system.  One informed staff of viruses on 
computer disks and the second provided cautionary advice concerning the use of government credit 
cards.

				Summary of Investigations

Investigative Workload

Pending at beginning of period				2
Matters brought to the OIG				4 
	Total Investigative contacts			6

Closed or referred during reporting period		4 
Pending at end of period				2 

					STAFFING

Our one auditor who had taken investigatory training retired during February 1996.  We are 
looking into obtaining investigating training for one auditor.  In addition, we are reviewing 
the possibility of receiving investigative assistance from another OIG on an as-needed basis; 
this may require a budget line item for investigative expenses.

					OTHER ACTIVITIES

			    INDIRECT COST RATE NEGOTIATIONS/REVIEWS

Grantees are entitled to recover total project costs, both direct and indirect.  Indirect costs 
are those costs of an organization or institution that are not readily identifiable with a 
particular project or activity but are nevertheless necessary to the general operation of the 
organization or institution and the conduct of the activities it performs.

The cost of office supplies, general telephone, postage, accounting, and administrative salaries 
are types of expenses usually considered as indirect costs.  In theory, all such costs might be 
charged directly; practical difficulties, however, preclude such an approach.  Therefore, they 
are usually grouped into a common pool(s) and distributed to those organizational or 
institutional activities that benefit from them through the expedient of an indirect cost rate(s).

Cognizant federal agencies approve the rates after reviewing cost allocation plans submitted by 
grantees.  The approved rate will generally be recognized by other federal agencies.

During this period, we negotiated indirect cost rates with seven grantees.

				ATTENDING MEETINGS, PANELS, ETC.

During this reporting period OIG staff attended various NEH meetings.  Panel meetings 
(where grant applications are reviewed by outside consultants), pre-council meetings (where the 
program divisions discuss the panel review results with the Chairman and his immediate staff) 
and the National Council meeting.  In addition, the IG attends the Chairman's bi-weekly meeting; 
the Deputy Chairman's bi-weekly meetings and a travel policy monthly meeting.

					PEER REVIEW

The Inspector General Act of 1978, as amended, requires all OIGs to have a peer review every 
three years.  The Executive Council on Integrity and Efficiency's (ECIE) committee on peer 
review assigned the NARA OIG the responsibility of conducting a review of the NEH OIG. 

				STRATEGIC PLANNING FOR THE OIG

We developed a strategic plan following guidelines established by the United States General 
Accounting Office (GAO).  This is an continuous effort.  With the downsizing of the NEH and the 
elimination of certain programs, our audit universe has changed and this has had an effect on 
our plan.  We are developing a strategy to work with grantees early in the grant period to 
avoid future problems.  We anticipate that we will need more agency support of computer hardware 
and software.

				PARTICIPATION ON THE EXECUTIVE COUNCIL ON 
					INTEGRITY AND EFFICIENCY

The Executive Council on Integrity and Efficiency (ECIE) was established by the President in 1992
to coordinate and implement government wide activities to combat fraud and waste in federal 
programs and operations.   OIG staff regularly attend monthly meetings of the ECIE.

				REGULATORY AND LEGISLATIVE REVIEWS

The Inspector General Act of 1978, as amended, requires the Office of Inspector General to 
review proposed legislation and regulations.  The reviews are made to assess whether the 
proposed legislation or regulation (1) impacts on the economy and efficiency of Endowment programs
and operations, and (2) contains adequate internal controls to prevent and detect fraud and 
abuse.

During this period, we commented on several OMB Circulars.  We also reviewed the NEH Grants 
Administration Manual.

				FEDERAL MANAGERS' FINANCIAL
				  INTEGRITY ACT REVIEWS

The Federal Manager's Financial Integrity Act requires the Chairman to provide assurance to the 
President that Endowment resources are protected from fraud, waste, mismanagement, and 
misappropriation.

This period, we reviewed all of the responses/assurance statements from each office and division 
director covering the Fiscal Year 1995.  No material weaknesses were disclosed.

					TRAINING

The OIG is complying with the continuing education requirements of the General Accounting 
Office's Government Auditing Standards.  For the year ending December 31, 1995, all auditors 
received at least forty hours of training as required.

				AUDIT RESOLUTION AND FOLLOW-UP

Budgetary restraints at NEH have forced the OIG to assume the dominant role in the audit 
follow-up process.  Fortunately, the procedures used by NEH make the process efficient.  Many 
of the auditors' recommendations concern accounting system improvements by our grantees.  
Our auditors are the only staff in the agency qualified to review and reply to grantees.  In 
addition, since we are aware of time frames, we are generally able to meet the 180-day deadline. 
In this small agency, we find this procedure to be efficient and effective.

Some of our grantees are taking longer than the 180-day deadline to implement procedural 
recommendations and in responding to questioned costs.  These delays are understandable because 
of the grantees small staff.

				REPORTS WITH OUTSTANDING MANAGEMENT DECISIONS

Section 5(a)(3)of the Inspector General Act, as amended requires an identification of audit 
recommendations disclosed in previous semiannual reports on which corrective actions are still 
in process.  The following is a list of all OIG audit reports, discussed in prior semiannual 
reports, for which final management actions have not been completed and closed out.

Report Issued		Grantee							Report No.

05-09-95		Audit of Gift Certification Letters from
			  State Humanities Councils				OIG-95-03 (EA)1/ 

09-28-95		Hawai'i Committee for the Humanities			OIG-95-04 (EA)2/ 

09-28-95		Guam Humanities Council					OIG-95-05 (EA)2/ 

09-28-95		CNMI Council for the Humanities				OIG-95-06 (EA)2/ 

Our approach is to be aggressive in meeting the deadlines--including recommending that the agency
suspend grants in progress and hold in abeyance new grant applications.  However, we believe the 
above are working diligently to implement the findings.

1/  This requires action from the Endowments' Grants Office.

2/  The open items pertain to system enhancements and changes.

				SUMMARY OF AUDIT REPORTS ISSUED BEFORE THE
				    COMMENCEMENT OF THE REPORTING PERIOD
				FOR WHICH NO MANAGEMENT DECISION HAS BEEN MADE

Audit of Gift Certificate Letters from State Humanities Council

	We received eighteen state humanities councils' records and documentation supporting 
	gift certification letters.  We originally questioned $539,000 of gifts certified to 
	release federal matching funds.  Of this amount $198,479, remains unresolved.

	Limited Audits of State Humanities Councils
	Period First Report:  April 1, 1995 - September 30, 1995

	The objectives of the limited audits at the three councils were to determine 
	1) the extent to which the councils' accounting system, internal controls, and 
	management policies could provide reasonable assurance that the councils are adequately
	 managed and account for grant funds in accordance with NEH requirements, including the former Division of State Programs' Procedures Manual and applicable federal regulations; and 2) whether the NEH-issued compliance supplement for state humanities councils was used in performing the A-133 audits.

	Hawaii Committee for the Humanities

	Guam Humanities Council

	CNMI Councils for the Humanities

	We found accounting and managerial weaknesses at all three councils.  In addition, we questioned minor amounts of costs at the Guam and CNMI councils.  The questioned costs and most of the weaknesses have been corrected and we expect to have them resolved by the end of the next report period.

				AGENCY REFUSAL TO PROVIDE INFORMATION
					  OR ASSISTANCE

There were no reports made to the Chairman of the National Endowment for the Humanities where 
information or assistance, requested under section 5(a)(5) of the Inspector General Act of 1978, 
as amended, was unreasonably refused or not provided.

However, we have repeatedly requested information from the Senior Humanities Advisor concerning 
the staffing pattern of the agency after the RIF.  During the next reporting period we will make 
a formal request to the Chairman.

				SIGNIFICANT REVISED MANAGEMENT DECISIONS
			   	    MADE DURING THE REPORTING PERIOD

No significant management decisions were revised during this reporting period.

				SIGNIFICANT MANAGEMENT DECISIONS WHICH
				THE INSPECTOR GENERAL IS IN DISAGREEMENT

The Inspector General has no disagreement with significant management decisions made during this 
reporting period.

					LIST OF AUDIT REPORTS

The following is a list of audit/survey reports issued by the OIG during the reporting period.  
For each audit report, where applicable, the total dollar value of questioned costs (including a 
separate category for the dollar value of unsupported costs) is provided.  The Act also requires 
us to report on "the dollar value of recommendations that funds be put to better use."  We have 
no amounts to report and therefore have omitted the column.

				EXTERNAL AUDIT/SURVEY REPORTS ISSUED

				Report		Date		Questioned	Unsupported
				Number		Issued		Cost		Cost
Audit of Gift Certification				
   Letters From State 
   Humanities Councils		96-01		11-06-95	$ 228,004	$ 228,004

INDIRECT COST RATE DESK REVIEW REPORTS ISSUED

					Report		Date	Questioned	Unsupported
Grantee					Number		Issued	Cost		Cost

Concord Museum				96-01(IDC)	10-12-95						
Film Odyssey, Inc.			96-02		12-15-95						
Pierpont Morgan Library			96-03		01-29-96						
Southeastern Library Network, Inc.	96-04		02-13-96						
National Alliance of Black 
  School Educators			96-05		02-15-96						
Film Arts Foundation			96-06		03-06-96						
IMAGE Film & Video Center		96-07		03-29-96

COGNIZANT AUDIT AGENCY REVIEW REPORTS ISSUED

						Report	Date	Questioned	Unsupported
Grantee						Number	Issued	Cost		Cost

Tennessee Humanities Council			96-01(CAA)	11-20-95						
Salt River Pima-Maricopa Indian Community	96-02(CAA)	11-20-95						
Commonwealth of Kentucky			96-03(CAA)	11-20-95						
Huntington Theatre Company			96-04(CAA)	11-20-95						
City and County of Denver Colorado		96-05(CAA)	11-20-95						
University of Rochester				96-06(CAA)	11-20-95						
Cleveland Medical Library Association		96-07(CAA)	11-20-95						
Espritruth Films, Inc.				96-08(CAA)	11-20-95						
Vermont Folklife Center				96-09(CAA)	11-20-95						
Dartmouth College				96-10(CAA)	11-20-95						
State of Oregon					96-11(CAA)	11-30-95						
Garrett-Evangelical Theological Seminary	96-12(CAA)	11-30-95						
Trenton State College				96-13(CAA)	11-30-95						
Research Foundation of SUNY			96-14(CAA)	11-30-95						
Massachusetts Historical Society, Inc.		96-15(CAA)	11-30-95						
University of Pittsburgh			96-16(CAA)	11-30-95						
Dartmouth College				96-17(CAA)	11-30-95						
Pomona College					96-18(CAA)	11-30-95						
American Political Science Association		96-19(CAA)	11-30-95						
Emory University				96-20(CAA)	11-30-95						
Museum of Photographic Arts			96-21(CAA)	01-18-96						
Brown University				96-22(CAA)	01-18-96						
Franklin Pierce College				96-23(CAA)	01-18-96						
Yale University					96-24(CAA)	01-18-96						
University of Dayton				96-25(CAA)	01-18-96						
Filmmakers Collaborative			96-26(CAA)	01-18-96						
George Washington University, DC		96-27(CAA)	01-18-96						
City of New York, NY				96-28(CAA)	01-18-96						
South Dakota Humanities Council			96-29(CAA)	01-18-96						
University of Illinois, Chicago			96-30(CAA)	01-18-96						
University of Maine System			96-31(CAA)	02-01-96						
State of Oklahoma				96-32(CAA)	02-01-96						
Osage Nation					96-33(CAA)	02-01-96						
University of Michigan				96-34(CAA)	02-01-96						
University of Georgia Research Foundation, Inc.	96-35(CAA)	02-01-96						
Texas A & M Research Foundation			96-36(CAA)	02-01-96						
Texas A & M Research Foundation			96-37(CAA)	02-01-96						
Makah Cultural and Research Center		96-38(CAA)	02-01-96						
Pueblo of Pojoaque				96-39(CAA)	02-01-96						
University of Rochester				96-40(CAA)	02-01-96						
University of Guam				96-41(CAA)	03-05-96						
State of Colorado				96-42(CAA)	03-05-96						
Indiana University, Bloomington			96-43(CAA)	03-05-96						
Harvard University				96-44(CAA)	03-05-96						
University of Minnesota				96-45(CAA)	03-05-96						
Washington University, MO			96-46(CAA)	03-05-96						
George Washington University, DC		96-47(CAA)	03-05-96						
Auburn University				96-48(CAA)	03-05-96						
University & Community College 			96-49(CAA)	03-05-96						
State of Delaware				96-50(CAA)	03-05-96						
University of Oklahoma, Norman			96-51(CAA)	03-05-96						
Ohio State University				96-52(CAA)	03-05-96						
Georgia Humanities Council			96-53(CAA)	03-05-96						
Chicago Historical Society			96-54(CAA)	03-05-96						
University of the State of New York		96-55(CAA)	03-05-96					
American Dance Festival				96-56(CAA)	03-05-96						
Maine Technical College System			96-57(CAA)	03-05-96						
Franklin and Marshall College			96-58(CAA)	03-05-96					
American Forum					96-59(CAA)	03-05-96						
Oberlin College					96-60(CAA)	03-05-96						
American Council on Education			96-61(CAA)	03-26-96					
Saint Joseph's College				96-62(CAA)	03-26-96					
Nevada Humanities Committee			96-63(CAA)	03-26-96					
National Trust for Historic Preservation 
  in the United States				96-64(CAA)	03-26-96				
The Frick Collection				96-65(CAA)	03-26-96					
Association of Science Technology Center	96-66(CAA)	03-26-96					
Ohio Humanities Council				96-67(CAA)	03-26-96					
Wheelock College				96-68(CAA)	03-26-96					
Kenyon College					96-69(CAA)	03-26-96					
Case Western Reserve University			96-70(CAA)	03-26-96					

						TABLE I
				 INSPECTOR GENERAL-ISSUED REPORTS
				WITH QUESTIONED COSTS DOLLAR VALUE

						Number of	Questioned	Unsupported
						Reports		Cost		Costs

                                                                                                                                                                                                            

A.  For which no management decision
	has been made by the commencement
	of the reporting period			2		$ 228,817	$ 228,817

B.  Which were issued during the
	reporting				1		$ 228,004	$ 228,004 

	Subtotals (A+B)				3		$ 456,821	$ 456,821

C.  For which a management decision
	was made during the reporting
	period					0		$ 143,722	$ 143,722

	(i)  dollar value of disallowed
	costs					0		$ 0		$ 0

	(ii) dollar value of costs not
	disallowed (grantee 
	subsequently supported all
	costs)					0		$ 0		$ 0

D.  For which no management decision has
	been made by the end of the
	reporting period			3		$ 313,099	$ 313,099

    Reports for which no management
	decision was made within six
	months of issuance			1		$ 197,479	$ 197,479

Note:	The questioned costs $313,099 is comprised of:

outstanding from OIG-95-03 (EA) (Prior Semi Annual Report)
  Six councils certified gifts from regrants after the regrant period ended	$ 122,979
  Two councils that substituted ineligible gifts				$  74,500
										$ 197,479
outstanding from OIG-96-01 (EA) (current Semi Annual Report)
  Three councils certified gifts from regrants after the regrant period ended	$ 115,620

TOTAL										$ 313,099

						TABLE II

				INSPECTOR GENERAL-ISSUED REPORTS
			WITH RECOMMENDATIONS THAT FUNDS BE PUT TO BETTER USE

During this period, we did not issue any audit reports with recommendations that funds be used 
more efficiently.

				GLOSSARY OF AUDIT TERMINOLOGY

Questioned Cost - A cost that is questioned by the OIG because of an alleged violation of a 
provision of a law, regulation, contract, grant, cooperative agreement, or other agreement or 
document governing the expenditure of funds; because such cost is not supported by adequate 
documentation; or because the expenditure of funds for the intended purpose is unnecessary or 
unreasonable.

Unsupported Cost - A cost that is questioned because of the lack of adequate documentation at 
the time of the audit.

Disallowed Cost - A questioned cost that management, in a management decision, has sustained or 
agreed should not be charged to the government.

Funds Be Put To Better Use - Funds, which the OIG has disclosed in an audit report, that could 
be used more efficiently by reducing outlays, de-obligating program or operational funds, 
avoiding unnecessary expenditures, or taking other efficiency measures.

Management Decision - The evaluation by management of the audit findings and recommendations and 
the issuance of a final decision by management concerning its response to such findings and 
recommendations.

Final Action - The completion of all management actions, as described in a management decision, 
with respect to audit findings and recommendations.  When management concludes no action is 
necessary, final action occurs when a management decision is made.

Source:  Excerpt from Section 106(d) of the Inspector General Act Amendments of 1988 
(P.L. 100-504).

									APPENDIX 1

					OVERVIEW OF
			THE NATIONAL ENDOWMENT FOR THE HUMANITIES

In order "to promote progress and scholarship in the humanities and the arts in the United 
States," Congress enacted the National Foundation on the Arts and the Humanities Act of 1965.  
This act established the National Endowment for the Humanities as an independent grant-making 
agency of the federal government to support research, education, and public programs in the 
humanities.  Grants are made through three divisions--Education and Research Programs, 
Preservation and Access, and Public Programs -- and three offices -- Challenge Grants, Enterprise,
and Federal State Partnership.

THE HUMANITIES

The act that established the National Endowment for the Humanities says "The term `humanities' 
includes, but is not limited to, the study of the following:  language, both modern and classical;
linguistics; literature; history; jurisprudence; philosophy; archaeology; comparative religion; 
ethics; the history, criticism, and theory of the arts; those aspects of social sciences which 
have humanistic content and employ humanistic methods; and the study and application of the 
humanities to the human environment with particular attention to reflecting our diverse heritage,
traditions, and history and to the relevance of the humanities to the current conditions of 
national life."

									APPENDIX 2

				ESTABLISHMENT OF THE OFFICE OF 
				       INSPECTOR GENERAL

On October 18, 1988, the Inspector General Act Amendments of 1988, Public Law 100-504 was 
signed into law.  In this legislation, Congress established Offices of Inspector General in several
departments and in thirty-three agencies, including NEH.  The NEH inspector general (IG) is 
appointed by the Chairman.  The independence of the IG is an important aspect of the Act.  For 
example, the IG:

	cannot be prevented from initiating, carrying out, or completing an audit or
 	investigation, or from issuing any subpoena;

	has access to all records of the agency;

	reports directly to the Chairman, and can only be removed by the Chairman, who must
	promptly advise Congress of the reasons for the removal; and 

	reports directly to Congress.

The OIG has the responsibility and authority to:

	conduct audits and investigations;

	provide leadership and coordination, and recommend policies to promote efficiency and 
	effectiveness and to prevent fraud;

	keep the chairman and Congress fully and currently informed of problems and deficiencies;
 	and

	comply with governmental auditing standards.

The Act requires the IG to report semiannually to the Chairman and Congress.  The report is 
provided to the chairman, who may comment on the report.  The report must be forwarded to 
Congress within thirty days.  Serious or flagrant problems can be reported anytime to the 
chairman, who may comment but must transmit the report intact to Congress within seven days of 
receipt.

	THE OFFICE OF INSPECTOR GENERAL

	serves American taxpayers
	by investigating reports of waste, fraud,
	mismanagement, or abuse
	involving  federal funds.

	If you want to report any matter
	involving NEH programs, operations, or employees
	
	please call

	(202) 606-8423

	or,

	you may write

	Office of Inspector General-HotLine
	National Endowment for the Humanities
	1100 Pennsylvania Ave. N.W., Room 419
	Washington, DC  20506

	FAX:	(202) 606-8329

	ELECTRONIC MAIL HOTLINE
	sbernstein@neh.fed.us

	Be assured that government employees are protected
	from reprisal and that anyone may have
	his or her identity held in confidence,
	unless the Inspector General determines
	that such disclosure is unavoidable.