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Department of Health and Human Services

OFFICE OF 

INSPECTOR GENERAL 

A H
GENCY FOR  EALTHCARE 

R Q : 

ESEARCH AND  UALITY
M P S
ONITORING  ATIENT  AFETY 

G
RANTS

Daniel R. Levinson

Inspector General

June 2006

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Office of Inspector General 

http://oig.hhs.gov 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, 
as amended, is to protect the integrity of the Department of Health and Human Services 
(HHS) programs, as well as the health and welfare of beneficiaries served by those 
programs.  This statutory mission is carried out through a nationwide network of audits, 
investigations, and inspections conducted by the following operating components: 
Office of Audit Services 
The Office of Audit Services (OAS) provides all auditing services for HHS, either by 
conducting audits with its own audit resources or by overseeing audit work done by others. 
Audits examine the performance of HHS programs and/or its grantees and contractors 
in carrying out their respective responsibilities and are intended to provide independent 
assessments of HHS programs and operations.  These assessments help reduce waste, 
abuse, and mismanagement and promote economy and efficiency throughout HHS. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 
HHS, Congress, and the public with timely, useful, and reliable information on 
significant issues.  Specifically, these evaluations focus on preventing fraud, waste, or 
abuse and promoting economy, efficiency, and effectiveness in departmental programs.  
To promote impact, the reports also present practical recommendations for improving 
program operations. 
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative 
investigations of allegations of wrongdoing in HHS programs or to HHS beneficiaries 
and of unjust enrichment by providers.  The investigative efforts of OI lead to criminal 
convictions, administrative sanctions, or civil monetary penalties. 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to 
OIG, rendering advice and opinions on HHS programs and operations and providing all 
legal support in OIG's internal operations. OCIG imposes program exclusions and civil 
monetary penalties on health care providers and litigates those actions within HHS. 
OCIG also represents OIG in the global settlement of cases arising under the Civil False 
Claims Act, develops and monitors corporate integrity agreements, develops compliance 
program guidances, renders advisory opinions on OIG sanctions to the health care 
community, and issues fraud alerts and other industry guidance.  Report TemplateVersion  = 04-30-05_rev.15  
  E X E C U T I V E   S U M M A R Y

OBJECTIVE 
To determine whether the Agency for Healthcare Research and 
Qualitys (AHRQ) monitoring of Financial Status Reports, performance 
reports, and the grant closeout process for patient safety grants are in 
accordance with Federal requirements. 
BACKGROUND 
Congress enacted the Healthcare Research and Quality Act of 1999 
(Public Law 106-129), which established AHRQ within the Department 
of Health and Human Services (HHS).  Congress directed AHRQ to 
designate funds from its appropriation for grants to study patient safety 
in H.R. Rep. No. 106-645, at 102 (2000).  For fiscal years (FY) 2001 
through 2003, AHRQ awarded 120 grants totaling $128 million to 
conduct research on improving patient safety and reducing medical 
errors.  Federal regulations and departmental policies (e.g., Grant 
Policy Directives from the Office of Grants) govern HHS grants 
monitoring. 
To determine AHRQs compliance with patient safety grant 
requirements relating to Financial Status Reports, performance reports, 
and the closeout process, the Office of Inspector General (OIG) selected 
a stratified random sample from the population of 120 patient safety 
grants that were awarded in FYs 2001, 2002, and/or 2003.  The sample 
consisted of 39 grants from 2 strata.  Although OIG picked a sample 
randomly, the small sample and population sizes did not allow OIG to 
make any projections about the entire population of patient safety 
grants. 
FINDINGS 
Most Financial Status Reports were not received or were late. Of the 
grants sampled, 30 percent of Financial Status Reports were not 
received and 43 percent were late, representing a combined total of 
$50.6 million in dispensed grant funds. When contacted 1 month later, 
AHRQ staff confirmed that the Financial Status Reports not found 
during the initial review of the official grant file still had not been 
received.  The lack of reports received or received timely may be due to 
misinterpretation of Federal regulations addressing financial reporting 
associated with no-cost extensions, AHRQ staff not using enforcement 
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E X E C U T I V E   S U M M A R Y  
tools to help to ensure timely receipt of these reports, and the lack of a 
tracking system for these reports. 
Performance reports generally complied with Federal requirements. 
At the time of OIGs review of the official grant files, 97 percent of the 
most recently required annual performance reports were in the file, and 
94 percent were received timely.  AHRQ staff reported that the timely 
receipt of these reports may be due to frequent interaction between 
grantees and AHRQ staff concerning the grants progress, and AHRQs 
use of a tracking system to record receipt of these reports. 
Federal requirements for grant closeouts were not met. Of the 
sampled grants, seven official grant files were eligible for closeout.  
Two of these grants were closed in accordance with Federal 
requirements.  Three grants, however, lacked documentation of required 
closeout reports, liquidation of assets, and/or results of the final 
research.  AHRQ staff did not complete the closeout process for the 
remaining two grants despite the fact that both grant files contained all 
required closeout documents. 
AHRQ staff stated that the closeout of these grants was delayed due to 
a large backlog of grant files awaiting completion of the closeout 
process. Patient safety grants comprised only part of this overall 
backlog. Recently, AHRQ hired a contractor to assist in reducing this 
backlog and to assist in the collection of delinquent reports for closeout. 
AHRQ staff told OIG that the contractors actions improved the 
efficiency of the closeout process and reduced the number of grants 
awaiting closeout. 
RECOMMENDATIONS 
The AHRQ practices inhibit its ability to adequately oversee and 
evaluate grantees overall performance and its stewardship of Federal 
funds.  While AHRQ appears to manage the receipt of performance 
reports well, other areas identified in this report reveal weaknesses that 
impact the accountability of patient safety grant funds. 
Therefore, OIG recommends that AHRQ: 
Require submission of interim financial information of prior year 
expenditures before future funding is authorized. The AHRQ 
methods for obtaining this information could include:  semiannual 
Financial Status Reports, expansion of financial information currently 
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reported on the performance reports, or a separate process for 
accounting for financial expenditures. 
Establish a tracking system for Financial Status Reports. AHRQ staff 
reported that the system for tracking performance reports was important 
to the timely receipt of performance reports.  Thus, AHRQ should use 
lessons learned from this system while implementing a similar system for 
Financial Status Reports. 
Require grantees with no-cost extensions to submit Financial Status 
Reports in compliance with Federal requirements. Clarification of this 
Federal requirement for AHRQ staff and grantees is needed to ensure 
compliance.  Grantees with no-cost extensions must submit Financial 
Status Reports at least annually, unless they specifically request and 
receive an extension. 
Ensure that grants awaiting closeout are closed promptly.  AHRQ 
should continue to take positive steps to eliminate the backlog of grants 
awaiting closeout and to ensure that future closeouts are processed timely. 
AGENCY COMMENTS 
AHRQ responded that it agrees with the findings in the report and that 
the recommendations are reasonable.  AHRQ indicated that the 
recommendations reinforce ongoing improvements begun subsequent to 
the FYs that we reviewed or support already envisioned activities.  
Specifically, AHRQ indicated that it (1) can pursue the use of the 
progress report to identify the status of prior year funds, (2) has begun 
development of a tracking system for Financial Status Reports, (3) will 
develop a procedure to ensure compliance with Federal regulations 
when grantees make use of no-cost extensions, and (4) has made 
progress in dropping closeout periods from 400 days to 114 days.   
OFFICE OF INSPECTOR GENERAL RESPONSE 
OIG recognizes the positive actions AHRQ has both taken or is planning 
to meet the intent of our second and third recommendations as well as 
the agencys progress toward compliance with closeout deadlines, our 
fourth recommendation.  In its final management decision 
memorandum, OIG requests AHRQ to provide more specific information 
on how it intends to address the first and fourth recommendations.  
Regarding the first recommendation, AHRQ indicates that it can pursue 
the use of progress reports to gather financial information on prior-year 
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funds. Committing to do so or providing another method to obtain 
interim financial status information would address this 
recommendation.  As for the fourth recommendation, despite significant 
progress in reducing its backlog, AHRQ remains out of compliance with 
the 90-day requirement for grants ending in 2005.  AHRQ does 
anticipate . . . continued improvement as grantees realize that AHRQ 
considers submission of final reports a priority.  AHRQ may want to 
provide the actions it will take if grantees fail to realize the priority it 
has placed on the submission of final reports. 
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  T A B L E   O F   C O N T E N T S  

EXECUTIVE SUMMARY ..................................... i

I N T RO DUC T IO N  ............................................. 1

F I N D IN G S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  6

Most Financial Status Reports werenot received or were late. . . .  6

Performance reports generally complied with Federal 

requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  9

Federal requirements for grant closeouts werenot met . . . . . . . . .  9

R E C O MMEN D A T ION S  ......................................... 11

  AgencyComments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11

Office of Inspector Genereal Response. . . . . . . . . . . . . . . . . . . . . .  12

APPENDIX ...................................................... 13

  AgencyComments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13

A C K NO WL E D G M E N T S ......................................... 16
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OBJECTIVE 
To determine whether the Agency for Healthcare Research and 
Qualitys (AHRQ) monitoring of Financial Status Reports, performance 
reports, and the grant closeout process for patient safety grants are in 
accordance with Federal requirements. 
BACKGROUND 
The Department of Health and Human Services (HHS) funds almost 
one-quarter of all Federal outlays and administers more grant dollars 
than all other Federal agencies combined.1  The Office of Inspector 
General (OIG) identified grants management as one of the top 
management challenges for HHS.  The OIGs mission is to ensure that 
Federal funds are used appropriately to maximize their intended 
purpose and that fraud, waste, and abuse, if present, are identified and 
eliminated.2 
Congress enacted the Healthcare Research and Quality Act of 1999 
(Public Law 106-129), which established AHRQ within HHS.  Congress 
directed AHRQ to designate funds from its appropriation for grants to 
study patient safety.3  For fiscal years (FY) 2001 through 2003, AHRQ 
awarded 120 patient safety grants totaling $128 million to conduct 
research on improving patient safety and reducing medical errors.4 
Monitoring Requirements 
Federal regulations and departmental policies (e.g., Grant Policy 
Directives (GPD) issued by the Office of Grants) govern HHS grants 
monitoring.5  AHRQ is required to collect and assess grantees Financial 
Status Reports (Standard Forms 269 or 269A) and performance reports 
1 HHS: What We Do. Available online at http://www.hhs.gov/about/whatwedo.html/. 
Accessed April 25, 2006. 
2 FY 2005 Performance and Accountability Report, Appendix A.  Available online at 
http://www.hhs.gov/of/library/par05/pdfmenu/. Accessed April 25, 2006. 
3 H.R. Rep. No. 106-645, at 102 (2000). 
4 AHRQs Grants Management Officer furnished OIG an FY 2001-FY 2003 Summary of 
Patient Safety Grants in November 2004.  This summary, which listed all patient safety 
grants, was used to select the sample. 
5 See 45 CFR Part 74 (regulations establishing, in part, grant monitoring and reporting 
requirements for HHS grants to universities, nonprofit organizations, and hospitals); and 
the GPD Parts 3.01-3.07 (guidance to HHS offices on grants management issues, including 
requirements for postaward monitoring and reporting). 
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(both interim and final), and ensure that the grant closeout process has 
been completed.  AHRQ may implement enforcement provisions, where 
appropriate, for grantees that do not comply with Federal regulations 
and/or departmental policies.6 
Financial Monitoring. AHRQ staff use Financial Status Reports to 
monitor grantees use of Federal funds.  These reports must document 
the financial aspects of the grant including unobligated balances, assets, 
and outlays. A grantees business office normally completes and 
submits the Financial Status Report to AHRQ. 
Grantees must submit the Financial Status Report at least annually, 
although AHRQ can require more frequent reporting, as it deems 
necessary.7  Financial Status Reports submitted annually must be 
received no later than 90 calendar days after each specified reporting 
period; however, AHRQ may approve a request from the grantee for an 
extension of the due date.8  Departmental policy requires AHRQ to take 
timely action to advise grantees of noncompliance, including late 
submission of a Financial Status Report, and to take appropriate 
enforcement actions.9 
Performance Monitoring.  The performance report contains information 
regarding the accomplishments of the grant.  The performance report 
must generally include a narrative discussion of the grantees progress 
toward achieving the grants goals and objectives. 10 The Principal 
Investigator, generally a grantee employee, has primary responsibility 
for ensuring compliance with all grant requirements, including 
completion of the performance report. 
Grantees must submit the performance report at least annually, 
although AHRQ can require more frequent reporting, as it deems 
necessary.  Performance reports submitted annually must be received 
no later than 90 calendar days after the end of the specified reporting 
6 45 CFR  74.62(a). 

7 45 CFR  74.52(a)(1)(iii). 

8 45 CFR  74.52(a)(1)(iv).  If quarterly or semiannual reporting periods are used, the 

reports are due no later than 30 days after each reporting period. 
9 GPD Part 3.07.B.5. 
10 45 CFR  74.51(d). 
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period.11  AHRQ has the responsibility to initiate appropriate follow-up 
action, as necessary, on delinquent reports.12 
Grant Closeout Procedures.  AHRQ must ensure through its grant 
closeout procedures that the grantee has completed and submitted all 
work outlined in the terms and conditions of the grant.  Unless AHRQ 
authorizes an extension, the grantee is required to liquidate all 
obligations incurred no later than 90 calendar days after the funding 
period or the date of completion of the award.13 Further, Federal 
regulations require that a grantee must submit a final Financial Status 
Report, a final performance report, and all other reports specified in the 
terms and conditions of the grant no later than 90 calendar days after 
the date of completion of the award.14  The grantee can request 
extension of the final performance report and/or the final Financial 
Status Report that is due as part of the grant closeout process.15 
Federal regulations do not specify the type of notification (written or 
verbal) that grantees must make when requesting an extension to 
closeout their grant. 
The final performance report indicates accomplishments under the 
project and whether the research objectives were met or gives an 
explanation of why they were not.  Once accepted by the Project Officer, 
an AHRQ employee, results from the final performance report are then 
made available to the public.  The Financial Status Report also must be 
reconciled. The Grants Management Officer remains responsible for the 
closeout of the grant until all requirements of the terms and conditions 
are fulfilled, all reports have been received and accepted, and the 
account is closed.16 
11 45 CFR  74.51(b).  Alternatively, AHRQ may establish a due date based on the 
anniversary dates of multiple year awards.  If quarterly or semiannual reporting periods 
are used, the reports are due no later than 30 days after each reporting period. 
12 45 CFR  74.62(a) and GPD Part 1.04D.1.i. 
13 45 CFR  74.71(b). 
14 45 CFR  74.71(a). 
15 45 CFR  74.71(a).  AHRQ may approve extensions of closeout reports when the grantee 
requests such an extension. 
16 45 CFR  74.71 and GPD Part 1.04D.1.i. 
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No-Cost Extensions 
A no-cost extension is a written notice by the grantee to AHRQ to 
initiate an extension of the period of the grant award.17 Such 
extensions do not modify or eliminate Federal reporting requirements 
for Financial Status Reports or performance reports.  If a grantee wants 
an extension for the Financial Status Report, the grantee must make a 
specific request to AHRQ, and AHRQ must approve the request.18 
METHODOLOGY 
OIG selected a stratified random sample from the population of 
120 patient safety grants that received funding in FYs 2001, 2002, 
and/or 2003. The sample consisted of 39 grants from 2 strata. 
The first stratum consisted of 12 grants that received patient safety 
grant funding in FYs 2001, 2002, and/or 2003 and that AHRQ identified 
as being complex or requiring additional administrative efforts.19 
The second stratum consisted of the remaining 108 grants that received 
patient safety grant funding in FYs 2001, 2002, and/or 2003.  Grants 
were sorted in descending order by the total grant dollars received in 
the 3 FYs. To obtain a sample with varying amounts of total grant 
dollars received, 27 grants were selected by a systematic process in 
which OIG chose every fourth grant in the list.  Although OIG picked a 
sample randomly, due to the small sample and population sizes, this 
sample was not designed to make any projections about the entire 
population of patient safety grants. 
Grant File Review 
OIG developed a checklist based on Federal requirements to review 
AHRQs official grant files for the 39 sampled grants.  This file review 
determined whether Financial Status Reports, performance reports, and 
grant closeouts complied with Federal regulations and departmental 
17 45 CFR  74.25(d)(2). 
18 45 CFR  74.52(a)(1)(iv). 
19 AHRQ defined complex grants as those with (a) projects involving carryover of funds in 
multiple years, (b) supplemental awards issued during the project, and (c) multiple 
subcontractors. AHRQ defined grants requiring additional administrative efforts as 
those (a) with habitually large unobligated balances and (b) that repeatedly requested 
carryover funds for the next awarding period. 
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policies.20  Specifically, OIG determined whether Financial Status 
Reports were complete and timely, and whether these reports 
documented the status of funds. Further, OIG determined whether 
performance reports were complete and timely, and documented 
(1) accomplishments of the grant goals, (2) objectives of research 
findings, (3) circumstances when grant goals were not met, and  
(4) developments that had a significant impact on the award-supported 
activities. 
OIG reviewed file documentation for seven of the sampled grants 
identified by AHRQ as eligible for closeout to assess whether AHRQ had 
taken appropriate administrative actions to closeout official grant files. 
Where applicable, OIG looked for evidence of AHRQs enforcement 
actions for grantees not in compliance with Federal regulations and 
departmental policies. 
Interviews 
Upon completion of the review of the official grant files, OIG used a 
structured survey to request additional information from AHRQ staff 
(i.e., Project Officers, Grants Management Specialists, and the Grants 
Management Officer) about the processes used to monitor these grants. 
OIG interviewed 17 of 19 Project Officers, 21 the 7 Grants Management 
Specialists, and the Grants Management Officer who were involved in 
monitoring the sampled patient safety grants.  In addition, when the 
official grant file did not contain the required documentation, OIG 
contacted the responsible AHRQ staff to (1) verify that the 
documentation had not been misfiled, (2) determine if documentation 
was received after OIGs data collection occurred, and (3) identify and 
clarify the enforcement actions, if any, AHRQ took to obtain delinquent 
reports. 
Standards 
This study was conducted in accordance with the Quality Standards for 
Inspections issued by the Presidents Council on Integrity and 
Efficiency and the Executive Council on Integrity and Efficiency. 
20 OIG used criteria contained in 45 CFR  74.51, 74.52, and 74.71 to establish whether 
AHRQ appropriately closed the official grant file. 
21 One Project Officer was unavailable due to a lengthy illness.  The other Project Officer 
had left AHRQs employment prior to the start of this study. 
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  F I N D I N G S  

All of the grants in the sample used 
Most Financial Status Reports were not
annual reporting periods, and 
 received or were late 
45 CFR  74.52(a)(1)(iv) requires 
grantees to submit completed Financial Status Reports no later than 
90 calendar days after the end of each annual reporting period. 
The Financial Status Report is necessary for monitoring grantees 
financial obligations as they relate to the terms and conditions of the 
grants. AHRQ staff use this report to assess expenditures that were 
charged against the grants and to determine if grantees have obligated 
these funds.  This report is also useful in measuring how grantees are 
expending funds and whether such spending is in the amount and at the 
pace anticipated for the projects. 
Thirty percent of the Financial Status Reports were not received 
Of the 90 Financial Status Reports in the sample population that were 
required to be in the official grant file for FY 2001 through FY 2003, 22 
OIG identified 
Table 1:  Financial Status Reports Not in File 
27 instances in 
and Associated Dollars 
which these 
Year  Not in File  Dollars 
reports were not in 
FY 2001  0 $0 
the file. When OIG 
FY 2002  2 $2,255,454 
made a follow-up 
FY 2003  25  $19,299,625 
Total  27  $21,555,079  request 1 month 
Source:  Office of Inspector General analysis of official grant files, 2005.  later, AHRQ staff 
confirmed that these reports still had not been received.  These grants 
represented $21.5 million in awards that lacked a formal accounting 
and review of the grantees financial expenditures (Table 1).  The two 
grants that lacked Financial Status Reports in FY 2002 also lacked 
these reports for FY 2003.  As a result, there is no evidence that AHRQ 
reviewed Financial Status Reports for these grants during that 2-year 
period. 
22 Not all grants spanned the period of OIG review, FY 2001 through FY 2003.  Some 
grants were only 1-year or 2-year grants. 
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OIG found that for the 12 grants that AHRQ identified as either being 
complex or requiring additional administrative efforts:23 
o in FY 2001, all Financial Status Reports were in the file; 
o in FY 2002, 2 Financial Status Reports were not received; and 
o in FY 2003, 9 Financial Status Reports were not received. 
Despite AHRQs acknowledgment that these grants were complex or 
required additional administrative efforts, the Financial Status Reports 
for these grants comprised 11 of the 27 reports that were not received. 
Additionally, 43 percent of Financial Status Reports were not timely 
OIG identified 39 instances over the 3-year period in which Financial 
Status Reports were not received timely.  These grants represented 
$29 million in awards that AHRQ reviewed later than it would have, 
provided the grantee had submitted the Financial Status Report as 
Federal regulations require (Table 2). 
Table 2:  Late Financial Status Reports 
Financial Status Report - Days Past Due and Associated Dollars 
Year  1-30  31-60  61-90  91-180  181-365  >365  Total  Dollars 
FY 2001  2  3  0  1  7  2  15  $14,232,043 
FY 2002  2  3  0  6  6  2  19  $12,298,535 
FY 2003  1  2  0  1  1  0  5  $2,562,138 
Total  5  8  0  8  14  4  39  $29,092,716 
Source:  Office of Inspector General analysis of official grant files, 2005. 
The combined dollars for reports that were not received or were late 
over the 3-year review period totaled $50.6 million.24  AHRQs Grants 
Management Officer stated that AHRQ currently lacks a system to 
track the receipt of Financial Status Reports. 
23 Due to a late start date for one grant and a 1-year suspension for another grant, 
11 grants had Financial Status Reports due in FY 2001 and FY 2002, while all 12 grants 
had Financial Status Repots due in FY 2003. 
24 Of the 90 Financial Status Reports OIG expected to find in the review, OIG found that 
24 were received timely, 27 were not received, and 39 were received late.  Of the reports 
reviewed, all were complete and notations contained within the official grant file 
indicated that AHRQ staff reviewed the Financial Status Reports and compared the 
expenditures listed against the funding approved for the grant. 
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Misinterpretation of no-cost extensions may contribute to late Financial 
Status Reports 
Twenty of the twenty-five Financial Status Reports not received for 
FY 2003 involved grants with no-cost extensions. AHRQ staff informed 
OIG of their belief that a no-cost extension also extended the due date 
for the Financial Status Report. While regulations in 
45 CFR  74.25(d)(2) allow grantees to initiate a no-cost extension up to 
12 months prior to the expiration date of the award, grantees must 
continue to comply with the reporting requirements specified in 
45 CFR  74.52(a)(1), unless they also request an extension of the 
Financial Status Report. OIG found no evidence of such requests 
during the review. 
Grants Management Specialists offered additional explanations for late 
reports 
Several Grants Management Specialists with whom OIG spoke noted 
that grantees might be confused about AHRQs reporting requirements. 
This confusion may be due to their involvement with other HHS 
awarding agencies that conduct similar research grants, but have 
different reporting procedures. For example, many of these agencies 
use electronic systems to collect Financial Status Reports, whereas 
AHRQ requires a paper format. As a result, grantees may be uncertain 
about the reporting process used for a particular grant. One specialist 
stated that there is often a lack of communication between the Principal 
Investigator and business office on how the reports are to be submitted. 
AHRQs reporting requirements specify that the terms and conditions of 
the grant may go to the Principal Investigator; however, two specialists 
told OIG that reporting requirements are not always shared with the 
grantees business office, which is normally responsible for completing 
and submitting the Financial Status Report. 
Enforcement tools were not used to ensure timely receipt of Financial Status 
Reports 
AHRQ staff informed OIG that they have used enforcement actions for 
grantees that did not submit their Financial Status Reports, but to little 
effect. However, for the grant files OIG reviewed, AHRQ did not use the 
authorities provided in Federal regulation and departmental policies 
(e.g., disallowance of funds) to obtain the delinquent Financial Status 
Reports.25 Only 2 of the 27 official grant files without Financial Status 
25 45 CFR  74.62(a) and GPD Part 3.06.B.4.d. 
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Reports contained documentation of AHRQs requests for the reports 
(e.g., electronic mail or telephone calls), which are not enforcement 
actions. 
At the time of OIGs review of
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the official grant files,
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97 percent of the most recently 
required annual performance reports were in the file, and 94 percent 
were received timely, including all 12 grants that AHRQ identified as 
either being complex or requiring additional administrative efforts. 
OIG found that all but one of these performance reports documented the 
accomplishments of the grants goals, objectives, research findings, and 
the reasons particular goals (if any) were not met. 
AHRQ attributed the timely receipt of performance reports to the 
professional relationship between Project Officers and Principal 
Investigators, involving frequent communication to monitor the overall 
progress of the grant. AHRQ staff stated that during these 
communications, the Principal Investigator is informed or reminded 
that performance reports must be received before authorization of the 
next years funding. In addition, AHRQ has in place a system to track 
the receipt of these reports, which also contributes to the successful 
timely receipt of these reports. 
Grantees must submit all
Federal requirements for grant closeouts 
required reports within 
were not met 
90 calendar days after 
completion of the grant pursuant to Federal regulation 
45 CFR  74.71(a). Seven of the thirty-nine sampled grants were 
eligible for closeout. Two of the seven grants were closed in accordance 
with Federal requirements. Three grants lacked documentation of 
required closeout reports, liquidation of assets, and/or results of the 
final research. The remaining two grant files contained all required 
grant closeout documents; however, AHRQ staff had not completed the 
closeout process. 
AHRQ staff stated that the closeout of these grants was delayed due to 
a large backlog of grant files awaiting completion of the closeout 
process. Patient safety grants comprised only part of this overall 
backlog. Recently, AHRQ hired a contractor to assist in reducing this 
backlog and to assist in the collection of delinquent reports for closeout. 
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F I N D I N G S  
AHRQ staff told OIG that the contractors actions improved the 
efficiency of the closeout process and reduced the number of grants 
awaiting closeout. The lack of timely closeout inhibits AHRQs ability to 
provide prompt payments to grantees for allowable reimbursable costs 
and to ensure grantees promptly refund any balances of unobligated 
funds that have been advanced or paid, as Federal regulations require.26 
Available enforcement actions are not always used 
For the grants reviewed, AHRQ staff stated they did not always use 
available enforcement actions to achieve grantee compliance with 
Federal and departmental closeout requirements.  Many of the 
enforcement tools (e.g., disallowance of funds) identified in the terms 
and conditions of awards and in Federal regulation are ineffective at the 
closeout stage of the grant because all grant payments have been made. 
26 45 CFR  74.71. 
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E X E C U T I V E   S U M M A R Y
  R E C O M M E N D A T I O N S  

RECOMMENDATIONS 
The AHRQ practices inhibit its ability to adequately oversee and 
evaluate grantees overall performance and its stewardship of Federal 
funds.  While AHRQ appears to manage the receipt of performance 
reports well, other areas identified in this report reveal weaknesses that 
impact the accountability of patient safety grant funds. 
Therefore, OIG recommends that AHRQ: 
Require submission of interim financial information of prior year 
expenditures before future funding is authorized. The AHRQ 
methods for obtaining this information could include:  semiannual 
Financial Status Reports, expansion of financial information currently 
reported on the performance reports, or a separate process for 
accounting for financial expenditures. 
Establish a tracking system for Financial Status Reports. AHRQ staff 
reported that the system for tracking performance reports was important 
to the timely receipt of performance reports.  Thus, AHRQ should use 
lessons learned from this system while implementing a similar system for 
Financial Status Reports. 
Require grantees with no-cost extensions to submit Financial Status 
Reports in compliance with Federal requirements. Clarification of this 
Federal requirement for AHRQ staff and grantees is needed to ensure 
compliance.  Grantees with no-cost extensions must submit Financial 
Status Reports at least annually, unless they specifically request and 
receive an extension. 
Ensure that grants awaiting closeout are closed promptly.  AHRQ 
should continue to take positive steps to eliminate the backlog of grants 
awaiting closeout and to ensure that future closeouts are processed timely. 
AGENCY COMMENTS 
AHRQ responded that it agrees with the findings in the report and that 
the recommendations are reasonable.  AHRQ indicated that the 
recommendations reinforce ongoing improvements begun subsequent to 
the FYs that we reviewed or support already envisioned activities.  
Specifically, AHRQ indicated that it (1) can pursue the use of the 
progress report to identify the status of prior year funds, (2) has begun 
development of a tracking system for Financial Status Reports, (3) will 
develop a procedure to ensure compliance with Federal regulations 
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R E C O M M E N D A T I O N S  
when grantees make use of no-cost extensions, and (4) has made 
progress in dropping closeout periods from 400 days to 114 days.  The 
complete text of AHRQ comments can be found in the Appendix. 
OFFICE OF INSPECTOR GENERAL RESPONSE 
OIG recognizes the positive actions AHRQ has both taken or is planning 
to meet the intent of our second and third recommendations as well as 
the agencys progress toward compliance with closeout deadlines, our 
fourth recommendation.  In its final management decision 
memorandum, OIG requests AHRQ to provide more specific information 
on how it intends to address the first and fourth recommendations.  
Regarding the first recommendation, AHRQ indicates that it can pursue 
the use of progress reports to gather financial information on prior-year 
funds. Committing to do so or providing another method to obtain 
interim financial status information would address this 
recommendation.  As for the fourth recommendation, despite significant 
progress in reducing its backlog AHRQ remains out of compliance with 
the 90-day requirement for grants ending in 2005.  AHRQ does 
anticipate . . . continued improvement as grantees realize that AHRQ 
considers submission of final reports a priority.  AHRQ may want to 
provide the actions it will take if grantees fail to realize the priority it 
has placed on the submission of final reports. 
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  A P P E N D I X  

Agency for Healthcare Research and Quality Comments 
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A P P E N D I X

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A P P E N D I X

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  A C K N O W L E D G M E N T S  

This report was prepared under the direction of Brian T. Pattison, 
Regional Inspector General for Evaluation and Inspections in the 
Kansas City regional office, and Gina C. Maree, Deputy Regional 
Inspector General.  Other principal Office of Evaluation and Inspections 
staff who contributed include: 
Perry A. Seaton, Team Leader 
Zula Crutchfield, Project Leader 
Dennis Tharp, Program Analyst 
Brian T. Whitley, Program Analyst 
Alan Levine, Program Specialist 
Elise Stein, Director, Public Health and Human Services 
Technical Assistance 
Barbara Tedesco, Mathematical Statistician 
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