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Department of Health and Human Services


OFFICE OF 

INSPECTOR GENERAL 

AGENCY FOR HEALTHCARE 


RESEARCH AND QUALITY: 


MONITORING PATIENT SAFETY 


GRANTS


Daniel R. Levinson


Inspector General


June 2006


OEI-07-04-00460

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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. 
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Δ E XECUTIV E SU MMAR Y

OBJECTIVE 

To determine whether the Agency for Healthcare Research and 

Quality’s (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 AHRQ’s 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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EXE CUTIVE S U MMAR 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 OIG’s 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 grant’s progress, and AHRQ’s 

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 contractor’s 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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EXE CUTIVE S U MMAR Y 

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 agency’s 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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EXE CUTIVE S U MMAR Y 

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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Δ T ABLE OF CONTENTS 

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

INTR O D U C T I ON ............................................. 1

FINDI NGS .................................................... 6

Most Financial Status Reports were not received or were late .... 6

Performance reports generally complied with Federal 

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

Federal requirements for grant closeouts were not met ......... 9

RECOM M E NDATI O NS ......................................... 11

 Agency Comments...................................... 11

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

APPENDI X ...................................................... 13

 Agency Comments...................................... 13

ACKN O W LEDGMENTS ......................................... 16
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Δ INTRODUCTION 

OBJECTIVE 

To determine whether the Agency for Healthcare Research and 

Quality’s (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 OIG’s 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 AHRQ’s 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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INTROD UCT ION 

(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 grantee’s 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 grantee’s progress 

toward achieving the grant’s 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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INTROD UCT ION 

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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INTROD UCT ION 

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 

AHRQ’s 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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INTROD UCT ION 

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 AHRQ’s 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 OIG’s 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 President’s 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 AHRQ’s employment prior to the start of this study. 

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Δ FINDINGS 

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 

27 instances in 

which these 

reports were not in 

the file. When OIG 

made a follow-up 

request 1 month 

Table 1: Financial Status Reports Not in File 

and Associated Dollars 

Year 

FY 2001 

FY 2002 

FY 2003 

Not in File 

0

2

25 

Dollars 

$0 

$2,255,454 

$19,299,625 

Total 27 $21,555,079 

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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F I NDING S 

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 AHRQ’s 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 

FY 2001 

FY 2002 

FY 2003 

1-30 

2 

2 

1 

31-60 

3 

3 

2 

61-90 

0 

0 

0 

91-180 

1 

6 

1 

181-365 

7 

6 

1 

>365 

2 

2 

0 

Total 

15 

19 

5 

Dollars 

$14,232,043 

$12,298,535 

$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 AHRQ’s 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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F I NDING S 

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 AHRQ’s 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. 

AHRQ’s 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 

grantee’s 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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F I NDING S 

Reports contained documentation of AHRQ’s requests for the reports 

(e.g., electronic mail or telephone calls), which are not enforcement 

actions. 

At the time of OIG’s review of Performance repo ce reports generally s generally complied complied with 

the official grant files, Federal requirements

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 grant’s 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 year’s 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 NDING S 

AHRQ staff told OIG that the contractor’s actions improved the 

efficiency of the closeout process and reduced the number of grants 

awaiting closeout. The lack of timely closeout inhibits AHRQ’s 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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ΔEXE CUTIVE S U MMAR Y RECOMME NDA TIONS 

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 MMENDA 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 agency’s 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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Δ APPENDIX 

Agency for Healthcare Research and Quality Comments 

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APP E N D I X

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APP E N D I X

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Δ A CKNOWLEDGMENTS 

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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