STATE 

DEPARTMENT

Implementation of 

Grants Policies Needs 

Better Oversight

Report to the Chairman, Subcommittee 

on Financial and Contracting 

Oversight, Committee on Homeland 

Security and Governmental Affairs, 

U.S. Senate

July 2014

GAO-14-635

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-14-635, a report to the 

Chairman, Subcommittee on Financial and 

Contracting Oversight, Committee on 

Homeland Security and Governmental Affairs, 

U.S. Senate

July 2014

STATE DEPARTMENT

Implementation of Grants Policies Needs Better 

Oversight

Why GAO Did This Study

Grants are key tools that State uses to 

conduct foreign assistance. In fiscal 

year 2012, State obligated over $1.6 

billion worldwide for around 14,000 

grants to individuals and organizations 

for a variety of purposes, such as 

fostering cultural exchange and 

facilitating refugee resettlement. 

However, recent GAO and Inspectors 

General reports have identified 

challenges with State’s management of 

these funds. This report examines (1) 

the policies and guidance that State 

has established to administer and 

oversee grants, and (2) the extent to 

which the implementation of those

policies and guidance provides

reasonable assurance that funds are 

being used as intended. GAO analyzed 

State’s policies and guidance, and 

interviewed cognizant grants officials at

14 bureaus headquartered in 

Washington, D.C., and three overseas 

missions (Afghanistan, Cambodia, and 

Turkey). GAO also conducted file 

reviews for a sample of 61 grants

totaling approximately $172 million.

Selection criteria included total dollar 

value of grants in a country, 

geographic diversity, and balance 

among bureaus.

What GAO Recommends

GAO recommends that the Secretary 

of State develop processes for 

ensuring that (1) bureaus and missions 

conduct appropriate risk assessments 

and (2) grants officials complete 

required documentation. GAO also 

recommends that the Secretary of 

State (3) follow up systematically on 

recommendations from State’s internal 

reviews of its grants management. 

State concurred with GAO’s 

recommendations.

What GAO Found

The Department of State (State) has established policies and guidance that 

provide a supportive environment for managing grants and cooperative 

agreements (grants). In addition, State provides its grants officials mandatory 

training on these policies and guidance, and routinely identifies and shares best 

practices. State’s policies are based on federal regulations, reflect internal control 

standards, and cover topics such as risk assessment and monitoring procedures. 

State’s policies also delineate specific internal control activities that grants

officials are required to both implement and document in the grant files as a way 

of promoting accountability (see fig.).

Key Internal Control Activities Required through a Grant’s Life Cycle 

GAO found that inconsistent implementation of policies and guidance weakens 

State’s assurance that grant funds are used as intended.

• Inadequate risk analysis. In most of the files GAO reviewed, grants officials

did not fully identify, assess, and mitigate risks, as required. For example,

officials conducted a risk identification process for 45 of the 61 grants that 

GAO reviewed. While grants officials identified risk in 28 of those 45 grants, 

they mitigated risks in only 11.

• Poor documentation. Grants officials generally did not adhere to State 

policies and procedures relating to documenting internal control activities. 

For example, 32 of the 61 files reviewed did not contain the required 

monitoring plan. Considerable turnover among grants officials makes 

documenting internal control activities particularly important. State’s periodic 

management reviews of selected bureaus’ and overseas missions’ grant 

operations have also found that key documentation was frequently missing or 

incomplete and made recommendations to address the problem. However, 

State has not consistently followed up to ensure the implementation of these 

recommendations, as internal control standards require.

State does not have processes for ensuring compliance with risk analysis and 

documentation requirements. Without the proper implementation of its internal 

control policies for grants management, State cannot be certain that its oversight 

is adequate or that it is using its limited oversight resources effectively.

View GAO-14-635. For more information, 

contact David Gootnick at (202) 512-3149 or 

GootnickD@gao.gov.
Page i GAO-14-635 State’s Grants Management

Letter 1

Background 4

State Has Established Policies and Guidance That Provide a 

Supportive Environment for Administering and Overseeing 

Grants 8

Inconsistent Implementation of State Policies and Guidance 

Weakens Assurance That Grant Funds Are Used as Intended 12

Conclusions 24

Recommendations for Executive Action 25

Agency Comments 25

Appendix I Objectives, Scope, and Methodology 27

Appendix II Internal Control Standards as Designed and Implemented in State’s 

Grants Management 33

Appendix III Agency Comments 40

Appendix IV GAO Contacts and Staff Acknowledgments 43

Related GAO Products 44

Tables

Table 1: Top 10 U.S. Department of State Grant-Making Bureaus 

and Posts by Total Federal Financial Assistance 

Obligated in Fiscal Year 2012 6

Table 2: Department of State’s Grants Policy Directives (GPD) as 

of April 2, 2014 and Related Internal Controls 34

Table 3: Overall Results Relating to Risk Management from GAO 

File Reviews 36

Table 4: Control Activities: Overall Results Relating to Monitoring 

Approach from GAO File Reviews 36

Contents
Page ii GAO-14-635 State’s Grants Management

Table 5: Control Activities: Results Relating to Closeout Activities 

from GAO File Reviews 37

Table 6: Results Relating to Information and Communications 

from GAO File Reviews: Basic Documentation 37

Table 7: Results Relating to Information and Communications 

from GAO File Reviews: Justifying Competitive Selection 

Decisions 37

Table 8: Results Relating to Information and Communications 

from GAO File Reviews: Justifying and Documenting 

Sole-Source Decisions 38

Table 9: State’s Internal Monitoring: Findings from A/OPE’s GMRs 

and GREATs for Bureaus and Posts within GAO’s Sample 38

Figures

Figure 1: Key Internal Control Activities Required Through a 

Grant’s Life Cycle 10

Figure 2: Grant Sample Compliance with the Various Steps of a 

Risk Analysis 15

Figure 3: Key Documentation at Each Phase of a Grant’s Life 

Cycle 17
Page iii GAO-14-635 State’s Grants Management

Abbreviations

A/OPE Office of the Procurement Executive

AQM Bureau of Administration, Office of Acquisitions 

Management

CFR Code of Federal Regulations

ECA Bureau of Educational and Cultural Affairs

GMR Grant Management Review

GO grants officer

GOR grants officer representative

GPD grant policy directive

GREAT Grants Review Evaluation and Assistance Trainings

INL Bureau of International Narcotics and Law Enforcement

ISN Bureau of International Security and Nonproliferation

NEA/MEPI Bureau of Near East Affairs, U.S.-Middle East Partnership 

Initiative

OMB Office of Management and Budget

PM/WRA Bureau of Political-Military Affairs, Office of Weapons 

Removal and Abatement

PRM Bureau of Population, Refugees, and Migration

This is a work of the U.S. government and is not subject to copyright protection in the 

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Page 1 GAO-14-635 State’s Grants Management

441 G St. N.W.

Washington, DC 20548

July 21, 2014

The Honorable Claire McCaskill

Chairman

Subcommittee on Financial and Contracting Oversight

Committee on Homeland Security and Governmental Affairs

United States Senate

Dear Madam Chairman:

Grants and cooperative agreements are key tools that the U.S. 

Department of State (State) uses to conduct foreign assistance. State 

uses them to award assistance to individuals and organizations for a 

variety of purposes, such as fostering educational and cultural exchanges 

with citizens of other countries, facilitating refugee resettlement, and 

developing U.S. allies’ law enforcement capacity. In fiscal year 2012, 

State obligated over $1.6 billion for approximately 14,000 grants and 

cooperative agreements worldwide.

State’s Office of the Inspector General and the Special Inspector General 

for Afghanistan Reconstruction recently reported that State faced 

challenges overseeing its grants and ensuring that funds were being used 

as intended.1 In particular, they found deficiencies in certain internal 

control activities as well as financial reporting. We have also identified

 1

See, for example, Special Inspector General for Afghanistan Reconstruction, Selected 

Public Diplomacy Awards Mostly Achieved Objectives but Embassy Can Take Steps to 

Enhance Grant Management and Oversight, Audit 12-13 (Washington, D.C.: July 30, 

2012); Department of State Office of Inspector General, Audit of Grant Closeout 

Processes for Selected Department of State Bureaus, AUD-CG-13-31 (Washington, D.C.: 

June 2013); and Department of State Office of Inspector General, Audit of Bureau of 

Population, Refugees and Migration Oversight of Selected Cooperative Agreements in 

Support of Colombian Refugees in Ecuador, AUD-CG-13-35 (Washington, D.C.: July 

2013).
Page 2 GAO-14-635 State’s Grants Management

challenges and lessons learned for grants management across the 

federal government in a body of work spanning several decades.2

You asked us to review issues related to State’s management and 

oversight of grants and cooperative agreements. This report examines (1) 

the policies and guidance that State has established to administer and 

oversee grants and cooperative agreements, and (2) the extent to which 

the implementation of those policies and guidance provides reasonable 

assurance that funds are being used as intended.

To address these objectives, we analyzed federal regulations and State’s 

policies and guidance. We interviewed State officials from the Office of 

the Procurement Executive (A/OPE); the Office of the Deputy Chief 

Financial Officer, and various functional and regional bureaus and offices 

headquartered in Washington, D.C.; and three overseas missions to 

determine how State both designs and implements department-wide 

internal control policies on grants performance and financial 

management.3 To further determine how State implements these policies, 

we selected three case study countries—Afghanistan, Cambodia, and 

Turkey—based on criteria that included total dollar value of grants in a 

country, geographic diversity, and balance among the bureaus involved in 

managing the awards. For these countries we examined a 

nongeneralizable sample of 48 grants and cooperative agreements by 

award size and bureau that had obligations in fiscal year 2012.4 In 

addition, we used the same criteria to draw another nongeneralizable 

sample of 13 grants managed in Washington, D.C.5 Overall, the 61 grants 

 2

See GAO, Grants to State and Local Governments: An Overview of Federal Funding 

Levels and Selected Challenges, GAO-12-1016 (Washington, D.C.: Sept. 25, 2012), 

which highlights and summarizes some of the grants management challenges GAO has 

identified over the years. In addition, see our more recent report—Cuba Democracy 

Assistance: USAID’s Program Is Improved, but State Could Better Monitor Its 

Implementing Partners, GAO-13-285 (Washington, D.C: Jan. 25, 2013).

3

U.S. overseas missions can encompass multiple locations, or posts, within a country. For 

example, the U.S. mission to Turkey comprises three posts, including an embassy in 

Ankara, and consulates in Istanbul and Adana.

4

We selected our sample in June 2013, when fiscal year 2012 data were the most 

complete data available.

5

The principal place of performance of these grants is the United States. The types of 

activities funded include the resettlement of refugees and the placement of foreign 

exchange students in schools and universities across the country.
Page 3 GAO-14-635 State’s Grants Management

we reviewed ranged in value from just over $25,000 to $28,000,000, and 

totaled approximately $172 million.6 Collectively, the grants in our 

samples were managed by 3 posts and 14 of the 27 grant-making 

bureaus and offices in State, and included grants by 6 of the top 10 

bureaus and posts in terms of total dollar amount obligated for federal 

financial assistance in fiscal year 2012.7 We developed a data collection 

instrument that we used to conduct file reviews for the 61 grants. Our file 

review assessed grants officials’ implementation of a selection of State’s 

required internal control activities for grants management, including risk 

assessment, monitoring of recipients, and documentation of key activities. 

We also conducted interviews with cognizant grants officials for each of 

the grants to learn how they implemented grants management policies. 

To identify any internal control deficiency patterns or trends, we analyzed 

and compared the data we collected from our file reviews and interviews, 

and also compared them to the findings from State’s internal inspections 

of grant-making operations.

We conducted this performance audit from May 2013 to July 2014 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe the

evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives. A more detailed description of 

our scope and methodology can be found in appendix I.

 6

For those grants of less than $25,000 where the program is short-term and the cost can 

reasonably be determined at the time of the award, State uses a special assistance 

instrument called a fixed obligation grant. This type of assistance award has different, 

often less stringent, reporting and other requirements than grants and cooperative 

agreements.

7

These 27 bureaus and offices include the U.S. Mission to the United Nations. Regional 

and functional bureaus oversee the grant making at the three overseas missions in our 

sample.
Page 4 GAO-14-635 State’s Grants Management

Grants and cooperative agreements are assistance instruments used to 

transfer money, property, or services to accomplish a public purpose. The 

difference between the two instruments relates to the amount of 

involvement between the agency and the recipient during performance: 

when substantial involvement is not anticipated, State uses a grant; 

otherwise, it uses a cooperative agreement. For the purposes of this 

report, the term “grants” refers to both grants and cooperative 

agreements.8

State’s grants vary greatly by size and recipient—from grants of less than 

$100 to help cover an individual’s travel expenses, to multi-million dollar 

grants to, for example, international nongovernmental organizations for 

democracy-building programs. A/OPE sets department-wide policies 

related to grants management, and individual bureaus may also develop 

their own specific policies to supplement those from A/OPE.9 Managing a 

grant involves a variety of State officials, often from multiple bureaus and 

posts. The principal grants officials include the following:

• The grants officer (GO), who is ultimately responsible for overseeing 

the grant.

• The grants officer representative (GOR), who often has program 

implementation expertise and assists the GO in overseeing a grant.

• The program officer, who, if the GO is from a different bureau, may 

provide programmatic expertise, primarily during the preaward phase. 

For example, a program officer may design the grant announcement 

and assist in selecting recipients. In some cases, the program officer 

 8

As defined in the Federal Financial Assistance Management Improvement Act of 1999, 

“federal financial assistance” includes grants, cooperative agreements, loans, loan 

guarantees, insurance, interest subsidies, and other forms of assistance. Pub. L. No. 106-

107, §4(3), 113 Stat. 1486 at 1487 (Nov. 20, 1999), citing §31 U.S.C. 7501(a)(5). In our 

evaluation, we have limited our assessment to grants and cooperative agreements and, 

for simplicity, refer to them as grants.

9

One bureau has established a bureau-specific grants assistance center, which serves as 

a repository of resources and grants-management-related information. In addition, the 

Public Affairs Section in the embassy in Kabul, Afghanistan, has established a 

Comptroller’s Office that has dedicated responsibility for assisting with grants oversight 

and management. The office has created standard operating procedures for grants 

management for all public affairs offices and provides training and financial management 

functions. 

Background

State Grants 

Management: Definitions 

and Key Roles and 

Responsibilities
Page 5 GAO-14-635 State’s Grants Management

may be designated as the GOR once the grant is awarded to a 

recipient.

• The budget officer, who is responsible for ensuring that the 

appropriated funds are drawn down correctly.

Some GOs and GORs also reported using a grants management 

specialist or other staff, such as interns, to help them manage certain 

aspects of their portfolios.

The various grants officials involved in the management of a grant may 

be from different bureaus as well as different locations. Twenty-seven 

bureaus and offices within State, including the U.S. Mission to the United 

Nations, have grant-making authority or grant oversight responsibilities. 

Posts, including embassies and consulates overseas, may also make 

grants. Ten bureaus and posts accounted for the majority of federal 

assistance obligations that State made in fiscal year 2012 (see table 1). 

For those GOs located in Washington, D.C., the GOR is usually located in 

the principal place of performance, which may be at State headquarters in 

Washington, D.C.—for cultural exchange programs, for example—or 

overseas. Eighteen of the 27 bureaus with grant-making authority have 

their own GOs. Those that do not have GOs or whose GOs do not have a 

high enough grant-making authority rely on the Office of Acquisitions 

Management to fulfill the GO role. This office provides a full range of 

grant management services, including planning, negotiations, cost and 

price analysis, and administration.10 In those instances, the bureau 

requesting the grant then generally provides the GOR, program officer, or 

both to supply program-specific expertise. As of May 2014, there were 

571 GOs worldwide, with 503 of them based overseas. Most GOs at 

posts are Foreign Service Officers with multiple other duties. In addition, 

Foreign Service Officers usually rotate to another post within 1-3 years, 

per State’s normal operating procedures. This considerable turnover rate 

means that a single grant may have multiple GOs over its life cycle.11

 10According to State officials, the Office of Acquisitions Management works on a fee-forservice basis, charging 1 percent of any dollar obligated. The office currently services 

about 16 bureaus and offices.

11As grants officials change assignments and locations in State and around the world, 

they may shift management responsibility for the awards under their oversight to new 

grants officials. For 23 of the 61 grant files we reviewed, grants officials transferred 

responsibility to new officers at least once during the life of the grant.
Page 6 GAO-14-635 State’s Grants Management

Table 1: Top 10 U.S. Department of State Grant-Making Bureaus and Posts by Total Federal Financial Assistance Obligated in 

Fiscal Year 2012

Bureau, office, or post 

Total obligated amount

(in U.S. dollars)

Bureau of Educational and Cultural Affairs (ECA) $397,283,825

Bureau of Administration, Office of Acquisitions Management (AQM) $393,229,481

Bureau of Population, Refugees, and Migration (PRM) $352,658,294

Bureau of Political-Military Affairs, Office of Weapons Removal and Abatement (PM/WRA) $129,243,899

Bureau of Near East Affairs, U.S.-Middle East Partnership Initiative (NEA/MEPI) $90,472,412

Bureau of International Narcotics and Law Enforcement (INL) $69,890,738

Kabul, Afghanistan $56,381,107

Islamabad, Pakistan $27,999,681

Bureau of Near East Affairs, Iraq (NEA/Iraq) $16,840,547

Office to Monitor and Combat Trafficking in Persons $15,850,928

Total $1,549,850,912

Source: GAO analysis of data from the Department of State. | GAO-14-635

Notes: Federal financial assistance includes all grants and cooperative agreements. Our sample of 61 

grants included grants managed by ECA, AQM, PRM, INL, PM/WRA, and Kabul.

State’s grants generally follow a life cycle that consists of four phases—

preaward, award, postaward, and closeout. In the preaward phase, grants 

officials develop the program idea, evaluate proposals, and select a 

recipient. The GO then negotiates the costs of the grant with the recipient 

and drafts the award document during the award phase. In the postaward 

phase, grants officials monitor the recipient’s progress and disburse 

payments as appropriate. Finally, in the closeout phase, grants officials 

assess final programmatic and financial reports and determine any final 

payments or reimbursements that are necessary.
Page 7 GAO-14-635 State’s Grants Management

As we have noted in prior reports, effective oversight and internal control 

are important when awarding and managing federal grants to provide 

reasonable assurance to federal managers and taxpayers that grants are 

awarded properly, recipients are eligible, and federal grant funds are used 

as intended and in accordance with applicable laws and regulations.12

The Standards for Internal Control in the Federal Government (the federal 

standards) sets forth the standards that provide the overall framework for 

establishing and maintaining internal control and for identifying and 

addressing major performance and management challenges and areas at 

greatest risk of fraud, waste, abuse, and mismanagement.13

• Control environment: Management and employees should establish 

and maintain an environment that sets a positive and supportive 

attitude toward internal control and conscientious management. A 

positive control environment is the foundation for all other standards.

• Risk assessment: Internal control should provide for an assessment of 

the risks the agency faces from both external and internal sources. 

Risk assessment is the identification and analysis of relevant risks 

associated with achieving the agency’s objectives and forming a basis 

for determining how risks should be managed.

• Control activities: Internal control activities help ensure that 

management’s directives are carried out. Control activities are the 

policies, procedures, techniques, and mechanisms that enforce 

management’s directives. They help ensure that actions are taken to 

address risks, and they are integral to the stewardship of government 

resources and achieving effective results.

• Information and communications: Information should be recorded and 

communicated to management in a form and within a time frame that 

enables management to carry out its internal control and other 

responsibilities.

• Monitoring: Internal control monitoring should assess the quality of 

performance over time and ensure that any issues are promptly 

resolved.

 12See, for example, GAO-12-1016 and GAO, Iraq and Afghanistan: Agencies Face 

Challenges in Tracking Contracts, Grants, Cooperative Agreements, and Associated 

Personnel, GAO-10-509T (Washington, D.C.: Mar. 23, 2010).

13GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: November 1999).

Internal Control Standards 

Applicable to State Grants 

Management

The Five Standards for internal control

1. Control environment

2. Risk assessment

3. Control activities

4. Information and communications

5. Monitoring

Source: GAO. | GAO-14-635
Page 8 GAO-14-635 State’s Grants Management

State has established a core set of policies and guidance incorporating 

federal regulations for administering and overseeing grants. A/OPE has 

established policies and training to further assist grants officials as they 

implement the department’s policies and to reduce wasteful spending in 

government. A/OPE has taken steps to improve its policies, revising 

many of them since their issuance. State has provided these policies, as 

well as training and other support, to staff to encourage effective grant 

management throughout the life cycle of a grant.

State’s grant management policies incorporate requirements established 

in federal regulations and guidance, which are codified in the Code of 

Federal Regulations (CFR).14 These regulations are based on Office of 

Management and Budget (OMB) circulars on grants and cooperative 

agreements with nongovernmental organizations and institutions of higher 

education as well as with state and local governments. OMB circulars 

provide guidance to grants officials for implementing rules regarding 

allowable costs, program purposes, and financial management 

procedures.15 In addition, the authorities for specific assistance programs 

may provide requirements for associated grants.16 OMB guidance and 

regulations contained in the CFR inform State’s policies for grants 

management. State collects and articulates the department’s policies in 

the Foreign Affairs Manual and its associated handbooks. This manual 

assigns A/OPE the authority to prescribe acquisition and assistance 

 1422 CFR Parts 135 and 145.

15In December 2013, OMB issued new guidance for all federal assistance, including 

State’s grants. A/OPE is required to update its regulations to reflect these changes by 

June 2014 and implement the changes by December 2014. According to State officials, 

these changes will include a greater emphasis on risk assessment. The guidance can be 

found at 78 Federal Register 78, 590 (Dec. 26, 2013), as well as at 2 CFR Chapter I, 

Chapter II, Parts 200, 215, 220, 225, and 230. This guidance supersedes and streamlines 

requirements from OMB Circulars A–21, A–87, A–110, and A–122; Circulars A–89, A–

102, and A–133; and the guidance in Circular A–50 on Single Audit Act follow-up.

16For example, the Smith-Mundt Act authorizes assistance awards involving press, 

publications, radio, Internet, and other technology projects (see 22 U.S.C. § 1461(a)), and 

the Mutual Educational and Cultural Exchange Act of 1961 (22 U.S.C. § 2451 et seq.) 

authorizes exchange programs, such as the Fulbright Program, that increase mutual 

understanding between Americans and people of other countries.

State Has 

Established Policies 

and Guidance That 

Provide a Supportive 

Environment for 

Administering and 

Overseeing Grants

State’s Policies 

Incorporate Federal 

Regulations
Page 9 GAO-14-635 State’s Grants Management

policies, regulations and procedures for State.17 State officials told us that 

A/OPE also works closely with the Office of the Deputy Chief Financial 

Officer to develop policies related to the financial management of grants.

Since 1992, A/OPE has issued 59 grants policy directives to provide 

additional guidance specific to State’s staff explaining how they should 

conduct grants management in accordance with federal regulations.18

A/OPE has issued or revised more than half of these policies since 2008, 

creating at least two of them in response to concerns from its Inspector 

General and us about State’s internal controls for grants management.19

State’s policies and guidance help establish a control environment 

framework for grants management. Two of the directives related to risk 

assessment, for example, directly cite the federal standards, which call on 

federal agencies to identify risks as part of a positive internal control 

environment. State’s policies also provide guidance for implementing key 

internal control activities throughout the life cycle of a grant, such as 

approval of the monitoring plan or review of quarterly or annual reports 

(see fig. 1).

 17While A/OPE’s authority derives from the Foreign Affairs Manual, A/OPE articulates its 

guidance, procedures, and policy in its grants policy directives, its handbook, and the 

CFR. 

18A/OPE has issued 59 in total, but has retired 5 of them for a total of 54 active Grants 

Policy Directives.

19Grants Policy Directive 59 (effective January 2012) provides guidance for Management 

of Contractors Supporting Grants Administration, citing our recommendation in our report 

GAO, Improvements Needed in Management of Contractors Supporting Contract and 

Grant Administration in Iraq and Afghanistan, GAO-10-357 (Washington, D.C.: Apr. 2010)

as the impetus for the policy. Grants Policy Directive 34 (effective October 2008) provides 

guidance for State’s Grants Management Review program, stating that the program was 

initiated in response to a collection of recommendations made by us, State’s Inspector 

General, and OMB.

State’s Policies and 

Guidance Establish 

Internal Controls 

throughout the Grant Life 

Cycle

The Five Standards for Internal Control 

1. Control environment: sets a positive 

and supportive attitude toward internal 

control and conscientious 

management.

1. Risk assessment

2. Control activities

3. Information and communications

4. Monitoring

Source: GAO. | GAO-14-635
Page 10 GAO-14-635 State’s Grants Management

Figure 1: Key Internal Control Activities Required Through a Grant’s Life Cycle

State’s control environment also includes a variety of additional guidance, 

including mandatory training, “best practices” dissemination, and online 

resources.

• Training: State offers its staff several grants management courses, 

covering such topics as monitoring and evaluation, cost principles, 

and ethics. GOs must take at least 24 hours of grants management 

training, and GORs must take both an introduction and a monitoring 

course to obtain certification.20 Both must update their training with at 

least 16 hours of courses every 3 years. Some courses are also 

available online, and A/OPE has worked with several bureaus to hold 

training focused on their specific needs. In addition, A/OPE 

occasionally offers regional or post training in the field, depending on 

resources, and has recently begun holding webinars to train and 

answer questions from grants officials overseas.21

• Best practices dissemination: According to State officials, A/OPE 

began holding quarterly meetings in 2004 for grants officials 

throughout the department to both raise issues and share best 

practices. More recently, A/OPE has begun to offer a 2-day course 

twice a year in lieu of the quarterly meetings. The course offers an 

update on trends and regulation changes as well as a refresher on 

grants administration and policy.

 20Grant-making authorities range from level 1, for grants under $100,000, to level 7, which 

provides unlimited grant-making authority. Training requirements for GOs increase with 

each higher level of grant-making authority, reaching 120 hours of required grant 

management training for level 7.

21See GAO, Grant Workforce: Agency Training Practices Should Inform Future 

Government-wide Efforts, GAO-13-591 (Washington, D.C: June 28, 2013) for more 

information about State’s grants management training.
Page 11 GAO-14-635 State’s Grants Management

• Online resources: Finally, State has a number of Intranet resources 

available for grants officials. Beyond distance learning courses, 

A/OPE also has sample templates for a variety of grant 

documentation, including a preaward survey, financial management 

survey, risk assessment tool, and several types of monitoring reports. 

An A/OPE official told us A/OPE is currently updating the Federal 

Assistance Policy Manual, which will provide additional guidance for 

the entire grant life cycle.22 Furthermore, bureaus and posts are 

allowed to design guidance appropriate to the varying circumstances 

surrounding their grants. For example, three of the bureaus and two of 

the posts in our sample have developed their own risk assessment 

checklists.

State guidance also directs grants officials to document key internal 

control activities throughout the life cycle of a grant, including the use of 

funds, the recipient’s progress, and the grants officials’ assessment of 

that progress. State has several policies either dedicated to 

documentation or requiring documentation. For example, one policy 

describes the roles and responsibilities for both the GOs and the GORs, 

listing what information they must document as well as where and at what 

phase in the grant life cycle they should document it.23 For certain internal 

control activities, State has created additional policies with detailed 

documentation and reporting requirements. The policies cover topics 

such as competition versus sole source decisions, risk identification and 

assessment processes, and developing monitoring plans. These policies 

also include sample templates outlining various approaches to 

documenting these activities. Under State guidance, bureaus and posts 

may tailor these policies to their specific needs. Given the considerable 

turnover rate of GOs who are Foreign Service Officers, as well as the fact 

that grants management is not often their primary task, a strong internal 

controls environment is essential for accountability.

 22A/OPE’s Federal Assistance Policy Manual contains internal guidance, policies and 

standards for the award and management of State’s assistance awards.

23State’s Office of the Procurement Executive, Grants Policy Directive Number 28, 

Revision 1. Subject: Roles and Responsibilities for the Award and Administration of 

Federal Assistance. Effective Sept. 21, 2010.
Page 12 GAO-14-635 State’s Grants Management

State has not consistently implemented the risk analysis and 

documentation of internal controls required by grants management 

policies and guidance, a fact that weakens assurance that grant funds are 

used as intended. In particular, grants officials have not adhered 

consistently to State’s policies about identifying, assessing, and mitigating 

risks associated with the grants we reviewed. Furthermore, grants

officials do not always document the implementation of key internal 

controls activities as required. State has established procedures for 

assessing grants officials’ implementation of its internal controls. In 

conducting these reviews, A/OPE found insufficient documentation in the 

grant files at all 10 of the bureaus and posts that were also in our review 

and recommended solutions, but did not systematically follow up to 

ensure that the bureaus and posts had implemented them.

Grants officials responsible for the files in our sample often did not adhere 

to State’s policies on risk assessment. Federal standards define risk 

assessment as “the identification and analysis of relevant risks associated 

with achieving the [agency’s] objectives.” A risk analysis helps ensure that 

grants officials undertake the necessary control activities and use 

oversight resources appropriately. State’s policy on risk management 

further elaborates that risk assessment should begin in the preaward 

phase and continue throughout the grant life cycle. Furthermore, it states 

that a risk management plan must include identification, assessment, and 

monitoring and mitigation of risk. In most of the files we reviewed, 

however, we did not find evidence that grants officials had fulfilled these 

requirements, as described below.

• Risk identification: State’s policies require grants officials to carry out 

a comprehensive review of potential recipients to identify risks. Risk 

factors could include a lack of stable financial infrastructure or 

experience in managing a U.S. government grant, past performance 

problems, an unusual or difficult environment, responsibility for a large 

amount of funds, and concern the organization might be involved in 

terrorist activities. Of the 61 grant files we reviewed, 45 showed that 

grants officials had at least partially undertaken a risk identification 

process.24 However, 33 of these were missing key elements of a risk 

 24Our sample is nongeneralizable and did not allow us to determine whether there were 

any statistically significant differences by factors such as bureau and award size.

Inconsistent 

Implementation of 

State Policies and 

Guidance Weakens 

Assurance That Grant 

Funds Are Used as 

Intended

Grants Officials Often Did 

Not Conduct Required 

Risk Analysis

The Five Standards for internal control

1. Control environment

2. Risk assessment: the identification 

and analysis of relevant risks 

associated with achieving the 

agency’s objectives and forming a 

basis for determining how risks

should be managed.

3. Control activities

4. Information and communications

5. Monitoring

Source: GAO. | GAO-14-635
Page 13 GAO-14-635 State’s Grants Management

identification process, such as a review of the recipient’s financial 

systems and internal controls.

• Risk assessment: State policy requires grants officials to exercise a 

greater level of oversight for high-risk versus low-risk grants; however, 

we found in our file reviews that grants officials often did not assess 

identified risks to determine the grants’ risk level. Of the 45 grants that 

underwent a risk identification process, 28 had risks identified. 

However, only 15 of those 28 grants that identified risks also included 

at least a partial assessment of risks, such as a preaward checklist at 

one post that included some questions about prior federal grant 

management experience and other past performance issues. In 

addition, while State has established a variety of guidance on risk 

assessment, the wording of the guidance is not consistent in certain 

aspects, such as assessment of external risk factors. For example, 

while one of the grants policy directives lists Transparency 

International’s Corruption Perception Index as a risk assessment 

resource, none of A/OPE’s sample risk assessment templates 

mention the index or corruption in general.25 In another example, we 

found that a grant to support civil society had received a “low-risk”

determination, based on calculations from a risk assessment 

checklist, although grants officials remarked in the notes section of the 

checklist that corruption was rampant in that country. Since corruption 

was not an element of the checklist itself, it did not factor into the 

overall risk-level determination—nor was it reflected anywhere else in 

the grant file documentation.26

• Risk mitigation: State policies require grants officials to document how 

they will mitigate, or address, identified risks, including by preparing 

and implementing a monitoring plan. Of the 15 grants that showed 

 25The Corruption Perception Index ranks countries around the world according to the 

degree of corruption that is perceived to exist among public officials and politicians on an 

annual basis.

26Risk-level determination is one way to assess risks, but State has little guidance on how 

to determine any risk level other than high. Furthermore, the web-based grants 

management system that State has begun using for grants management does not require 

GOs to document the risk level they have assigned to a grant. The paper-based checklist 

that the web-based system is replacing in part also does not require GOs to document a 

risk-level determination. Only 12 of the 61 grant files we reviewed included a risk-level 

determination: 4 grants had a high-risk recipient, 3 had a high-risk project, and 5 had a 

low- or relatively low-risk recipient. Three additional grants were marked “Not a high risk 

recipient” although they did not include any final risk-level determination. Of the 49 grants 

without a final risk-level determination, we found that some had risk factors present, 

including a lack of experience in managing a U.S. government grant. 
Page 14 GAO-14-635 State’s Grants Management

both identification and assessment of risks, 11 showed at least partial 

mitigation of those risks (see fig. 2). Of the remaining 4 grants that 

showed no risk mitigation, 1 included an audit report identifying 

significant financial management risks, such as noncompliance with 

allowable costs, on the part of the grant recipient.27 The grants 

officials, however, did not reflect these risks in a risk mitigation or 

monitoring plan. In two other grant files we reviewed, grants officials 

identified allegations of prior financial mismanagement, but awarded 

the grant without addressing how the risk would be mitigated. 

Furthermore, State’s various risk-related guidance does not clearly 

emphasize the importance of linking risk assessment to monitoring. 

Federal standards state that risk analysis generally includes deciding 

how to manage the risk and what actions should be taken. Of the five 

sample monitoring templates that A/OPE has developed, however, 

three do not mention risk.28 Grants officials who use these templates, 

therefore, may not make the link between monitoring and risk. For 

example, of the 13 grants from two bureaus in our sample that had 

developed their own risk assessment checklists based on A/OPE’s 

templates, we found that 7 did not reflect risks identified in a 

monitoring plan. Moreover, of the 23 grants in our sample overall that 

had assessed risks and had a monitoring plan, only 10 reflected the 

risks in the plan.

 27The Single Audit Act, as amended, requires each reporting entity that expends $500,000 

or more in federal awards, including grants, in a fiscal year to obtain an annual “single 

audit,” which includes an audit of the entity’s financial statements, a schedule of the 

expenditure of federal awards, and a review of related internal controls. The report is 

prepared in accordance with OMB’s implementing guidance in OMB Circular No. A-133, 

Audits of States, Local Governments, and Non-Profit Organizations, which provides 

guidance to auditors on selecting federal programs for audit and the related internal 

control and compliance audit procedures to be performed. This circular does not apply to 

non-U.S.-based entities expending federal awards received either directly as a recipient or 

indirectly as a subrecipient (OMB Cir. A-133 rev. 2007).

28State’s Grant Policy Directive Number 42: Monitoring Assistance Awards indicates that 

the monitoring plan templates are illustrative and may be tailored for use.
Page 15 GAO-14-635 State’s Grants Management

Figure 2: Grant Sample Compliance with the Various Steps of a Risk Analysis

Without identifying and assessing risks, it may be difficult for State to 

determine whether there are any observable impediments to the 

recipient’s effective management of State funds that would need to be 

mitigated. Determining which grants warrant greater oversight and which 

require less helps managers ensure the appropriate allocation of 

resources for safeguarding grant funds.
Page 16 GAO-14-635 State’s Grants Management

Grants officials in the sample of grants we reviewed generally did not 

adhere to State policies and procedures relating to documenting control 

activities. Federal standards call for the clear, prompt, and accurate 

documentation of internal control and all other significant events, 

including risk assessments and monitoring activities, and state that this 

documentation should be readily available for examination. State 

guidance directs grants officials to document key internal control activities 

throughout the life cycle of a grant, including the use of funds, the 

recipient’s progress, and the grants officials’ assessment of that progress 

(see fig. 3). To support officials as they implement this guidance, State 

has created multiple systems for organizing, retaining, and sharing 

information about grants, whether the files are in electronic or hard copy 

form. Documenting grant management activities is particularly important 

because of grants officials’ considerable turnover rate, which can leave 

newly assigned grants officials dependent on files to determine what 

control activities are required and which have been conducted.

Grants Officials Often Did 

Not Document Control 

Activities 

The Five Standards for internal control

1. Control environment

2. Risk assessment

3. Control activities: the policies, 

procedures, techniques, and 

mechanisms that enforce 

management’s directives.

4. Information and communications: 

Information should be recorded and 

communicated to management in a 

form and within a time frame that 

enables them to carry out their 

internal control and other 

responsibilities.

5. Monitoring

Source: GAO. | GAO-14-635
Page 17 GAO-14-635 State’s Grants Management

Figure 3: Key Documentation at Each Phase of a Grant’s Life Cycle

However, the grant files we reviewed did not consistently document key 

grant activities as required, to demonstrate that internal controls had been 

implemented. In many of the files we reviewed, required documents were 

missing from the official file or incomplete, as described below.

• Internal control checklist: State requires each grant file to contain a 

checklist, which grants officials are supposed to use to document the 

completion of many internal control activities throughout the grant’s 

life cycle. These activities include vetting recipients, identifying the 

amount of funds and project duration, identifying key contacts at State 

and the recipient organization, and tracking receipt of information from 

the recipient about progress made and costs incurred. State’s training 

further emphasizes the importance of keeping all sections of this 

checklist current to assist managers in monitoring grants and ensure 

that they fulfill the U.S. government’s obligation to grant recipients. 

However, 17 out of the 61 files we reviewed did not contain this 
Page 18 GAO-14-635 State’s Grants Management

checklist, and only about 11 percent (5 out of 44) of the forms that did 

exist were completely filled out.29

• Grant award justification: State requires grant files to contain a 

justification for awarding any grants without a full and open 

competition.30 However, for the 24 grants in our sample that were 

sole-sourced, 7 did not contain this justification.

• Monitoring plans: State policies require grants officials to prepare a 

monitoring plan to measure the recipient’s progress toward achieving 

the grant’s goals and objectives and ensure that the recipient 

complies with the grant agreement. The grants officials must use the 

plan to indicate the type and frequency of monitoring they will conduct 

given the risks involved and the resources available for these 

activities. However, about half of the files we reviewed (32 of the 61) 

did not contain a monitoring plan. Furthermore, some of the 29 plans 

that were documented did not address key aspects of monitoring the

terms and conditions of the grant agreement, such as risk analysis 

and evaluation. For example, 3 of the 29 documented plans we 

reviewed did not describe how the GO planned to monitor progress 

toward the grant’s specific goals and objectives.

• Monitoring activities conducted: While most of the files contained 

evidence of some monitoring activities, such as e-mail communication 

with recipients, this monitoring did not completely adhere to State’s 

guidance. Of the 29 documented monitoring plans, the evidence 

showed that grants officials had fully executed 8 of them and partially 

executed an additional 10. For example, some of the partially 

executed plans indicated that the grants officials were to conduct site 

visits and review recipient reports, but the grant files showed that the 

grants officials had closed the grants without documenting any 

evidence of these planned monitoring activities. Regardless of 

whether grants had monitoring plans, we found that only 16 of the 61 

files contained evidence that the grants officials had completed the 

required review of all the recipient’s financial and programmatic 

reports to monitor for key information—including verifying timely 

progress toward the goals, as well as identifying and addressing any 

 29Our file review did not assess the accuracy of the information in the checklist. However, 

we made note of any required information that was missing, such as the grant purpose, 

grant amount, or project period.

30State’s Grant Policy Directive Number 5: Competition Requirements for Assistance 

Awards encourages competition in awarding grants and cooperative agreements and lists 

permitted exceptions to this rule. It also provides a blank copy of the required memos for 

documenting decisions to use limited or no competition in certain circumstances. 
Page 19 GAO-14-635 State’s Grants Management

delays or inappropriate expenditures. Another 24 of the 61 files 

contained evidence that grants officials had done partial reviews of 

these reports. These reviews, as well as reviews of the final recipient 

reports, are required to close an award, but we found four awards that 

GOs had closed without evidence that they had reviewed the 

recipient’s final reports. On more than one occasion, State had 

difficulty providing required internal control documentation to us, either 

because a grants official was on leave or had moved on to another 

post. For example, we identified incomplete documentation in some 

award files at one post, including missing final financial and 

programmatic reports. Three months after our site visit, the GO still 

could not produce the documents, because the grants management 

specialist whose computer’s hard drive contained the documents was 

on extended leave. Two other GOs we interviewed said the files they 

inherited did not contain required documents, such as the approval 

forms from bureau headquarters for awards exceeding $25,000.

Without documentation such as the internal control checklist, the grant 

award justification, monitoring plans, and monitoring reports, State cannot 

provide adequate oversight to ensure grant funds are being used as 

intended. Without the required checklist, for example, managers cannot 

readily ensure that the required documentation supporting the 

management of each grant is present and complete. State also cannot 

determine whether the GO’s decision not to award a grant through open 

competition was justifiable according to State’s guidance unless the GO 

documents that decision. Furthermore, while grants officials told us they 

do conduct monitoring, absent adequate monitoring plans and reports, it 

is difficult for managers to determine whether grants officials are 

effectively allocating resources or conducting monitoring, or that a grant 

accomplished its intended goals.

GOs and GORs we interviewed cited a variety of reasons for not 

conducting the required risk analysis and documentation, including a 

misunderstanding of State policies and guidance, a heavy workload, and 

a lack of staff expertise. For example, several of these grants officials told 

us they did not do a risk analysis either because the recipient was well 

known or they knew intuitively that the risk level was low—particularly if 

the grant was relatively small or funded a short-term project such as a 2-

day photography exhibit. State policies, however, do not preclude wellknown organizations from risk analysis. Moreover, we found an example 

where the GO assumed the grant was low-risk without doing a full risk 

analysis, even though it was the first time that State had awarded a grant 

to the recipient. The grant files contained evidence that as the grant 

Grants Officials Cited 

Several Reasons for 

Nonadherence to Risk 

Analysis and 

Documentation 

Requirements, and State 

Does Not Have Processes 

for Ensuring Compliance
Page 20 GAO-14-635 State’s Grants Management

progressed, the recipient had a variety of performance issues, including 

trying to use the grant funds for activities other than what was intended. 

The amount of time and resources dedicated to an appropriate risk 

analysis may vary for lower dollar value grants, well-known recipients, or 

other factors; nonetheless, according to an A/OPE official, a risk analysis 

is still required in these circumstances. State, however, does not have a 

process in place for ensuring that grants officials conduct a risk analysis.

According to State officials and the files we reviewed, multiple 

responsibilities and large portfolios limited the oversight they conducted to 

ensure that required documentation was in place. Grants officials 

reported having high numbers of grants to manage and multiple 

responsibilities beyond managing grants. At bureaus with GOs based in 

Washington, D.C., workloads tended to be higher, according to an A/OPE 

official.31 This official reported that the average number of grant 

transactions undertaken by these domestic GOs in fiscal year 2013 was 

46, and two Washington, D.C.-based GOs we interviewed reported 

having portfolios of 110 and 200 active grants, respectively. At two posts 

we visited, the GOs were responsible for managing portfolios of about 56 

to 66 grants in fiscal year 2012, in addition to their primary responsibilities 

as public affairs officers for the embassies. Both GOs reported relying on 

GORs and others to complete the award documentation. They reported 

conducting occasional spot checks of the files compiled by the GORs. At 

both posts, however, we found that each grant file in our sample 

managed by these GOs was missing required internal control documents. 

Furthermore, we brought oversight issues to the attention of the GOs of 

which they had previously been unaware, such as unexpended funds 

from a closed-out grant.32

 31See GAO, Department of State: Human Capital Strategy Does Not Recognize Foreign 

Assistance Responsibilities, GAO-07-1153 (Washington, D.C: September 2007) for more 

information about grants officers’ workloads.

32In March 2014, State’s Office of Inspector General (IG) issued a Management Alert on 

contract file management deficiencies. Through recent audits, investigations, and 

inspections, the IG has found that contract files also lack required documentation. To hold 

contracting officials accountable and require them to update contract files in accordance 

with federal and department policies, the Management Alert recommends that A/OPE 

develop and implement a process to randomly sample and verify the completeness of 

contract files, as well as provide the results of these reviews to the appropriate bureaus 

and offices. See Department of State and the Broadcasting Board of Governors, Office of 

Inspector General, Management Alert (Contract File Management Deficiencies), MA-A0002 (Washington, D.C.: Mar. 20, 2014).
Page 21 GAO-14-635 State’s Grants Management

Some grants officials told us that State’s systems for documenting key 

management activities are not easy to use. A/OPE officials told us they 

are working to improve the main electronic management systems used by 

grants officials (the Grants Database Management System and the State 

Assistance Management System),33 but the accuracy of some information 

will still depend on the person inputting it, and State does not have a 

process for ensuring that all of the required documentation is included. 

Three grants officials we interviewed reported that interns and grant 

assistants update the paper and electronic files and that the grants 

officials do not check their work. In addition, some grants officials told us 

that while official files might be missing required documentation, the 

information was stored elsewhere and could be retrieved upon request. 

While some grants officials eventually produced the requested 

information, others did not. Some grants officials told us that they kept 

information about recipient performance on their computer’s hard drive, a 

fact that may limit other grants officials’ access to this information. 

Furthermore, the official files did not indicate where this information could 

be found.

State has assessed the implementation of internal controls at several 

bureaus and posts and has recommended improvements; however, it has 

not followed up to ensure the implementation of its recommendations. 

According to the federal standards, successful monitoring should include 

policies and procedures for regularly assessing the effectiveness of the 

internal controls in place and for ensuring that the findings of audits and 

other reviews are promptly resolved. In 2008, A/OPE issued a policy to 

systematically review grants management at posts and bureaus.34 The 

 33The State Assistance Management System is a Department of Health and Human 

Services system, but State officials told us that State has created a steering committee to 

provide suggestions for improvements to the system.

34Office of the Procurement Executive, Grants Policy Directive Number 34. Subject: 

Grants Management Reviews. Effective October 28, 2008.

State Has Assessed 

Implementation of Internal 

Controls at Bureaus and 

Posts, but Has Not 

Followed Up on Most 

Recommendations for 

Improvement 
Page 22 GAO-14-635 State’s Grants Management

policy stated that the number and extent of the reviews conducted each 

year would be dependent on A/OPE’s available resources.35

A/OPE has assessed compliance with grant management policies at 

some bureaus in Washington, D.C., and overseas posts and found some 

deficiencies in grants officials’ implementation of those policies. In 2008, 

State created a Grants Management Review (GMR) program with 

guidelines and a checklist for reviews. The bureaus and posts are to be 

selected for review based on weaknesses identified by the Inspector 

General, dollar amount and volume of grants processed, informal risk 

assessments, public visibility of the grants, and bureau or post requests 

to be reviewed. In addition to the GMRs and other reviews of grantmaking bureaus headquartered in Washington, D.C., A/OPE has 

conducted less formal reviews at grant-making posts overseas, 

combining file reviews with training. These reviews—called Grants 

Review Evaluation and Assistance Trainings (GREAT)—are initiated in 

response to requests for training or when A/OPE becomes aware of 

challenges faced at certain posts, including considerable turnover. 

According to officials, A/OPE tries to select posts for review if they are 

located at or near destinations where A/OPE staff have other reasons to 

travel, so as to conserve resources. A/OPE officials said their method for 

conducting GREATs was similar to that used for GMRs, but less in-depth. 

As a result, unlike the formal GMRs—which State officials said can take 2 

to 3 months to conduct—these informal GREATs take 2 to 3 days and 

result in shorter reports. Between 2001 and February 2014, A/OPE 

completed 13 GMRs and other reviews at 12 bureaus and offices 

 35According to a senior A/OPE Office of Federal Assistance official, the office consists of 

nine staff and, in addition to conducting these compliance reviews, those nine staff are 

responsible for developing policies and guidance for all of State’s grant programs, 

ensuring compliance with this guidance, implementing training for grants management 

officials, and appointing warranted grants officers to approve grants.

The Five Standards for internal control

1. Control environment

2. Risk assessment

3. Control activities

4. Information and communications

5. Monitoring: Internal control 

monitoring should assess the quality 

of performance over time and ensure 

that any issues are promptly 

resolved.

Source: GAO. | GAO-14-635
Page 23 GAO-14-635 State’s Grants Management

headquartered in Washington, D.C., and 42 GREATs at 37 posts around 

the world.36

These assessments of grants officials’ implementation of grants 

management policy at bureaus and posts have found insufficient 

documentation, among other deficiencies, and recommended solutions. 

Specifically, 52 of the 55 reviews found insufficient documentation in 

grant files, affecting 47 bureaus and posts. Ten of the bureaus and posts 

where A/OPE had conducted GMRs, GREATs, and other reviews were 

included in our review samples.37 At all 10 bureaus and posts, State found 

challenges with documentation similar to those we identified. For 

example, in 5 of the 10 bureaus and posts, A/OPE found that grants 

officials did not consistently document monitoring reports or site visit 

reports, and in one case the post had no monitoring plans in its award 

files. A/OPE found insufficient documentation in the other 4 bureaus as 

well, such as incomplete internal control checklists or inadequate 

documentation of sole source justification. One bureau in Washington, 

D.C., kept its monitoring reports on an electronic shared drive, but the 

award files did not indicate where to find the reports. A/OPE has made 

many recommendations to bureaus and posts aimed at correcting the 

deficiencies it identified. These recommendations have included the 

establishment of standard operating procedures and more effective use of 

electronic systems for documentation, among others.

 36The two bureaus A/OPE reviewed prior to establishing the GMR program—between 

2001 and 2008—were AQM and PRM. The 10 bureaus and offices at which A/OPE 

completed GMRs between 2008 and February 2014 were: the Bureau of Democracy, 

Human Rights, and Labor; the Bureau of Diplomatic Security; ECA; INL; the Bureau of 

International Security and Nonproliferation (ISN), Office of Exports Control Cooperation; 

Office to Monitor and Combat Trafficking in Persons; NEA/MEPI; the Office of Overseas 

Schools; the Bureau of International Information Programs; and PM/WRA. As of March 

2014, A/OPE had completed GREATs in: Accra, Addis Ababa, Ankara, Baghdad, 

Bangkok, Berlin, Bucharest, Buenos Aires, Cairo, Dushanbe, Frankfurt, Guatemala City, 

Jerusalem, Kabul, Kinshasa, Kuwait City, London, Luxembourg, Mexico City, Montevideo, 

Moscow, Nairobi, New Delhi, Ottawa, Panama City, Paris, Quito, Rome and the Holy See, 

San Salvador, Santo Domingo, Sarajevo, Sofia, Tel Aviv, Tunis, Warsaw, Yerevan, and 

Zagreb. There were 44 bureaus and posts covered by 50 reviews because A/OPE 

conducted 6 follow-up reviews. Specifically, A/OPE conducted two GMRs at AQM, and 

two GREATs in each of the following: Moscow, Mexico City, San Salvador, Panama City, 

and Paris.

37For a summary of findings in these 10 bureaus and posts, see app. II.
Page 24 GAO-14-635 State’s Grants Management

However, State has not systematically followed up to ensure the 

implementation of these recommendations. State’s system for tracking 

compliance with its grants management policies has yielded 

recommendations for improvement at 48 of the 49 bureaus and posts it 

has reviewed, but State has conducted follow-up with only 6 of those 48 

bureaus and posts to ensure that these recommendations were 

implemented. State’s policy for GMRs outlines how State will select and 

conduct a review, but does not provide a procedure for ensuring that 

corrective action has been taken and no further management action is 

needed. However, A/OPE officials report that they have limited staff, with 

currently only one individual leading both the GMR and GREAT reviews. 

In addition, they report having a limited travel budget for conducting 

follow-up reviews. A senior A/OPE official said it is necessary to be 

vigilant about regularly sending messages regarding important grantrelated tasks, particularly when there is considerable turnover among 

personnel at posts. Because State does not track or report on the 

implementation of recommendations, State cannot determine whether its 

grants management reviews and training are achieving their purpose of 

strengthening the management and oversight of assistance agreements.

Given the relatively large amount of funding for grants and the 

widespread use of these instruments to achieve foreign policy goals, it is 

important for State to ensure that grant funds are used as intended. State 

has made progress toward establishing the internal controls it needs to 

gain this assurance. For example, State has outlined its expectations for 

grants management in detailed policies and guidance that should be clear 

for all grants officials. In particular, the requirements to conduct a risk 

analysis and document the implementation of required control activities 

conform to the federal standards for internal control. However, we found 

that most of the grant files we reviewed did not contain evidence of an 

appropriate risk analysis or were missing other required internal control 

documentation, and State has not developed processes for ensuring that 

grants officials implement these requirements. Therefore, State’s 

assurance that grant funds are used as intended is weakened. 

Recommendations made in State’s internal reviews of grant-making 

practices reinforce expectations concerning documentation. However, 

State management does not systematically follow up to ensure that 

grants officials throughout the department consistently implement these 

required control activities or act upon recommendations made. As a 

result, State cannot be certain that its oversight of grants management is 

adequate or that it is using its limited oversight resources effectively.

Conclusions
Page 25 GAO-14-635 State’s Grants Management

To help ensure that State’s grants officials fully implement grants 

management policies and internal controls that are in place, and that 

grant funds are used as intended, we recommend that the Secretary of 

State take the following two actions:

Develop processes to help ensure that

• bureaus and missions conduct appropriate risk assessments, and

• grants officials complete required documentation for all grants. Such a 

process could include systematic inspections of grant files, with the 

results shared among A/OPE, the appropriate bureaus and missions, 

and the grants officials themselves, so as to promote accountability.

In addition, we recommend that the Secretary of State take the following 

action:

• follow up systematically on recommendations from State’s internal 

reviews of its grants management.

We provided a draft of this report to State for its review and comment. 

State provided written comments, which we have reprinted in appendix III, 

as well as technical comments, which we incorporated, as appropriate.

State provided additional information about its efforts to establish policies 

and guidance to provide a supportive environment for administering and 

overseeing grants. In particular, State noted that, in addition to the 

policies and guidance described in our report, the department has 

implemented processes regarding grant-making authority and certification 

for grants officials and has cooperated with the Office of Management 

and Budget on governmentwide foreign assistance management issues.

State concurred with our recommendations to develop processes for 

ensuring that bureaus and missions conduct appropriate risk 

assessments and that grants officials complete required documentation. 

Specifically, State indicated that it will modify risk assessment guidance to 

include suggestions from our report, provide additional training focused 

on risk assessment, and specifically evaluate compliance with risk 

assessment requirements in State’s own assessments of internal controls 

at bureaus and posts. State also indicated that it will increase the 

emphasis on file documentation and expand the extent of file reviews 

during these assessments at bureaus and posts to help ensure that 

grants officials complete required documentation for all grants. In 

addition, State concurred with our recommendation to follow up 

Recommendations for 

Executive Action

Agency Comments
Page 26 GAO-14-635 State’s Grants Management

systematically on recommendations from State’s internal reviews of its 

grants management. Specifically, it said that it will require formal 

responses to recommendations from its grant management assessments 

at bureaus and posts, to include recommendation implementation status 

updates.

We are sending copies of this report to the appropriate congressional 

committee and the Secretary of State. In addition, the report is available 

at no charge on GAO’s website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact 

me at (202) 512-3149 or GootnickD@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. GAO staff who made major contributions to 

this report are listed in appendix IV.

Sincerely yours,

David Gootnick

Director, International Affairs and Trade
Appendix I: Objectives, Scope, and 

Methodology

Page 27 GAO-14-635 State’s Grants Management

Our objectives were to examine (1) the policies and guidance that the 

Department of State (State) has established to administer and oversee 

grants and cooperative agreements, and (2) the extent to which the 

implementation of those policies and guidance provides reasonable 

assurance that funds are being used as intended.

To define grants and cooperative agreements (grants) and to describe the 

roles and responsibilities of those involved in managing State’s grants 

and the key activities grants officials must conduct during each phase, we 

reviewed State’s grants policy directives (GPD) and State’s required 

grants officials training, and interviewed State officials.1 To describe the 

internal control standards applicable to State grants management, we 

reviewed the Standards for Internal Control in the Federal Government

(the federal standards).2

To describe the policies and guidance that State has established to 

administer and oversee grants, we reviewed federal regulations, Office of 

Management and Budget (OMB) circulars, and State’s GPDs, as well as 

training and other resources the department provides its grants officials. 

We collected and analyzed all 54 active GPDs issued by State’s Office of 

the Procurement Executive (A/OPE).3 We reviewed State Department 

training regarding State’s incorporation of federal regulations into its 

grants policies and interviewed A/OPE officials regarding this topic. We 

interviewed officials from A/OPE and the Office of the Deputy Chief 

Financial Officer, who set department-wide policies on grant performance 

and financial management, and bureau and post officials regarding any 

additional policies and guidance they provide that is specific to the 

programs they manage. To describe the extent to which State’s GPDs 

establish internal controls throughout the phases of a grant’s life cycle, we 

compared the key activities the grants officials must conduct at each 

phase, as well as the additional training and guidance A/OPE provides to 

grants officials, with the federal standards and with federal regulations for 

grants management.

 1

For the purposes of this report, the term “grants” refers to both grants and cooperative 

agreements.

2

GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: November 1999).

3

State issued 59 in total, but retired 5 of them.

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 28 GAO-14-635 State’s Grants Management

To assess the extent to which State’s policies and guidance provide 

reasonable assurance that funds are being used as intended, we 

assessed State’s policies and guidance for grants management against 

the implementation of those policies, as well as reviewing State’s own 

process for conducting internal assessments of the implementation of 

those policies. We interviewed State officials from A/OPE, the Office of 

the Deputy Chief Financial Officer, and various functional and regional 

bureaus and offices headquartered in Washington, D.C., and three 

overseas missions to determine how State both designs and implements 

department-wide internal control policies on grants performance and 

financial management.4

To further determine how State implements these policies, we selected 

three case study countries —Afghanistan, Cambodia, and Turkey—

based on criteria that included total dollar value of grants in a country, 

geographic diversity, and balance among the bureaus involved in 

managing the awards. For these countries we examined a 

nongeneralizable sample of 48 grants by award size and bureau that had 

obligations in fiscal year 2012.5 In addition, we used the same criteria to 

draw another nongeneralizable sample of 13 grants managed in the 

United States, Washington, D.C.6 Overall, the 61 grants we reviewed 

ranged in value from just over $25,000 to $28,000,000, and totaled 

approximately $172 million.7 To arrive at these 61 grants, we included all 

grants over $25,000 with obligations in fiscal year 2012 in Cambodia and 

Turkey, which had 15 and 21 such grants respectively, and selected 20 

such grants managed in the other two countries, for a total of 76 files. We 

excluded grants where multiple places of performance were listed and 

 4

U.S. overseas missions can encompass multiple locations, or posts, within a country. For 

example, the U.S. mission to Turkey comprises three posts, including an embassy in 

Ankara, and consulates in Istanbul and Adana.

5

We selected our sample in June 2013 when fiscal year 2012 data were the most 

complete data available.

6

The principal place of performance of these grants is the United States. The types of 

activities funded include the resettlement of refugees and the placement of foreign 

exchange students in schools and universities across the country.

7

For those grants less than $25,000 where the program is short-term and the cost can 

reasonably be determined at the time of the award, State uses a special assistance 

instrument called a fixed obligation grant. This type of assistance award has different, 

often less stringent, reporting and other requirements than grants and cooperative 

agreements.
Appendix I: Objectives, Scope, and 

Methodology

Page 29 GAO-14-635 State’s Grants Management

selected only those grants where our four countries were listed as the 

only place of performance. However, once we began conducting 

interviews regarding these grants, we discovered that some of the grants 

had been mislabeled in State’s Grants Database Management System. 

Specifically, 2 were managed in countries other than the ones listed in the 

database; another grant was listed in the database as being managed in 

Cambodia alone, but was in fact managed from Washington, D.C., and 

implemented worldwide; and a fourth grant was a duplicate of a grant 

already in our sample. Correcting for these errors and adjustments, our 

sample was reduced to 72 grants. Three bureaus each managed 10 or 

more of these, accounting for 39 of the 72 grants. We determined that we 

had obtained sufficient coverage of grants from the three bureaus in 

question by reviewing 28 of their 39 grants. This determination further 

reduced our overall sample size from 72 to 61 grants. The final sample of 

61 grants we conducted file reviews for included 19 in Afghanistan, 10 in 

Cambodia, 19 in Turkey, and 13 in the United States.8

 8

There were 14 bureaus involved in the management of the 61 grants in our sample, as 

well as three posts in Afghanistan, Cambodia, and Turkey. The 19 grants in Afghanistan 

involved the Kabul post; the Bureau of International Narcotics and Law Enforcement (INL); 

the Bureau of South and Central Asian Affairs; the Bureau of Political-Military Affairs, 

Office of Weapons Removal and Abatement (PM/WRA); and the Office of Acquisitions 

Management (AQM) managing on behalf of the Bureau of International Security and 

Nonproliferation’s (ISN) Office of Cooperative Threat Reduction. The 10 grants in 

Cambodia involved the Office of Overseas Schools; PM/WRA; the Bureau of East Asian 

and Pacific Affairs; and AQM managing grants for the Bureau of Counterterrorism and the 

Bureau of Democracy, Human Rights, and Labor. The 19 grants in Turkey involved the 

Bureau of European and Eurasian Affairs; the Bureau of Population, Refugees, and 

Migration (PRM); and AQM managing grants for the Bureau of Conflict and Stabilization 

Operations; Bureau of Counterterrorism; and the Bureau of Oceans and International 

Environmental and Scientific Affairs. And the 13 grants in the United States involved the 

Bureau of Educational and Cultural Affairs (ECA); PRM; and AQM managing for the 

Bureau of Democracy, Human Rights, and Labor and the Bureau of African Affairs. AQM 

and the Office of Overseas Schools are in the Bureau of Administration.
Appendix I: Objectives, Scope, and 

Methodology

Page 30 GAO-14-635 State’s Grants Management

Collectively, the grants in our samples were managed by 3 posts and 14 

bureaus of the 27 grant-making bureaus and offices in State.9 Our sample 

included grants by 6 of the top 10 bureaus and posts in terms of State’s 

total federal financial assistance obligations in fiscal year 2012.10 Our 

sample was nongeneralizable and did not allow us to determine whether 

there were any statistically significant differences by factors such as 

bureau or award size. In this report, we presented the overall results of 

the data on internal control activities for all 61 grants that we selected for 

data collection instrument review. During our analysis, we also looked for 

any overall patterns or differences by bureau and award size in terms of 

dollar value, but did not note any. We identified examples of concerns 

about controls that we reported on, such as incomplete documentation 

and absence of a risk assessment, in awards with high and low dollar 

values across the bureaus in our sample.11 To examine how grants 

officials implemented grants management policies, we conducted file 

reviews for 61 grants using a data collection instrument and interviews 

regarding those 61 grants using a standard set of questions. We 

developed the data collection instrument to assess grants officials’

implementation of a selection of State’s required internal control activities 

for grants management, including risk assessment, monitoring of 

recipients, and documentation of key activities. To identify these required 

internal control activities, we analyzed federal regulations and State 

policies and guidance related to management of grants across their life 

 9

Regional and functional bureaus oversee the grant making at the three overseas 

missions in our sample. The 27 bureaus and offices are: the Bureau of African Affairs; the 

Bureau of Conflict and Stabilization Operations; the Bureau of Counterterrorism; the 

Bureau of Democracy, Human Rights, and Labor; the Bureau of Diplomatic Security; the 

Bureau of East Asian and Pacific Affairs; the Bureau of Economic and Business Affairs; 

ECA; the Bureau of Energy Resources; Bureau of European and Eurasian Affairs; the 

Bureau of Human Resources; the Bureau of Intelligence and Research; INL; the Bureau of 

International Organization Affairs; ISN; the Bureau of Near East Affairs (NEA); the Bureau 

of Oceans and International Environmental and Scientific Affairs; the Bureau of Overseas 

Building Operations; PM/WRA; PRM; the Bureau of Public Affairs; the Bureau of South 

and Central Asian Affairs; the Bureau of Western Hemisphere Affairs; the Bureau of 

Administration, which includes AQM, the Office of Overseas Schools, and A/OPE; the 

Office of the Secretary; the Office to Monitor and Combat Trafficking in Persons; and the 

U.S. Mission to the United Nations.

10See table 1.

11One bureau in our sample had multiple grants that we reviewed. Each grant had a 

monitoring plan, although most of those plans did not fully adhere to State’s guidance on 

risk mitigation and monitoring. 
Appendix I: Objectives, Scope, and 

Methodology

Page 31 GAO-14-635 State’s Grants Management

cycle and compared them against the federal standards.12 The data 

collection instrument asked a series of questions about critical elements 

of these internal control activities. During our reviews, we examined the 

files that State provided for each grant to determine whether they 

contained sufficient evidence to indicate whether the control activities had 

been performed. Our file review guidance indicated that while State policy 

requires the complete official file to be located in at least one place, 

analysts completing the reviews were directed to contact grants officials 

responsible for the files to request missing information where possible. 

Comments sections in the data collection instrument allowed the 

reviewers to document these requests and other notes they had about 

each question in the file. Two analysts reviewed each file, with the second 

analyst verifying the first analyst’s review. The focus of our analysis was 

the degree to which the grants officials had performed the required 

control activities for the grants in our sample. As noted above, we also 

considered whether there were any patterns or differences by award size 

in dollars or by bureau, but did not find any. In addition, the interview 

questions asked grants officials to identify training and guidance they 

found helpful, as well as any challenges they encountered as they 

implemented these policies. We pretested both the data collection 

instrument and interview questions in Kabul, and tested revised versions 

in Washington, D.C. Our file review and interview questions covered each 

phase of the grant life cycle, from preaward to closeout. We then 

compared the file review results for control activities against responses 

collected using the standard interview questions to provide a more 

complete picture of how the grants officials implemented the policies and 

identify reasons these officials cited for instances of noncompliance, as 

well as any State policies and guidance they found helpful.

We conducted interviews using the standard set of questions with at least 

one grants officer (GO) for each of the 61 grants in our sample, ultimately 

interviewing more than 50 GOs and grants officer representatives (GOR), 

as well as some program officers.13 To identify any internal control 

deficiency patterns or trends, we analyzed and compared the data we 

collected from our file reviews and interviews and also compared them to 

the findings from State’s internal inspections of grant-making operations.

 12For an overview of some of our file review findings, see app. II.

13Some grants in our sample did not have a GOR or a program officer.
Appendix I: Objectives, Scope, and 

Methodology

Page 32 GAO-14-635 State’s Grants Management

To describe State’s assessment of grants officials’ implementation of its 

internal controls, we reviewed State’s guidance for conducting these 

reviews, interviewed A/OPE officials regarding the review process, and 

reviewed 55 assessment reports A/OPE issued between 2001 and 

February 2014. These 55 included the assessment reports A/OPE 

conducted in 12 grant-making bureaus, including 10 Grants Management 

Reviews and 3 other reviews, and reports from the 42 Grants Review 

Evaluation and Assistance Trainings A/OPE conducted at 37 posts 

around the world. Of the 55 assessment reports, 10 covered 10 of the 17 

bureaus and posts included in our review. We analyzed those 10 reports 

to identify any findings related to the federal standards.14 We also 

reviewed all 55 reports to identify any instances where A/OPE either 

made recommendations and then returned to the bureaus and posts to 

follow up, or documented receiving recommendation implementation 

progress reports from those bureaus and posts.

We conducted this performance audit from May 2013 to July 2014 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe the 

evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

 14See app. II for a summary of this analysis of the 10 reports.
Appendix II: Internal Control Standards as 

Designed and Implemented in State’s Grants 

Management

Page 33 GAO-14-635 State’s Grants Management

We analyzed State’s grants policy directives (GPD) as well as its own 

grants management reviews, and we conducted file reviews for 61 grants 

in our sample to help determine both the policies State established for 

internal controls in grants management as well as how grants officials 

implemented those policies. To conduct the file reviews, we developed a 

data collection instrument that focused on basic documentation, decisions 

about competitive selections, risk management approach, monitoring 

approach, and closeout activities. For a full description of the 

methodology for the file reviews, see appendix I.

The following tables reflect our overall analysis of State’s policies and 

management reviews as well as selected results from our file reviews that 

correspond to the five internal control standards of control environment, 

risk assessment, control activities, information and communication, and 

monitoring.1 We analyzed A/OPE’s GPDs against each internal control 

standard to describe the control environment (see table 2). For risk

assessment, control activities, and information and communications, we 

selected results from our 61 file reviews using a data collection instrument 

we developed to analyze these three internal control standards in 

particular (see tables 3-8). Finally, for monitoring, we analyzed A/OPE’s 

findings from its internal reviews assessing the implementation of the 

internal control activities at eight bureaus and two posts included in our 

sample (see table 9). We selected these results because they add 

additional detail to the information summarized in the report.

 1

GAO/AIMD-00-21.3.1.

Appendix II: Internal Control Standards as 

Designed and Implemented in State’s Grants 

Management
Appendix II: Internal Control Standards as 

Designed and Implemented in State’s Grants 

Management

Page 34 GAO-14-635 State’s Grants Management

As shown in Table 2, we analyzed all 54 of A/OPE’s active GPDs against 

each internal control standard to help describe the control environment.2

Table 2: Department of State’s Grants Policy Directives (GPD) as of April 2, 2014 and Related Internal Controls

GPD Subject Related internal control standard(s)

GPD 1

Revision 6

Grants Officer Appointments Control environment and control activities

GPD 2

Revision 3

Liability and Enforcement Actions for Unauthorized 

Commitments

Control activities

GPD 3

Revision 3

Grants Management Forms Control activities

GPD 5

Revision 4

Competition Requirements for Assistance Awards Control environment, control activities, and information 

and communications

GPD 8

Revision 3

Signatory Authority for Overseas Awards Control activities

GPD 9

Revision 1

Audit Appeals Monitoring

GPD 11

Revision 3

Regional Bureau Notification/Approval Process for Awards 

Issued by Overseas Posts

Control activities

GPD 12

Revision 1

Congressional Notification Requirements for Public Diplomacy 

Awards

Information and communications

GPD 14

Revision 4

Standardized Assistance Instrument Identification System Control activities

GPD 16

Revision 3

Designation of Grants Officer Representatives Control environment and control activities

GPD 19

Revision 1

Excluded Parties List System Preaward Due-Diligence 

Requirement

Risk assessment

GPD 20

Revision 3

Federal Assistance Awards to Commercial For-Profit Firms Control activities

GPD 21

Revision 3

Grants Database Management System Requirements Control activities and information and communications

GPD 22

Revision 1

Indirect Costs Monitoring

GPD 23

Revision 2

Federal Assistance File Folder, Form DS-4012 Control activities

GPD 24

Revision 3

Catalog of Federal Domestic Assistance Information and communications

GPD 25 Intellectual Property Infringement and Responsibility 

Determinations

Risk assessment

 2

State issued 59 in total, but retired 5 of them.

Control Environment
Appendix II: Internal Control Standards as 

Designed and Implemented in State’s Grants 

Management

Page 35 GAO-14-635 State’s Grants Management

GPD Subject Related internal control standard(s)

GPD 26

Revision 1

Grants.gov and Other Announcement Methods Information and communications

GPD 27 Methods of Competition Information and communications

GPD 28

Revision 1

Roles and Responsibilities for the Award and Administration of 

Federal Assistance

Control environment

GPD 29

Revision 3

Mandatory Collection of the Data Universal Numbering System 

and Central Contractor Registration

Control activities

GPD 30

Revision 2

Property Grants and Requirements for the Disposal of Property 

Through Federal Assistance Awards

Control activities

GPD 31

Revision 1

Standardized Federal Assistance Award Formats Control Activities

GPD 34 Grants Management Reviews Monitoring

GPD 36 Conflict of Interest and Nondisclosure Requirements Control environment

GPD 37 Risk Assessment for Terrorism Finance Federal Assistance 

Awards

Risk assessment

GPD 38 The State Assistance Management System: Policy Deviations 

for Grantsolutions.gov Users

Information and communications

GPD 39 Standards for Proposal Review Panels Control environment

GPD 41

Revision 2

Close-Out of Federal Assistance Awards Control activities, information and communications, and 

monitoring

GPD 42 Monitoring Assistance Awards Control environment, control activities, risk 

assessment, and monitoring

GPD 43 Preaward Responsibility Determination Control activities and risk assessment

GPD 45 Retention, Retrieval, and Disposal of Records Control activities

GPD 48 Debarment and Suspension Control environment, control activities

GPD 51 Federal Awardee Performance and Integrity Information 

System

Control activities, information and communications, and 

monitoring

GPD 52 Improper Payments Control environment and risk assessment

GPD 53

Revision 1

Corrective Action Plan Control environment, control activities, risk 

assessment, and monitoring

GPD 57 Risk Management Control environment, control activities, and risk 

assessment

GPD 58 High-Risk Recipients Control activities, risk assessment, and monitoring

GPD 59 Management of Contractors Supporting Grant Administration Monitoring

GPD 62 Vetting of Afghanistan and Five-Country Pilot Program for the 

Prevention of Terrorist Financing

Monitoring

GPD 65 Audits of Foreign Recipient Organizations Monitoring

Source: GAO analysis of Department of State policies. | GAO-14-635

Notes: The GPD numbers do not run sequentially, given that A/OPE has retired five of them and did 

not always number them consecutively. Furthermore, some GPDs did not directly relate to any of the 

five internal control standards.
Appendix II: Internal Control Standards as 

Designed and Implemented in State’s Grants 

Management

Page 36 GAO-14-635 State’s Grants Management

To determine the extent to which overall risk management was conducted 

for each grant, each file reviewer first answered a series of questions in 

our data collection instrument about key elements of risk management, 

including the risk identification process, review of financial and systems 

controls, consideration of external risks, risk identification, risk 

assessment, and risk mitigation. On the basis of the responses to those 

questions, the reviewers made a final determination on overall risk 

management (see table 3).

Table 3: Overall Results Relating to Risk Management from GAO File Reviews

Data collection instrument statement Generally agree Partially agree Do not agree

The risk management approach adheres

to State guidance. 5 38 18

Source: GAO. | GAO-14-635

To determine the extent to which overall monitoring (see table 4) and 

closeout activities (see table 5) were conducted for each grant, each file 

reviewer first answered a series of questions in our data collection 

instrument about key elements of monitoring and closeout, including 

whether there was a monitoring plan, and if so, whether it reflected risks, 

whether monitoring mechanisms were described in the plan, whether the 

plan had been executed, and whether monitoring had been carried out in 

the absence of a plan.3 On the basis of the responses to those questions, 

the reviewers made a final determination about overall monitoring.

Table 4: Control Activities: Overall Results Relating to Monitoring Approach from GAO File Reviews

Data collection instrument statement Generally agree Partially agree Do not agree

The monitoring approach adheres to State guidance. 11 41 9

Source: GAO. | GAO-14-635

 3

Control activities include establishment and review of performance measures and 

indicators–the monitoring that grants officials conduct on recipients.

Risk Assessment: 

Risk Management 

Approach

Control Activities: 

Monitoring Approach 

and Closeout
Appendix II: Internal Control Standards as 

Designed and Implemented in State’s Grants 

Management

Page 37 GAO-14-635 State’s Grants Management

Table 5: Control Activities: Results Relating to Closeout Activities from GAO File Reviews

Data collection instrument questions Yes No Not applicable

If the award end date was more than 120 days ago, has the award been closed out? 16 9 36

• If yes, did the Grants Officer Representative provide the Grants Officer with a 

written evaluation of the recipient’s performance? 12 4 —

Source: GAO. | GAO-14-635

The data collection instrument we used to conduct the 61 file reviews also 

contained questions related to information and communications. For 

example, it contained questions and statements to verify whether required 

documentation was present and if so, whether it was complete. The 

documentation we looked for included the required internal control 

checklist, or DS-4012 (see table 6); overall documentation of competitive 

selection decisions (see table 7); and the required justification for 

awarding any grants without a full and open competition (sole-sourcing) 

(see table 8). To determine the extent to which overall competitive 

selection decisions were justified for each grant, each file reviewer first 

answered a series of questions about key elements of that justification, 

including—but not limited to—whether the award was sole-sourced, and if 

so, whether the decision to sole-source was justified in writing. On the 

basis of the responses to those and other questions, the reviewers made 

a final determination about the overall documentation of justification of 

competitive selection decisions (see table 7).

Table 6: Results Relating to Information and Communications from GAO File Reviews: Basic Documentation

Data collection instrument questions Yes No

Is the DS-4012 included? 44 a 17

• If so, is the cover sheet of the DS-4012 Section 1 Summary Information completely filled out? 5 39

Source: GAO. | GAO-14-635

a

The DS-4012 is the required internal control checklist.

Table 7: Results Relating to Information and Communications from GAO File Reviews: Justifying Competitive Selection 

Decisions

Data collection instrument statement Generally agree Partially agree Do not agree

Decisions about competitive selection are justified. 45 7 9

Source: GAO. | GAO-14-635

Information and 

Communications
Appendix II: Internal Control Standards as 

Designed and Implemented in State’s Grants 

Management

Page 38 GAO-14-635 State’s Grants Management

Table 8: Results Relating to Information and Communications from GAO File Reviews: Justifying and Documenting SoleSource Decisions

Data collection instrument questions Yes

Was the award sole-sourced? 24

• If yes, is there documented written justification of this decision? 16

Source: GAO. | GAO-14-635

A/OPE has assessed compliance with grant management policies at 

some bureaus in Washington, D.C., and overseas posts using its Grants 

Management Reviews (GMR) and Grants Review Evaluation and 

Assistance Trainings (GREAT) and other reviews. The 55 reviews State 

conducted between 2001 and February 2014 found some deficiencies in 

grants officials’ implementation of State’s grant management policies. 

Eight of the bureaus and two of the posts where State conducted there 

reviews were included in our sample of grants. We analyzed those 10 

reports to identify any findings related to the federal standards 

(see table 9).

Table 9: State’s Internal Monitoring: Findings from A/OPE’s GMRs and GREATs for Bureaus and Posts within GAO’s Sample

Type of 

review Bureau or post Findings by internal control standard

GMR Bureau of Administration, 

Office of Acquisitions 

Management

Control environment, control activities, information and communications, and monitoring

GMR Bureau of Democracy, 

Human Rights, and Labor

Control environment, control activities, and information and communications

GMR Bureau of Educational and 

Cultural Affairs

Control environment, control activities, information and communications, and risk 

assessment

GMR Bureau of International 

Narcotics and Law 

Enforcement

Control environment, control activities, information and communications, and monitoring

GMR Bureau of International 

Security and 

Nonproliferation (ISN)

Control environment, control activities, and information and communications

a

GMR Office of Overseas 

Schools

Control environment and control activities

GMR Bureau of Population, 

Refugees, and Migration

Control environment, control activities, and information and communications

GMR Bureau of Political-Military 

Affairs (PM)

Control environment, control activities, and information and communications b

Monitoring
Appendix II: Internal Control Standards as 

Designed and Implemented in State’s Grants 

Management

Page 39 GAO-14-635 State’s Grants Management

Type of 

review Bureau or post Findings by internal control standard

GREAT Ankara, Turkey Control environment, control activities, information and communications, and risk 

assessment

GREAT Kabul, Afghanistan Control environment, control activities, and information and communications

Legend:

State = Department of State

A/OPE = Office of the Procurement Executive

GMR = Grants Management Review

GREAT = Grants Review Evaluation and Assistance Trainings

Source: GAO analysis of Department of State data. | GAO-14-635

Notes: The internal control standard of monitoring includes management and supervisory activities, 

including the oversight that a Grants Officer conducts on Grants Officer Representative activities or 

that State management conducts on a Grants Officer’s activities.

a

This GMR reviewed the Office of Export Control Cooperation within ISN.

b

This GMR reviewed the Office of Weapons Removal and Abatement within PM.
Appendix III: Agency Comments

Page 40 GAO-14-635 State’s Grants Management

Appendix III: Agency Comments
Appendix III: Agency Comments

Page 41 GAO-14-635 State’s Grants Management
Appendix III: Agency Comments

Page 42 GAO-14-635 State’s Grants Management
Appendix IV: GAO Contacts and Staff 

Acknowledgments

Page 43 GAO-14-635 State’s Grants Management

David Gootnick, (202) 512-3149 or GootnickD@gao.gov

In addition to the contact named above, James B. Michels (Assistant 

Director), Judith Williams, Katherine Forsyth, Jacob Beier, Debbie Chung,

Oliver Culley, Martin De Alteriis, Jon Fremont, Farhanaz Kermalli, Anne 

McDonough-Hughes, Kimberly McGatlin, Shakira O’Neil, and Justin 

Fisher made key contributions to this report. Etana Finkler, Ernie 

Jackson, Julia Jebo Grant, and Cristina Ruggiero provided technical 

assistance.

Appendix IV: GAO Contacts and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments
Related GAO Products

Page 44 GAO-14-635 State’s Grants Management

Grant Workforce: Agency Training Practices Should Inform Future 

Government-wide Efforts. GAO-13-591. Washington, D.C.: June 28, 

2013.

Cuba Democracy Assistance: USAID’s Program Is Improved, but State 

Could Better Monitor Its Implementing Partners. GAO-13-285. 

Washington, D.C.: January 25, 2013.

Grants to State and Local Governments: An Overview of Federal Funding 

Levels and Selected Challenges. GAO-12-1016. Washington, D.C.: 

September 25, 2012.

Grants Management: Action Needed to Improve the Timeliness of Grant 

Closeouts by Federal Agencies. GAO-12-360. Washington, D.C.: April 16, 

2012.

Improper Payments: Remaining Challenges and Strategies for 

Government-wide Reduction Efforts. GAO-12-573T. Washington, D.C.: 

March 28, 2012.

2012 Annual Report: Opportunities to Reduce Duplication, Overlap and 

Fragmentation, Achieve Savings, and Enhance Revenue. 

GAO-12-342SP. Washington, D.C.: February 28, 2012.

Federal Grants: Improvements Needed in Oversight and Accountability 

Processes. GAO-11-773T. Washington, D.C.: June 23, 2011.

Grants.gov: Additional Action Needed to Address Persistent Governance 

and Funding Challenges. GAO-11-478. Washington, D.C.: May 6, 2011.

Government Performance: GPRA Modernization Act Provides 

Opportunities to Help Address Fiscal, Performance, and Management 

Challenges. GAO-11-466T. Washington, D.C.: March 16, 2011.

Iraq and Afghanistan: DOD, State, and USAID Face Continued 

Challenges in Tracking Contracts, Assistance Instruments, and 

Associated Personnel. GAO-11-1. Washington, D.C.: October 1, 2010.

Contingency Contracting: Improvements Needed in Management of 

Contractors Supporting Contract and Grant Administration in Iraq and 

Afghanistan, GAO-10-357. Washington, D.C.: April 12, 2010.

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Related GAO Products

Page 45 GAO-14-635 State’s Grants Management

Iraq and Afghanistan: Agencies Face Challenges in Tracking Contracts, 

Grants, Cooperative Agreements, and Associated Personnel. 

GAO-10-509T. Washington, D.C.: March 23, 2010.

Electronic Government: Implementation of the Federal Funding 

Accountability and Transparency Act of 2006. GAO-10-365. Washington, 

D.C.: March 12, 2010.

Grants Management: Grants.gov Has Systemic Weaknesses That 

Require Attention. GAO-09-589. Washington, D.C.: July 15, 2009.

Single Audit: Opportunities Exist to Improve the Single Audit Process and 

Oversight. GAO-09-307R. Washington, D.C.: March 13, 2009.

Grants Management: Attention Needed to Address Undisbursed 

Balances in Expired Grant Accounts. GAO-08-432. Washington, D.C.: 

August 29, 2008.

Department of State: Human Capital Strategy Does Not Recognize 

Foreign Assistance Responsibilities. GAO-07-1153. Washington, D.C: 

September 28, 2007.

Foreign Assistance: U.S. Democracy Assistance for Cuba Needs Better 

Management and Oversight. GAO-07-147. Washington, D.C.: November 

15, 2006.

Grants Management: Enhancing Performance Accountability Provisions 

Could Lead to Better Results. GAO-06-1046. Washington, D.C.: 

September 29, 2006.

Grants Management: Grantees’ Concerns with Efforts to Streamline and 

Simplify Processes. GAO-06-566. Washington, D.C.: July 28, 2006.

Auditing and Financial Management: Standards for Internal Control in the 

Federal Government. GAO/AIMD-00-21.3.1. Washington, D.C.: 

November 1, 1999.

(320978)
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