FISH AND WILDLIFE

SERVICE

Use of Federal Aid

Programs'

Administrative Funds

Statement of Barry T. Hill, Associate Director,

Energy, Resources, and Science Issues,

Resources, Community, and Economic

Development Division

United States General Accounting Office

GAO Testimony

Before the Subcommittee on Fisheries, Wildlife and

Drinking Water; Committee on Environment and Public

Works; United States Senate

For Release

on Delivery

Expected at

9:30 a.m. EDT

Wednesday

July 19, 2000

GAO/T-RCED-00-262
Page 1 GAO/T-RCED-00-262

Mr. Chairman and Members of the Subcommittee:

We are pleased to be here today to discuss the Fish and Wildlife Service’s (Service)

management and oversight of the administrative funds associated with the Wildlife

Restoration Program and, to a lesser extent, with the Sport Fish Restoration Program. The

information we present today is based on work that we completed and presented in

testimonies to the House Committee on Resources on July 20 and September 29, 1999. 1

At

that time, the Service promised a number of corrective actions. We have not determined

whether, or how, the Service has implemented those promised actions.

The Wildlife Restoration Program was begun in 1938 following the passage of the Federal Aid

in Wildlife Restoration Act, often called the Pittman-Robertson Act. The purpose of the act is

to restore, conserve, manage, and enhance the nation’s wildlife resources and to provide for

public use and benefits from these resources. The Service, an agency of the Department of

the Interior, administers the program. The Service’s Office of Federal Aid (Office) provides

overall support and direction for implementing the Wildlife Restoration Program as well as a

sister program, the Sport Fish Restoration Program. This sister program provides funds to

restore and manage the nation’s sport fishery resources and to provide public use and

benefits from these resources. The programs received a total of about $550 million in fiscal

year 1998—$170 million for Wildlife and $380 million for Sport Fish.

Funds provided for these programs are derived from federal excise taxes from the sale of

firearms, ammunition, archery equipment, fishing equipment, and other items. The core

mission of these programs is to distribute funds to states and other qualified government

recipients for the purposes of wildlife and sport fish restoration. A portion of the funds can

be used by the Office for the programs’ administration and implementation—up to 8 percent

for wildlife and up to 6 percent for sport fish. Of the roughly $550 million these programs

received in fiscal year 1998, about $31 million was used for administration and

implementation—$13.5 million for Wildlife and $17.4 million for Sport Fish.

Our testimony today will recap the results of our work on the management and oversight of

the Federal Aid program which provided options to improve the program’s use of

1

Fish and Wildlife Service: Management and Oversight of the Federal Aid Program Needs Attention (GAO/T-RCED-99-259, July

20, 1999) and Fish and Wildlife Service: Options to Improve the Use of Federal Aid Programs’ Administrative Funds (GAO/TRCED-99-285, September 29, 1999).
Page 2 GAO/T-RCED-00-262

administrative funds and provided additional information related to the use of administrative

funds.

Problems in the Way Administrative Funds Are Managed and Used

Last July we reported numerous problems with the way administrative funds are used and

managed. We believe that these problems led to a culture of permissive spending within the

Office of Federal Aid. The problems we identified included the following:

• controls over expenditures, revenues, and grants were inadequate;

• millions of dollars in program funds could not be tracked;

• basic principles and procedures for managing travel funds were not followed;

• basic internal control standards or Office of Management and Budget guidance for

maintaining complete and accurate grants files was not followed;

• regional offices used administrative funds inconsistently and for purposes that were not

clearly justified;

• charges for Service-wide overhead may not be accurate;

• routine audits to determine whether administrative funds were being used for authorized

purposes were not conducted; and

• the process for resolving audit findings involving states’ use of program funds was

questionable.

It is important to point out that many of the problems we identified last July were the same as

those we identified over 6 years earlier. In 1993, we reviewed the use of administrative funds

for the Sport Fish Restoration Program.2 As part of our work last year, we found that the

Service had not been entirely responsive to our earlier recommendations to correct the

management problems we identified in our previous review.

Options to Improve the Use of Administrative Funds

At the time of our September 1999 testimony, we believed that there were at least three

primary options to consider for controlling the use of administrative funds. First, the Office

of Federal Aid could have been given additional time by the Congress to correct the problems
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we identified in our work. In August 1999, the Service said that it had taken or was taking a

number of corrective actions including continuing with its reconciliation efforts to track the

use of administrative funds, requiring supervisory review and approval of travel vouchers,

and evaluating how to establish a procedure for performing routine audits of administrative

funds. This option would probably have had the least impact on the Office’s current

operations, but it would require follow-up at some point to verify that the promised

corrective actions have been taken. With this approach, we would be concerned about the

Service’s commitment to taking the needed corrective actions, given that it has not been fully

responsive to prior recommendations we have made.

Second, legislative limits could be placed on how the Service spends administrative funds.

For example, the spending of administrative funds could be limited to functions necessary for

the Office of Federal Aid to carry out its most basic responsibilities; namely, to (1) administer

the formula for getting grant funds to the states and other qualified government recipients,

(2) review specific project proposals from these entities, and (3) audit these entities’ use of

the grant funds for compliance with existing legislation and program goals. By placing more

restrictions on the use of the administrative funds this option would likely result in less

money being spent administering the program and would make more funds available for

distribution to the states and other qualified government recipients.

A third option would be to require the Service to use appropriated funds to administer the

Wildlife and Sport Fish Restoration programs and devote all excise tax revenues to state and

other qualified government recipients’ grants. This option would have required the Service to

annually justify to the Congress the amount of funds it needs for administering the program.

Hence, how the funds are being used and the direction that the program is taking would be

more visible to the Congress. Also, the Wildlife and Sport Fish Restoration programs would

be competing against other programs within the Department of the Interior for appropriated

funds. As in the second option, this option could potentially have removed much of the

organization’s flexibility for determining where to use the funds for administrative purposes.

2

Fisheries Management: Administration of the Sport Fish Restoration Program (GAO/RCED-94-4, Nov. 8, 1993).
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Additional Information on the Use of Administrative Funds

Subsequent to the July 20, 1999, hearing, the House Resources Committee asked us to

respond to a number of questions about the use of administrative funds raised by our

testimony. Appendix I of my September 29, 1999, statement provided our responses to these

questions. I have included this as an appendix to this statement as well. For the most part,

these responses elaborated on points made earlier. However, they also included substantial

additional information, such as our views on actions the Fish and Wildlife Service was

planning to take to correct the problems we identified. In this regard, we were hopeful but

not confident that the agency would be committed to implementing the planned changes and

that the changes would result in lasting improvement. Our lack of confidence was due to the

Office of Federal Aid’s poor track record in dealing with the identified problems. For

example, in response to our past recommendation that all administrative costs be thoroughly

documented, the Service stated that it had a system that allows it to maintain a

comprehensive file for documenting all direct charges against the Sport Fish Restoration

Program. We later found that, in many instances, we could not track and verify the status of

a grant, the amounts authorized for payment, or when the expenditures were made.

-----

This concludes my prepared statement. I would be happy to respond to any questions that

you and Members of the Committee may have.

Contact and Acknowledgments

For further information, please contact Barry T. Hill at 202-512-3841. Individuals making key

contributions to this and our prior testimonies are Lew Adams, Margie Armen, Cliff Fowler,

and Roy Judy.
Appendix I Appendix I

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Fish and Wildlife Service: Additional Information

Related to the Uses of Administrative Funds

Federal Aid administrative funds are used for several purposes within the Fish and Wildlife

Service. Examples include the uses made by the Administrative Grant Program, the

Director’s Conservation Fund, the Office of Federal Aid, and regional offices for such

purposes as salaries, travel, grants, and contracts. The Service also uses the Office of Federal

Aid’s administrative funds to pay for general administrative support services such as

telephone usage, equipment servicing and space rental, and a contractor to audit the use of

program funds provided to the states and other qualified government recipients. This

appendix provides our responses to the additional questions asked by the Chairman, House

Resources Committee, about these and other topics subsequent to our July 20, 1999

testimony. Some of the responses address promised corrective action by the Service. We

have not had an opportunity to update our work or to determine whether, or how, the Service

has implemented those promised actions.
Appendix I Appendix I

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Question 1. What is the Administrative Grant Program, how have the program’s funds been

used, and what problems does GAO have with the administration of this program?

Response 1. The Administrative Grant Program is operated by the Office of Federal Aid.

The program uses some of the administrative funds to support national fish and wildlife

projects that provide collective benefits to at least 50 percent of the states. The Fish and

Wildlife Service (Service) annually publishes a notice in the Federal Register, announcing the

procedures for submitting project proposals, deadlines, and the amount of money that is

available for administrative grants. The applicants submit their proposals to the Office of

Federal Aid (Office), which reviews each grant against established criteria to determine

eligibility. To determine eligibility for an administrative grant, the Office makes an

assessment of the benefits to be derived from the proposed project, the importance of

providing the grant, the problems that need to be addressed, the number of states that are

affected, and the approach that will be taken to accomplish the objectives of the grant. In

fiscal year 1998, the Office made about $4 million in administrative funds available for

administrative grants. The Office awarded 18 grants ranging from about $18,500 to $684,000

for such activities as developing and publishing a fish hatchery publication and a wildlife law

news quarterly, developing a national hunter retention outreach program, and improving

public knowledge of hunting and related animal use programs in the United States. Since

fiscal year 1994, the Office has funded 83 grants totaling about $19.5 million.

In reviewing administrative grant files, we found that the Office was not following standard

management practices to ensure that grant funds were properly applied and accounted for.

Specifically, we found that basic internal controls and documentation standards were not

being used and that the agency was not following the Office of Management and Budget’s

(OMB) requirements for grant management. We reviewed the grant files for fiscal years 1993

through 1998 and found them to be incomplete, out of date, and disorganized. To illustrate,

the files did not contain required key financial documents, status reports, or other supporting

documentation. As a result, in many instances, we could not track and verify the status of a

grant, the amounts authorized for payment, or the time periods in which these expenditures

were made.

We also found instances in which Office of Federal Aid officials authorized questionable

payments to grantees without thoroughly reviewing the submitted documentation. For
Appendix I Appendix I

GAO/T-RCED-00-262 Page 7

example, we found that the Office paid grantees for alcoholic beverages and excessive meal

charges that should have been questioned, and for work that was neither related to the grant

nor ever performed. We are concerned that the problem of authorizing questionable

payments may be widespread because the officials responsible for grant management said

that they did not review the details supporting requests for payment. Internal controls for

this aspect of the Office’s operations appeared to be nonexistent at the time of our review.

After our July 1999 testimony on this issue, the Service issued a notice in the Federal Register

on July 26, 1999, terminating the Administrative Grant Program for new administrative grants

effective in fiscal year 2000. In an August 10, 1999, letter to us, the then-Acting Director of

the Service stated that the decision to terminate the program was due in part to budgetary

constraints and in recognition of concerns received in response to a September 1998 Federal

Register notice regarding the management of these grants.
Appendix I Appendix I

GAO/T-RCED-00-262 Page 8

Question 2. What is the Director’s Conservation Fund, how has it been used, and what

problems does GAO have with the administration of this fund?

Response 2. The Director’s Conservation Fund was established in 1994 and was terminated

in March 1999. The Fund was set up for use by the Director of the Service to make

discretionary grants. From fiscal years 1994 through 1998, the Director used about $3.8

million in administrative funds for 53 grants. The grant funds have been used to support the

Service’s own activities such as conducting regional workshops, human resource projects,

and specific research projects on subjects such as mourning dove productivity in the Central

Valley of California. These funds have also been granted to private organizations such as the

FishAmerica Foundation1 for such activities as a challenge cost-share program to enhance

sport fisheries and their habitats and to a state game and fish commission for a symposium

on North America’s hunting heritage.

We found that the Office had not followed OMB’s guidance that requires agencies awarding

grants to notify the public of intended funding priorities for discretionary grant programs.

Moreover, the procedures used for approving grants under the Director’s Conservation Fund

were more open to subjective judgment and much less rigorous than the procedures used for

approving administrative grants. Under the Director’s Conservation Fund, there were no

specific criteria that a grantee needed to meet to obtain approval. The potential grantee

essentially had to identify only the title, purpose, and estimated cost of the project. As we

indicated in our response to question 1, the criteria for eligibility and approval under the

Administrative Grant Program were much more delineated. To illustrate, we found three

grants, totaling $280,000, that were rejected under the Administrative Grant Program but

subsequently funded by the Director’s Conservation Fund. We found a fourth grant for

$75,000 that met the eligibility requirements for an administrative grant but fell below the

cutoff point for funding. This grant was also funded under the Director’s Conservation Fund.

Finally, we found in a limited review of grants awarded during fiscal years 1994 through 1998,

that the Office had not exercised adequate controls over these grants. Specifically, the Office

had not followed internal control documentation standards and OMB guidance. As with the

administrative grant files, the files for this program were incomplete, out of date, and

disorganized and did not contain required financial forms and supporting documentation.

1

The FishAmerica Foundation is a nonprofit organization that supports projects designed to enhance fish populations through

habitat enhancement and water quality improvement.
Appendix I Appendix I

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In its August 10, 1999, letter to us, the Service stated that it had terminated the Director’s

Conservation Fund. According to agency officials, the Director made this decision in March

1999, shortly after we initiated our audit.
Appendix I Appendix I

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Question 3. Does existing legislation authorize a national grant program as exercised in the

Administrative Grant Program and the Director’s Conservation Fund?

Response 3. Program funds for the Federal Aid in Wildlife and Sport Fish Restoration Acts

are derived from federal excise taxes on selected items used in hunting and fishing. The bulk

of the program funds are available for making grants to states to conduct fish and wildlife

management and restoration programs and projects. However, the legislation expressly

reserves a percentage of the program funds to be made available for expenditure on

“administration and execution” of the programs. This portion of the program funds is often

referred to as “administrative funds.” The two authorizing statutes also specifically provide

for some additional particular activities to be conducted with administrative funds, and they

set a maximum amount that can be devoted annually to program “administration and

execution” (up to 8 percent of Wildlife Restoration funds and up to 6 percent of Sport Fish

Restoration funds).

While program administration is a relatively well-understood concept, neither statute

specifies what might constitute program “execution.” In our view, the most logical

interpretation of that language is that authority to use funds for program execution

encompasses carrying out activities that further program goals but do not involve making

grants to states. The Department of the Interior’s Solicitor has issued several opinions that

bear on the interpretation of program execution with administrative funds. In 1949, the

Solicitor advised that administrative funds could be used directly by the Department to

import bird eggs for the purposes of introducing a new species of game birds into this

country. In 1955 and again in 1985, the Solicitor advised that administrative funds could be

used to conduct surveys that reported on matters other than the consumptive use of wildlife.

In 1986, the Solicitor determined that administrative funds could be used to carry out a

national education program and to do so by means of grants to “public or private agencies

and organizations.”

The existing legislation does not specifically direct that either the Administrative Grant

Program or the Director’s Conservation Fund be established. However, the authority to use

funds for program execution is sufficiently broad that these types of programs are not

precluded.
Appendix I Appendix I

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Question 4. On August 10, 1999, the Fish and Wildlife Service provided you with a letter

enumerating a number of actions it was taking to address the concerns raised in your

testimony. In light of your work in 1993 and 1999, what confidence do you have that the

Service will actually follow through on its commitments and implement the kind of corrective

actions it mentions in its letter?

Response 4. We are hopeful but not confident that these actions will result in lasting

change. Our lack of confidence is due to the Office’s (1) record in dealing with identified

problems and (2) reinstatement or resurrection of programs under different names that had

been terminated in response to prior recommendations.

In 1993, we reported on a number of problems with the use of administrative funds for the

Sport Fish Restoration Program and made recommendations to the agency on how to correct

them. In 1994, the Department of the Interior notified the Congress that it and the Service

confirmed their agreement with each of the recommendations in our report and identified

actions taken in response to the recommendations. However, our work in 1999 on the

Wildlife Restoration Program shows that the assurances given to both the Congress and to us

in 1993 and 1994 led to little actual change. For example, in response to our recommendation

that all administrative costs be thoroughly documented, the Service stated that it had a

system allowing it to maintain a comprehensive file for documenting all direct charges

against the Sport Fish Restoration and other Office of Federal Aid programs. Nearly 6 years

later, we found that, in many instances, we could not track and verify the status of a grant,

the amounts authorized for payment, or the time periods in which the expenditures were

made. Furthermore, the Office has not effectively used the agency’s accounting system’s

capability to identify costs at the project level, thus making it impossible to identify all

project-specific costs. Finally, the Acting Director’s testimony submitted to your Committee

for the July 20, 1999, hearing stated that an internal review the Service initiated 4 years ago

raised some of the same concerns that we identified about program administration. The

Acting Director stated that efforts have been under way to address these issues “but are

obviously not completed.”

The Office of Federal Aid responded to issues raised as a result of our 1999 work in part by

reaffirming existing policy and by terminating programs. Reaffirming existing policies is just

the first step. Management must ensure that these policies are implemented. Our concern is
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that this additional step either will not be taken or that its effectiveness will gradually

degrade because of a lack of management attention, allowing a similar situation to exist in

the future. While terminating the Administrative Grant Program and the Director’s

Conservation Fund provided a quick response, no statutory or other limitation exists to

prevent the programs’ reinstatement or resurrection under different names. This latter point

is of concern because the Office of Federal Aid responded to our previous report by changing

its criteria for approving “special investigations” (the term the Office used for its projects)

but then rescinded those changes. Hence, rather than limiting grants to a maximum of (1)

$200,000 per year for each grantee and (2) 3 years or less duration, the Office resumed having

no limits at all. Also, rather than calling the projects special investigations, the Office

renamed them “administrative grants” or included them under the Director’s Conservation

Fund. We are concerned that this type of response could recur and, as a result, the agency

will again face the same management problems that we reported on in our July 20, 1999,

testimony.
Appendix I Appendix I

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Question 5. You have talked about problems in Federal Aid’s management of travel funds.

Could you please elaborate on the problems you have identified, including providing specific

examples of travel abuses?

Response 5. We found that the Office did not routinely follow basic principles and

procedures for managing its travel funds. As we stated in our July 20, 1999, testimony, the

Service’s policy is that staff working for the Office—like all Service employees—must receive

specific approval from the Director of the Service before attending certain national

conferences. However, we found nine instances in which this policy was violated by Office

staff who attended conferences in 1998 and 1999. In addition, we found that the head of the

Office filed almost $68,000 in travel vouchers for 71 trips taken from October 1995 through

June 1999 but was inconsistent in obtaining approvals for his travel vouchers. He had a

supervisor approve his travel vouchers for 25 trips taken from October 1995 through

February 1997. For travel taken from late February 1997 through May 1999, he had

subordinates approve 38 of his travel vouchers amounting to over $39,000 in travel expenses.

This practice is not permitted under the Service’s travel policy.

When we questioned the practice of having a subordinate approve a supervisor’s travel

voucher, we were told that the Service’s existing policy allowed subordinates to sign travel

vouchers, and we were provided with a copy of a 1991 policy. However, the 1991 policy

pertained to situations in which an office was isolated or geographically removed, making it

difficult to obtain proper supervisory approval. Regardless, the policy had been superceded

in 1992 by a policy specifically requiring supervisory approval for travel vouchers. In

addition, a statement printed on the back of the travel authorizations specifies that a

supervisor is responsible for approving a travel voucher.

After we provided our testimony to the House Resources Committee on this issue in July

1999, the Service concurred with the problems we identified. In its August 10, 1999, letter to

us, the Service said that it has suspended the use of open travel authorizations for the Office’s

entire staff and has reapprised all Service staff of its travel rules and regulations. In addition,

the head of the Office was directed to submit all future travel vouchers to his supervisor, the

Assistant Director for External Affairs, for appropriate review.
Appendix I Appendix I

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Question 6. Have you identified any additional issues with the use of General

Administrative Service (GAS) funds by the Fish and Wildlife Service?

Response 6. In addition to the issues we addressed on our July 20, 1999, testimony, we have

identified two other issues that indicate that GAS assessments were either too high in the

past or could be lowered in the future. The first issue relates to the potential impact on the

GAS assessment from projects and initiatives funded under the Servicewide Administrative

Support account managed by the Fish and Wildlife Service, which pays for overhead and

support expenses such as rental payments, telephone service, postage, and training. This

account is funded from three sources: (1) appropriated funds, (2) reimbursable agreements,

and (3) GAS. The GAS portion is made up of assessments made to the Sport Fish and

Wildlife Restoration programs and nine other programs.

From fiscal year 1990 through fiscal year 1998, the Servicewide Administrative Support

account funded over $10 million in projects and initiatives by the Fish and Wildlife Service

Director’s Office, some of which are questionable as central administrative support for the

Service. Examples of the questionable Director’s Office projects and initiatives funded under

the Servicewide Administrative Support account include $400,000 for Atlantic salmon work,

$200,000 for wolf monitoring and reintroduction, and $100,000 for rhinoceros conservation

studies. These projects and initiatives were in addition to projects funded by the Director’s

Conservation Fund.

Service officials said that none of these projects and initiatives was funded with the GAS

component of the Servicewide Administrative Support account. Regardless of which

component paid for these expenses, if these projects had not been funded, the GAS

contribution to the account could potentially be reduced. In July 1999, the Service advised us

that Servicewide Administrative Support funds would no longer be used to fund the

Director’s Office projects and initiatives.

The second issue relates to the unobligated balance in the Servicewide Administrative

Support account at the end of the fiscal year. On the basis of data we obtained, this account

had unobligated balances at the end of fiscal years 1990 through 1998. These balances ranged

from as high as about $7 million in fiscal year 1990 to as low as about $100,000 in fiscal year

1998. Service officials informed us that these unobligated balances relate to the appropriated
Appendix I Appendix I

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fund component of the Servicewide Administrative Support account. In total, from fiscal

year 1990 through fiscal year 1995, over $12 million in unobligated balances expired and were

not available for use in the following fiscal year. Hence, for those years, the GAS component

of the account could have been reduced. To illustrate, in fiscal year 1990, the Service’s total

GAS assessment was about $5.5 million, of which almost $5.2 million came from the Sport

Fish and Wildlife Restoration programs. In that same year, about $7.4 million in unobligated

funds in the Servicewide Administrative Support account expired. If the Service had spent all

of its appropriated fund component in the Servicewide Administrative Support account, it

would have needed less from the GAS component. That should then have translated into a

reduced GAS assessment and the potential for additional program funds to go to the states

and other qualified government recipients. Beginning in fiscal year 1996, Interior’s

appropriations acts have stipulated that appropriated funds can be obligated over 2 years

instead of just 1. And as a result, it is unlikely that any unobligated balances will expire.
Appendix I Appendix I

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Question 7. The Administrative Grant Program was carried out in close cooperation with

the Grants-in-Aid Committee of the International Association of Fish and Wildlife Agencies,

raising questions about the Committee’s role. If the now terminated Administrative Grant

Program was to be reconstituted, should Federal Aid officials reshape the Committee’s

involvement in the grant approval process?

Response 7. As it was previously conducted, the Administrative Grant Program relied

heavily on an outside group, the Grants-in-Aid Committee of the International Association of

Fish and Wildlife Agencies, to recommend both the direction of the program and the award of

administrative grant funds. (See our response to question 1.) Because the Committee’s role

was so central to the functioning of the Administrative Grant Program, officials of the Office

of Federal Aid and others questioned whether the Committee should have operated within

the framework of the Federal Advisory Committee Act (FACA). That act requires, among

other things, that a notice of meetings be published in advance in the Federal Register and

that papers, records, and minutes of meetings be available to the public.

The International Association of Fish and Wildlife Agencies is composed of delegates from

the 50 state fish and game authorities, foreign governments, private organizations, and

officials from the Office of Federal Aid. With about 50 members, the Grants-in-Aid

Committee included state and private delegates as well as key staff from the Office of Federal

Aid. The Committee played an integral part in managing the Administrative Grant Program,

setting the focus areas each year for which grant proposals would be solicited. It also

evaluated and ranked eligible grant proposals, including proposals from its parent

organization, the International Association of Fish and Wildlife Agencies. Finally, it

recommended those grants it believed the Office of Federal Aid should fund and the amount

of funding for each grant. The Committee’s grant recommendations were typically adopted

and implemented by the Office.

The Grants-in-Aid Committee was not chartered as a Federal Advisory Committee. As a

result, it performed the functions described above independently and outside the public view.

FACA requires, among other things, that advisory committees be chartered and reviewed

every 2 years by the agency head, that committee membership be representative and

balanced, and that committee proceedings and records be open to the public.
Appendix I Appendix I

GAO/T-RCED-00-262 Page 17

Officials of the Department of the Interior have questioned the Grants-in-Aid Committee’s

status. For example, in a November 1991 memo, the Chief of the Federal Aid Office stated

that he believed that the grant review process used the Committee in an advisory capacity

and that the Committee would need to comply with FACA. This opinion was shared by the

Chief’s supervisor who informed the Director of the Service in a January 1992 memo, “The

use of the Grants-In-Aid Committee has not been approved under the Federal Advisory

Committee Act and also raises an appearance of a conflict of interest.” He went on to state

that it would be in the best interest of the Service to discontinue this practice to avoid any

further questions or criticism of the Service. Although this concern was raised informally to

the Department of the Interior’s Office of the Solicitor, a written opinion was not requested,

because, according to Service and Office of Federal Aid officials, the informal advice they

obtained was that there was no violation of FACA.

We did not make a determination about whether the Committee should have been subject to

FACA’s requirements. The applicability of the act to the Committee’s activities was outside

the scope of our audit work. Because the Administrative Grant Program has recently been

terminated, questions about its former procedures are at this point academic. Nevertheless,

the Committee guided the disbursement of about $4 million in Federal Aid funds to

administrative grantees each year. It functioned as a virtual partner in managing the

Administrative Grant Program, and because it was never brought under FACA, it operated

largely without supervision and behind closed doors. If the Administrative Grant Program

were to be reconstituted, the role of any outside group in setting grant program parameters

and in evaluating and ranking potential grantees should be tailored appropriately. If the role

is not substantially more limited than what had previously existed, there should be a formal

determination that the group is functioning consistent with FACA.
Appendix I Appendix I

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Question 8. Are the regional offices in the Fish and Wildlife Service using Federal Aid funds

to pay for regional activities in a consistent manner?

Response 8. As we discussed in our July 20, 1999, testimony, we found that the Service had

no consistent practices for making regional office assessments. These assessments are

charges that the regions make against the administrative funds for salaries, travel expenses,

support costs, and other administrative activities. Each of the regions uses a different

approach for making the assessments.

In its August 10, 1999, letter to us, the Service said that it has sought to establish a workable

degree of consistency to the regional use of administrative funds. It said that as part of its

annual budget guidance, it has told its regions that no assessments may be levied against any

program, budget activity, subactivity, or project funded by the Federal Aid in Wildlife

Restoration Act unless advance notice of such assessments and their bases are presented to

the Committee on Appropriations and are approved by the Committee. Subsequently, Service

and Office of Federal Aid officials told us that they provided this guidance since 1997. The

Service also said that not all of its regions have followed this guidance. To ensure adherence

to this stated policy, the Service said that it would identify and adopt specific steps to help

provide consistency and uniformity. It also plans to seek guidance in this area from a

State/Federal Aid Review Team that has been formed to evaluate the administration of the

Federal Aid program. The Service, however, failed to identify the specific steps it plans to

take or the schedule for completing them. Service and Office of Federal Aid officials told us

that they are currently developing a plan that identifies the steps needed and their completion

dates.
Appendix I Appendix I

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Question 9. You emphasized the absence of routine audits of Federal Aid’s use of

administrative funds. However, many, perhaps even most, federal programs are not routinely

audited. Why do you think routine audits are so important in the case of the Federal Aid

program?

Response 9. We think routine audits of the administrative funds are needed for several

reasons. First, unlike most other federal programs, Federal Aid receives dedicated tax

revenues each year to administer its programs. As a result, program officials do not have to

publicly justify the programs’ spending levels before the Congress each year. Second,

although Federal Aid provides bi-annual reports on its programs to the public, it does not

fully disclose all of its spending, as our work has shown. For example, the spending

associated with the use of administrative funds by the Director’s Conservation Fund and the

Service’s regional offices is not discussed in these reports. Third, only three audits of the

administrative funds have been performed over the past 20 years, each of which has

identified some significant management problems. Since the program funding does not have

to be appropriated and no routine audits are performed, the Federal Aid program has had

very little oversight.

Routine audits will provide independent scrutiny of how these funds are spent. Given the

problems we identified in the Federal Aid programs in 1993 and the problems we again found

in 1999, we believe that routine audits of the use of administrative funds are essential.

Service and Office of Federal Aid officials told us that they have a proposal from an

independent firm to perform an audit of the administrative funds covering fiscal years 1999

and 2000.
Appendix I Appendix I

GAO/T-RCED-00-262 Page 20

Question 10. Do you think it is appropriate for Fish and Wildlife Service’s regional Federal

Aid officials to be responsible for resolving the audit findings of the Defense Contract Audit

Agency’s (DCAA) state audits?

Response 10. The Office of Federal Aid initiated a national audit program in fiscal year 1996

to routinely audit how states and other qualified government recipients are using the grant

funds provided under the Sport Fish and Wildlife Restoration programs. Under the audit

program, each recipient of grant funds will be audited every 5 years under a contract with the

DCAA. Resolution of the audit findings is the responsibility of the Service’s regional Federal

Aid office covering the entity being audited.

In our opinion, having the Service’s regional Federal Aid offices perform audit resolution is

problematic because it places them in a situation of performing dual and somewhat

conflicting roles and responsibilities. One of the primary missions of the regional offices is to

work closely with the states in advocating and encouraging their participation in the Federal

Aid program to enhance the states’ wildlife and fishery resources. To have these same offices

policing the program by charging them with resolving audit findings could make it more

difficult to maintain independence and comply with existing internal control standards

governing the separation of duties.2

According to these standards, key duties and

responsibilities in authorizing, processing, recording, and reviewing transactions should be

separated among individuals. Furthermore, the deterrent for the states to spend funds

inappropriately could be jeopardized if the audit resolution process is not independent of an

organization that has a significant role in encouraging the use of grant funds. DCAA officials,

who perform the audits of the states, also raised this concern to us. According to these

officials, the Service and the states have a partnership, and it may be difficult for a regional

Federal Aid office to hold states responsible for making the repayments indicated by audit

findings. Therefore, assigning the responsibility for audit resolution to a Department of the

Interior organization other than the Service’s regions would seem more appropriate.

2

Standards for Internal Controls in the Federal Government, U.S. General Accounting Office, 1983.
Appendix I Appendix I

GAO/T-RCED-00-262 Page 21

Question 11. In addition to grants made via the Director’s Conservation Fund and the

Administrative Grant Program, during your work did you find evidence of other grants?

Response 11. We found that the Office of Federal Aid’s headquarters made grants in

addition to those made from the Director’s Conservation Fund and the Administrative Grant

Program. We identified 18 other grants amounting to about $2.6 million that were awarded

from fiscal year 1994 through fiscal year 1998. The grants ranged from $5,000 awarded to a

high school for student training in aquatic environment and fisheries management to $400,000

each to three marine fisheries commissions. For example, the Gulf States Marine Fisheries

Commission received its $400,000 in fiscal year 1994 to develop a work plan for the sport fish

restoration administrative program. Other examples of these grants include $25,000 to a

state game commission to conduct a symposium on North America’s hunting heritage,

$60,000 to a university to publish and distribute a fish and wildlife laws newsletter, and about

$93,000 to a management firm to produce a handbook for fish and wildlife managers and

administrators.

It should be noted that the Federal Aid reports made available to the public do not divulge

the existence of these grants, why they were made, or what the funds were used for, even

though the reports explicitly state that their intent is to provide a complete accounting of

where the Federal Aid funds are spent. For example, the message from the Office Chief

appearing in a 1997 program update states, “This Program Update is intended to remove the

mystery of where the money comes from and where it goes, to inform the reader about

current Federal Aid issues and opportunities, and to build knowledge of and credibility for

the Sport Fish and Wildlife Restoration grant programs and the U.S. Fish and Wildlife

Service.” Similarly, in a program update for 1999, the Office Chief stated that “it is in the

conservation community’s best interest” that the Office provides as much information as can

be absorbed.

(141477)
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