United States Government Accountability Office

GAO Report to the Subcommittee on Federal 

Financial Management, Government 

Information, Federal Services, and International 

Security, Committee on Homeland Security and 

Governmental Affairs, U.S. Senate

GRANTS 

MANAGEMENT

Attention Needed to 

Address Undisbursed 

Balances in Expired 

Grant Accounts 

August 2008 

 

GAO-08-432 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

August 2008

GRANTS MANAGEMENT

Attention Needed to Address Undisbursed Balances

in Expired Grant Accounts

Highlights of GAO-08-432, a report to the 

Subcommittee on Federal Financial 

Management, Government Information, 

Federal Services, and International 

Security, Committee on Homeland

Security and Governmental Affairs, U.S. 

Senate 

In 2006, the subcommittee

concluded there was a need for

increased accountability and 

transparency for unspent funds in

federal programs and agencies, and 

requested GAO review the status of

balances not drawn down by 

grantees by the time the grants’ 

period of availability had ended. 

GAO was asked to answer these

questions: (1) to what extent are 

there undisbursed grant balances in

expired grant accounts and do they

share any program characteristics?; 

and (2) do these expired grants 

share grant management

challenges and how have federal 

agencies improved grant closeout

and diminished undisbursed 

balances? To do this, GAO analyzed 

grant balance data from the largest

federal grant payment system;

reviewed grant management 

problems and corrective actions 

from more than 150 audit reports;

and reviewed guidance from the 

Office of Management and Budget

(OMB) and the Code of Federal 

Regulations. 

What GAO Recommends

GAO recommends OMB instruct all

executive departments and 

independent agencies to track 

undisbursed balances in expired 

grant accounts and report on the

resolution of this funding in their 

annual performance plan and 

Performance and Accountability

Reports. OMB said it supported the

intent of our recommendations but 

did not specify whether it would 

implement them. 

During calendar year 2006, about $1 billion in undisbursed funding remained 

in expired grant accounts in the largest civilian payment system for grants—

the Payment Management System (PMS). PMS is administered by the 

Department of Health and Human Services and makes payments for about 70 

percent of grants and for 12 federal entities. Undisbursed funding is funding 

the federal government has obligated through a grant agreement, but which 

the grantee has not entirely spent. Among all of the expired grant accounts in

PMS that remained open, these undisbursed funds typically represented about 

1 percent of the total funds originally made available for these grants—

meaning grantees had spent most of their available funds. However, when 

expired grant accounts with no funds remaining were excluded and the focus 

was narrowed to just expired grant accounts with undisbursed balances, GAO 

found the amount of undisbursed funding represented, on average, about 26 

percent of the original funding made available. The expired but still open 

grant accounts were associated with thousands of grantees and over 325 

different federal programs. GAO also found that expired grant accounts with 

the largest undisbursed balances in PMS for calendar years 2003 through 2006 

shared a few common program characteristics. However, the results could not 

be compared to program characteristics for all closed federal grants or all 

closed grants using PMS, during this period, due to the burden of collecting 

comparable data for all closed federal grants from eight other federal civilian

payments systems or for all closed grants from PMS. 

Past audits of federal agencies by GAO and Inspectors General and annual 

performance reports by at least 8 federal agencies in 2006 and 2007 suggested 

that grant management challenges including grant closeouts and undisbursed 

balances are a long-standing problem. Closeout procedures ensure grantees

have met all financial requirements, provided final reports, and that unused 

funds are deobligated. The audits generally attributed the problems to 

inadequacies in awarding agencies’ grant management processes, including 

closeouts as a low management priority, inconsistent closeout procedures, 

poorly timed communications with grantees, or insufficient compliance or 

enforcement. However, when federal agencies, such as the Departments of 

Health and Human Services and Justice, and the Environmental Protection 

Agency, took corrective actions, there were improvements in grant closeouts 

and resolution of undisbursed funding. The actions taken by these three 

agencies generally focused on making grant closeouts a higher agency 

management priority, as noted in their recent performance reports, and on 

improving overall closeout processing. Using federal payment systems to 

track undisbursed funding in expired grant accounts and including the status 

of grant closeouts in annual performance reports could raise the visibility of 

the problem both within the agency and governmentwide, and lead to 

improvements in grant closeouts and minimize undisbursed balances. OMB 

circulars do not currently require federal agencies to track and report on 

undisbursed funding in expired grant accounts. To view the full product, including the scope 

and methodology, click on GAO-08-432. 

For more information, contact Stanley L. 

Czerwinski at (202) 512-6806 or 

czerwinskis@gao.gov. 
Contents 

Letter 1

Results in Brief 3

Background 5

Undisbursed Balances in Expired Grant Accounts in PMS Were 

about $1 Billion during 2006 10 

Grant Closeout Problems Attributed to Several Causes but Can Be 

Mitigated 13

Conclusion 20

Recommendations for Executive Action 21 

Agency Comments and Our Evaluation 21 

Appendix I Objectives, Scope, Methodology, and Additional 

Information on Program Characteristics 23 

Appendix II Federal Agencies Using PMS 34 

Appendix III Comments from the Office of Management 

and Budget 37 

Appendix IV GAO Contact and Staff Acknowledgments 39 

Abbreviations 

AHRQ Agency for Healthcare Research and Quality, Department of 

Health and Human Services 

CFDA Catalog of Federal Domestic Assistance

CFR Code of Federal Regulations 

CMIA Cash Management Improvement Act

CNS Corporation for National and Community Service 

DHS Department of Homeland Security 

DOE Department of Energy 

DOI Department of the Interior 

DOJ Department of Justice 

DOL Department of Labor 

DOS Department of State 

Page i GAO-08-432 Grants Management
DOT Department of Transportation 

DPM Division of Payment Management, Department of Health and

 Human Services 

EOP Executive Office of the President 

EPA Environmental Protection Agency 

GAN Grant Adjustment Notice 

GMS Grants Management System 

GOALS Government On-Line Accounting Link System 

GPRA Government Performance and Results Act of 1993

GSA General Services Administration 

HHS Department of Health and Human Service 

HRSA Health Resources and Services Administration, Department of 

Health and Human Service 

HUD Department of Housing and Urban Development 

IG Inspector General 

NASA National Aeronautics and Space Administration 

NASACT National Association of State Auditors, Comptrollers and 

 Treasurers 

NGMA National Grants Management Association 

NIH National Institutes of Health, Department of Health and 

 Human Service 

OIG Office of the Inspector General 

OJP Office of Justice Program, Department of Justice 

OMB Office of Management and Budget, Executive Office of the

 President 

ONDCP Office of National Drug Control Policy, Executive Office of 

 the President 

PAR Performance and Accountability Report 

PMS Payment Management System 

SSA Social Security Administration 

TANF Temporary Assistance for Needy Families 

USAID The United States Agency for International Development, 

Department of State 

U.S.C. United States Code 

USDA Department of Agriculture 

VA Department of Veterans Affairs 

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Page ii GAO-08-432 Grants Management
United States Government Accountability Office

Washington, DC 20548 

August 29, 2008 

The Honorable Tom Carper 

Chairman 

The Honorable Tom Coburn, M.D. 

Ranking Member 

Subcommittee on Federal Financial Management, Government 

 Information, Federal Services, and International Security 

Committee on Homeland Security and Governmental Affairs 

United States Senate 

The federal government’s reliance on grants to achieve national objectives

and respond to significant trends, such as an aging population and 

changing threats to national security, has grown significantly. According to

Office of Management and Budget (OMB) estimates, from 2000 through

2006, federal grant awards to nonfederal entities, such as states and 

nonprofit organizations, increased from $300 billion to over $450 billion.1

Grants now represent about one-sixth of the federal budget. If even a small 

fraction of total grant funding is not spent in a prudent and timely fashion, 

it can create potential problems for the federal government. The existence 

of unspent funds can hinder the achievement of national objectives in 

various ways, such as leaving projects incomplete, preventing the 

reallocation of scarce resources to address other needs, or making federal 

funds more susceptible to improper spending or accounting as monitoring 

diminishes over time. In times of constrained resources, it is vital for 

federal agencies to maximize the performance of their programs in order 

to meet long-term goals. 

In the spring of 2006, your subcommittee concluded there was a need for 

increased accountability and transparency for unspent funds in federal 

programs and agencies. You requested that we review the status of grant

funds that grantees had not drawn down by the time the grants’ period of 

availability had ended (i.e., “expired”). To respond to your request, we 

identified and analyzed data from the largest federal civilian grant payment

management system—accounting for about 70 percent of federal 

disbursements to grantees in 2006—to focus on agency-level grant 

accounts that remained open after their expiration date (hereafter,

 1

Office of Management and Budget, 2000 Federal Financial Management Report

(Washington, D.C., 2000); 2007 Federal Financial Management Report (Washington, D.C.,

2007). 

Page 1 GAO-08-432 Grants Management
referred to as “expired grant accounts”) and had unspent funds in the form 

of undisbursed balances. Undisbursed balances are funds that the federal

government has obligated by entering into a grant agreement, but the 

grantee has not drawn down (“disbursed”). These funds were obligated 

from the federal perspective. However, once the grant’s period of 

availability to the grantee has expired, the grant could be closed out and 

the funds deobligated by the awarding agency. Grant closeout procedures 

ensure that grantees have met all financial requirements, provided their 

final reports, and returned any undisbursed balances. 

Based on your request, this report answers these questions: (1) to what 

extent are there undisbursed grant balances in expired grant accounts and 

do they share any program characteristics?; and (2) do these expired 

grants share grant management challenges and what actions have federal 

agencies taken to improve grant closeout and diminish undisbursed 

balances? 

To address our objectives, we analyzed data on undisbursed balances in 

expired agency grant accounts and reviewed federal regulations, audit 

reports, and annual performance reports relating to grant closeouts. To 

identify the status of undisbursed balances in expired grant accounts, we

collected and analyzed 4 calendar years (from 2003 through 2006) of 

quarterly payment data for grants with defined spending periods that 

executed payments through the Department of Health and Human 

Services’ (HHS) Payment Management System (PMS). PMS is the largest 

of the nine civilian federal payment systems. In 2006, it handled about 70 

percent of all federal grant disbursements. As of August 2007, PMS 

provided payment services to nine federal departments, an independent 

agency, a government corporation, and the Office of National Drug 

Control Policy (ONDCP) within the Executive Office of the President.2

 We

used program information from the Catalog of Federal Domestic 

Assistance (CFDA) to identify key program characteristics that were 

associated with the expired grant accounts in PMS. We analyzed payment 

data for expired grant accounts in PMS, from 2003 through 2006, as a 

 2

As of August 2007, PMS served grant-administering offices from the Departments of Health 

and Human Services (HHS); Agriculture (USDA); Energy (DOE); Homeland Security 

(DHS); the Interior (DOI); Labor (DOL); State (State); the Treasury (Treasury); and 

Veterans Affairs (VA). PMS also served the Office of National Drug Control Policy 

(ONDCP) within the Executive Office of the President, the Corporation on National 

Community Service, and the National Aeronautics and Space Administration. See app. II for 

further detail. 

Page 2 GAO-08-432 Grants Management
complete set of current PMS customers, rather than analyzing specific 

federal agencies or grant programs. To identify federal guidelines on grant

closeouts, we reviewed related OMB circulars and agency regulations. To 

identify federal guidelines on performance reporting we reviewed related 

OMB circulars. To identify what other auditors found and recommended 

as strategies to diminish unspent funds in expired grant accounts, we 

conducted a Web-based literature search for related audit reports and 

reviewed over 150 reports that we and various federal Inspectors General 

(IG) issued from 2000 through 2007, and contacted officials from several 

federal IG offices.3

 In addition, we reviewed the 2006 and 2007 

Performance and Accountability Reports (PAR) for 15 cabinet-level

executive departments and the Environmental Protection Agency (EPA).4

Appendix I provides more information on our methodology and on PMS 

and CFDA. We conducted this performance audit from October 2006 to 

June 2008, 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 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives. 

During calendar year 2006, about $1 billion in undisbursed funding 

remained in expired grant accounts in the largest of the nine federal 

civilian payment systems—HHS’s Payment Management System (PMS), 

which serves offices from 12 federal departments and agencies and 

accounts for about 70 percent of all federal grant disbursements.5

 While 

this was a significant amount of undisbursed funding, it did not mean 

grantees using PMS were not spending most of their grant funding. This 

balance represented about 1 percent of the total funds made available for 

all expired grant accounts in PMS during 2006. When we excluded the 

expired grant accounts with no funds remaining from our data analysis 

Results in Brief 

 3

The Offices of Inspector General we contacted for this review included HHS; the U.S.

Department of Justice (DOJ); DOI; USDA; DOE; and DOL. 

4

We reviewed the 2006 and 2007 PARs for USDA, the Department of Commerce (DOC), the 

Department of Defense (DOD), the Department of Education (Education), DOE, HHS, 

DHS, the Department of Housing and Urban Development (HUD), DOI, DOJ, DOL, the 

Department of State (DOS), the Department of Transportation, Treasury, and VA. 

5

All dollar figures throughout the report are in nominal “then-year” dollars and were not 

adjusted for inflation. 

Page 3 GAO-08-432 Grants Management
and narrowed our focus just to those accounts with remaining 

undisbursed balances, we found that, in 2006, the amount of undisbursed 

funding represented, on average, about 26 percent of the original funding 

made available.6

 Expired grant accounts with undisbursed funds were not 

confined to a few federal awarding agencies, grant programs, or grantees.

Rather these accounts were associated with thousands of grantees in over 

325 different federal grant programs. We also found that expired grant 

accounts with the largest undisbursed balances in PMS for calendar years 

2003 through 2006 shared a few common program characteristics. 

However, the results could not be compared to program characteristics for 

all closed federal grants or all closed grants using PMS, during this period, 

due to the burden of collecting comparable data for all closed federal 

grants from eight other federal civilian payments systems or for all closed

grants from PMS. 

Taken together, dozens of past audit reports we reviewed from multiple 

agencies7

 and the 2006 and 2007 Performance and Accountability Reports 

for at least three federal agencies—EPA, HHS, and DOJ—suggested that 

undisbursed balances in expired grant accounts were a long-standing 

challenge and that these grants shared common grants management 

problems. The audits generally attributed the problems to inadequacies in

the awarding agencies’ grant management processes, including closeouts 

as a low management priority, inconsistent closeout procedures, poorly 

timed communications with grantees, or insufficient compliance or 

enforcement. Yet when agencies such as HHS, DOJ, and EPA made 

concerted efforts to address the problem, IGs and auditors reported the 

agencies were able to improve the timeliness of grant closeouts and 

decrease the amount of undisbursed funding in expired grant accounts. 

The approaches taken by the agencies administering the grants generally 

focused on elevating timely grant closeouts to a higher agency

management priority and on improving overall closeout processing. 

 6

These results exclude PMS accounts associated with grant programs for which the 

duration of the grant is not limited to a specified time period, such as Temporary 

Assistance for Needy Families (TANF) and Medicaid grants to states (see app. I). Some

grant-authorizing statutes limit the duration of grants, once awarded, to a specific time 

period (e.g., grants may be made for a period not to exceed 5 years). In some grant

programs, agency implementing regulations restrict the duration of grants. Other grant 

programs do not limit the duration of a grant. For example, TANF grants have no specified 

duration, once awarded. 

7

We reviewed audit reports from the following agencies covering the period from 2000

through 2006: DOE, DOJ, DOL, Education, EPA, HHS, HUD, the Social Security 

Administration (SSA), DOS, and USDA. 

Page 4 GAO-08-432 Grants Management
Recognizing the potential effect on performance in the area of financial

management, several federal agencies have elevated this issue as a 

management challenge in their annual performance plans and PARs. 

Current OMB circulars do not instruct federal departments and agencies to

track and report on expired grants and undisbursed grant funding. 

Given the federal government’s constrained fiscal position, it seems 

appropriate to minimize the amount of undisbursed funding remaining in 

expired grant accounts. Our analysis of the PMS data showed that a 

federal payment data system can track undisbursed funding and the 

amounts of undisbursed funding can be substantial. In addition, our 

analysis of audit reports and agency PARs showed that when agencies 

paid attention to grant closeouts, improvements were made and 

undisbursed balances were reduced. All federal civilian departments and 

agencies could annually track and report this information, if OMB 

provided governmentwide instructions. Therefore, we recommend that the 

Director, OMB, instruct all executive departments and independent 

agencies to take the following two actions: (1) annually track the amount 

of undisbursed grant funding remaining in expired grant accounts; and 

(2) report on the status and resolution of the undisbursed funding in their 

annual performance plan and in their annual PAR.

In commenting on our draft report, OMB said it supported the intent of our 

recommendations but did not commit to implementing them through its 

grants management guidance. OMB did not favor requiring agencies to 

report these balances in their PARs. Given that such reporting has raised 

the internal and external visibility of the issue of undisbursed balances in 

expired grant accounts and agencies have improved their performance, we 

continue to believe that the PARs would be appropriate vehicles to 

address the issue on a governmentwide basis. 

The federal government uses grants, along with other policy tools, such as

direct services and loans, to achieve national priorities through nonfederal 

parties, including state and local governments, educational institutions, 

Background 

Page 5 GAO-08-432 Grants Management
and nonprofit organizations. The federal government uses grants8

 to 

implement over 1,200 different programs through over 28 federal 

departments and agencies. These programs awarded funding to over 

60,000 grantees. The Catalog of Federal Domestic Assistance (CFDA) 

provides descriptions of these grant programs, as well as other domestic 

assistance programs.9

The design and implementation of federal grants varies. For example, 

grant programs generally use one of three ways to award funding to 

grantees. Formula grants award funds based on distribution formulas 

prescribed by legislation or regulation. Project grants generally award 

funding for specific periods or specific projects, products, or services. As a 

third method, some grant programs award funds using a hybrid of formula 

and project-based awarding methods. In addition, federal agencies use a 

variety of organizational approaches to implement grant programs. Some 

agencies administer many grants through multiple, decentralized 

components, while other agencies have small, centralized grant-making 

offices that administer only a few grant programs. 

Federal grants are typically subject to a wide range of requirements 

derived from a combination of program statutes, agency regulations, and 

other guidance. They are also subject to many crosscutting requirements 

that apply to most federal assistance programs, including statutory 

provisions applicable to recipients of federal funds and administrative 

requirements such as audit and record keeping and the allowability of 

costs. 

As a general rule, grant programs are governed by detailed legislation as 

well as implementing regulations issued by the responsible agency. Prior 

to 1988, each agency issued regulations to govern its grant management, 

and OMB Circular No. A-102, Grants and Cooperative Agreements With 

 8

Federal grants and cooperative agreements are forms of assistance authorized by statute 

in which a federal agency transfers something of value, such as money, to a party for a

purpose, undertaking, or activity of the grantee that the government has chosen to assist. 

The distinction between these two forms of assistance is that substantial involvement is 

expected between the executive agency and the state, local government, or other recipient

when carrying out the activity contemplated in a cooperative agreement, whereas such 

involvement is not expected in carrying out a grant agreement (see 31 U.S.C. 6304 and 31

U.S.C. 6305). Given the similarity between these two forms of assistance, we refer to grants 

and cooperative agreements as grants in the remainder of this report. 

9

For more information about the CFDA, see app. I. 

Page 6 GAO-08-432 Grants Management
State and Local Governments, also provided some governmentwide 

guidance for grants to state and local governments. OMB Circular No. 

A-110, Uniform Administrative Requirements for Grants and

Agreements With Institutions of Higher Education, Hospitals, and Other

Non-Profit Organizations, provided some guidance for grants to other 

types of grantees like hospitals and other nonprofit institutions. In 1987, a 

memorandum from the President directed OMB to revise Circular No. 

A-102 to specify uniform, governmentwide terms and conditions for grants 

to state and local governments, and directed executive branch

departments and agencies to propose and issue common regulations 

adopting these terms and conditions verbatim, modified where necessary 

to reflect inconsistent statutory requirements. Pursuant to this direction, 

the first iteration of what has come to be known as the “common rule” 

system was published on June 9, 1987. 

There are currently a number of OMB circulars on grants, which provide 

guidance only to federal (grantor) agencies; they do not apply directly to 

grantees. Therefore, each federal agency has issued largely identical sets

of regulations that prescribe requirements that are binding on their 

grantees. These regulations are referred to as the “common rules.” Each 

agency’s common rule regulations are codified in the Code of Federal 

Regulations.

Grant programs also share a common life cycle for administering the 

grants: announcement of grant opportunity, application, award, 

postaward, and closeout. During the award stage, the federal awarding 

agency enters into an agreement with the grantee. The grant agreement 

stipulates the terms and conditions for the use of grant funds such as the 

period of time funds are available for the grantee’s use, as noted by a start 

and end date. In addition, the awarding agency establishes an account in a 

federal payment system to execute payments to the grantee.10

During the postaward stage, the grantee carries out the requirements of 

the agreement and requests payments, while the awarding agency 

approves payments and oversees the grantee. The Payment Management 

 10Grant payments to states are generally made in accordance with the Cash Management 

Improvement Act (CMIA) of 1990 (P.L. 101-453), as amended. CMIA is intended to ensure 

greater efficiency, effectiveness, and equity in the exchange of funds between the federal

government and the states. The CMIA requires, among other things, that federal agencies 

and the states minimize the time that elapses between transfers of funds to the states and

payments for federal grant program purposes. 

Page 7 GAO-08-432 Grants Management
System (PMS), operated by HHS, went online in 1984 and, as of 2006, was 

the largest of the nine civilian federal payment systems. The system, which 

handled about 70 percent of all federal grant disbursements in 2006, serves 

nine federal departments, an independent agency, a government 

corporation, and ONDCP. Appendix I provides a description of PMS and 

appendix II provides a recent list of department- and agency-level PMS 

customers. According to HHS, PMS is a full-service centralized grants 

payment and cash management system. The system is fully automated to 

receive payment requests, edit them for accuracy and content, transmit the

payment to either the Federal Reserve Bank or the U.S. Treasury for 

deposit into the grantee’s bank account, and record the payment 

transactions and corresponding disbursements to the appropriate 

accounts. Federal agencies pay HHS a service fee for maintaining accounts 

and executing payments through PMS. PMS continues to charge agency 

customers a servicing fee until an account is closed. 

When the grantee has completed all the work associated with a grant 

agreement or the end date for the grant has arrived, or both, the awarding

agency and grantee close out the grant. Closeout procedures ensure that 

grantees have met all financial requirements, provided their final reports, 

and returned any unexpended balances. To close out a grant, federal 

regulations generally require that the 

• awarding agency ensures the grantee has completed all work and 

administrative requirements; 

• grantee settles (liquidates) all obligations 90 days after grant end date; 

• grantee submits all final financial, performance, and other reports within 

90 days of grant end date; and 

• grantee requests an extension of the reporting deadline from the awarding 

agency, if required. 

These requirements apply when the awarding agency has specified a 

funding period for the grant (a start and end date) and has prohibited the 

grantee from having carryover balances. In this report, we refer to grants

that were not closed after their end date as “expired” grants and PMS grant 

accounts that remained open after the grant’s end date as “expired grant

accounts.” 

PMS issues a quarterly report to its customers, referred to as the “closeout

report,” listing expired grant accounts that remain open, and for each 

account includes data on the funds made available and the amount of 

Page 8 GAO-08-432 Grants Management
funds disbursed (i.e., “drawn down” or “charged”). GAO recommended 

HHS develop and distribute this type of report in 1987.

11 HHS lists an 

account on a quarterly PMS closeout report if the end date for the account

was 3 months old and there was no disbursement in the preceding 9 

months. 

The closeout is an important grant management procedure because it is 

the final point of accountability for grantees. An undisbursed balance in an 

expired grant account can be an indication of a potential grant 

management problem. Grantees that do not expend their funding may not 

be meeting the program objectives for the intended beneficiaries. These 

balances may also suggest that awarding agencies or grantees, or both, 

may not be managing the funding efficiently or effectively. Effective grants

management, including the completion of grant closeout, increases the 

likelihood that awarded grants contribute to agency goals. 

An agency or grant program office can track its performance in closing 

grants and other grant management procedures using a variety of 

measures. In this report, we use the amount of undisbursed funding to 

assess one aspect of the performance of the expired grants—their 

financial status. Other types of measures track other aspects of 

performance, such as the grants’ service quality and customer satisfaction. 

The amount of undisbursed funding measures the amount of funds 

remaining potentially available for deobligation. 

Agencies report to the President and Congress regarding their strategic 

plans and actual program performance, including, among other things, 

progress on improving grants management and other management 

initiatives under the auspices of the Government Performance and Results 

Act of 1993 (GPRA). GPRA is part of a statutory framework that seeks to 

create a more focused, results-oriented management and decision-making 

process within both Congress and the executive branch. The act requires

federal agencies to develop strategic plans with long-term strategic goals,

annual goals linked to achieving the long-term goals, and annual reports 

on the results achieved. An agency’s annual performance plan contains the 

annual performance goals and associated measures for its programs, as 

well as mission-critical management problems identified by the 

 11See GAO, Accounting Systems: HHS Grant Payment Operation Has Improved and 

Additional Corrective Actions Are Underway, GAO/AFMD-88-18 (Washington, D.C.: 

Dec. 30, 1987), 11. 

Page 9 GAO-08-432 Grants Management
administration, the agency’s financial audit, and other agency assessments. 

An agency’s annual performance report compares its performance against 

its goals, summarizes the findings of program evaluations completed 

during the year, and describes the actions needed to address any unmet 

goals. OMB is responsible for providing guidelines to agencies on 

preparing their plans and reports, and for receiving and reviewing 

agencies’ strategic plans, annual performance plans, and annual 

performance reports. Currently, most agencies report on their annual 

performance in their PAR. OMB Circular No. A-11, Preparation, 

Submission and Execution of the Budget, provides guidelines on the 

content of the performance accountability portion of the PAR, while 

Circular No. A-136, Financial Reporting Requirements, provides guidance

on the content of the financial accountability portion of the PAR. 

In our review of the closeout data for expired grants that executed 

payments through HHS’s PMS, we found the quarterly amount of 

undisbursed funding reported as remaining in expired grant accounts 

increased from about $600 million in 2003 to about $1 billion during 2006.12

These balances typically represented about 1 percent of the total funds 

made available for all expired grants in PMS during this period. This 

proportion included expired grant accounts with a zero undisbursed 

balance (no undisbursed funding) and expired grant accounts with a 

positive undisbursed balance (undisbursed funds remaining). Once we 

excluded expired grant accounts with a zero balance from the calculation 

and narrowed our focus solely to expired grant accounts with undisbursed 

balances, the proportion of undisbursed funding relative to total funds 

made available increased substantially. Among this smaller set of expired

grant accounts, we found the undisbursed funding ranged between an 

average of 14 and 26 percent of the total funds made available for these 

grants. We found that, among PMS customers, numerous federal agencies 

and grant programs had expired grant accounts containing undisbursed 

funds. 

Undisbursed Balances 

in Expired Grant 

Accounts in PMS 

Were about $1 Billion 

during 2006 

 12All dollar figures throughout the report are in nominal “then-year” dollars (not adjusted

for inflation) because funds made available for federal grants are not indexed to inflation. 

Therefore, over the performance period of the grant, and into the postexpiration period, 

there are no increases in funding to account for the effects of inflation. 

Page 10 GAO-08-432 Grants Management
When we analyzed the quarterly PMS closeout data for 2003 through 2006, 

we identified two sets of expired grants accounts. One set consisted of 

expired grant accounts for which all of the funds made available had been

disbursed, but still had not been closed. As stated earlier, grant accounts 

remain open in PMS, and HHS continues to charge service fees to the 

awarding agencies for maintaining accounts and executing payments, until 

the awarding agencies indicate to HHS that the account can be closed. 

Thus, even though all grant funds have been disbursed, these grant 

accounts are continuing to cost the awarding agency through accumulated 

PMS service fees.13 Moreover, the presence of expired grant accounts at 

the awarding agency suggests more than a minor administrative oversight. 

It suggests that the final point of accountability for these grants, which 

includes such important tasks as the submission of financial and 

performance reports, was not completed. 

We identified a second set of accounts that included those expired 

accounts reported as still having an undisbursed balance.14 On the basis of 

our review of expired grant accounts with undisbursed balances, we found 

that, from March 2003 through March 2005, the quarterly totals of 

undisbursed funding ranged between an average of 14 and 16 percent of 

the funding made available for the grants. However, from June 2005 

through December 2006, the quarterly balances of undisbursed funding for 

these expired grants was near $1 billion, ranging between an average of 24 

and 26 percent of the funds made available. These results are for grant 

accounts with specific time limits and do not include grant accounts that 

do not have specific time limits, such as TANF or Medicaid, because 

without a specific time limit, the grants, once awarded, do not expire. The 

PMS closeout data results described in the remainder of this report only 

pertain to the set of expired grant accounts with undisbursed balances, 

unless otherwise noted. 

Expired Grant Accounts 

with Undisbursed 

Balances Had Not Spent 

between an Average of 14 

and 26 Percent of Funds 

Made Available 

 13Because of the data processing required to identify the expired grant accounts in PMS, as 

described in app. I, we could not readily calculate the fees PMS charged its client agencies

for continuing to service these expired accounts. 

14To be included in these analyses, each expired grant account had to have a positive 

balance of undisbursed funding (see app. I for details). 

Page 11 GAO-08-432 Grants Management
As stated previously, in 2006 PMS was the largest of the nine federal 

payment systems, handled about 70 percent of federal grant 

disbursements, and served nine federal civilian departments, an 

independent agency, a government corporation, and ONDCP. In analyzing 

the expired grant accounts with undisbursed balances in the PMS closeout 

data from 2003 through 2006, we found these accounts were not confined 

to a few federal awarding agencies, grant programs, or grantees. Instead 

we found, in 15 of the 16 quarters, at least four of the federal departments 

using PMS had over 100 expired grant accounts with undisbursed funding.

Lastly, we found that over 325 different programs administered the 

expired grant accounts with undisbursed funding and that thousands of 

grantees were associated with these grants.15

We analyzed the quarterly balances of undisbursed funding over 4 

calendar years, from 2003 through 2006, according to four program 

characteristics: size of the funding originally made available to the grantee; 

whether program funding was awarded based on a formula or on a project 

basis; the grantee organization (entity) receiving the grant; and whether 

the program required the grantee to make a contribution to support the 

grant activity. We selected these four characteristics because they are

fundamental elements of grant design that could be readily analyzed using 

the information from the PMS and the CFDA data sets. 

When we compared the undisbursed balances among the types within 

each of the four program characteristic categories, we found, for the first 

three characteristics, certain types of grants consistently had the largest 

quarterly balances. We found the largest quarterly balances of undisbursed 

funding to be consistently among expired grant accounts that had neither 

the smallest nor the largest funding awards, but rather in the mid-range of 

funding awards—that is, with funding awards from over $100,000 to 

$100 million. We found accounts with program funding awarded on a 

project basis had the largest undisbursed balances compared to those 

awarded on a formula basis. Lastly, we also found accounts with grants 

awarded to a state organization consistently had the largest undisbursed 

balances compared to other types of grantees. However, these results 

cannot be compared to the program characteristics of all closed federal 

grants or closed grants with payments processed through PMS from 2003 

Numerous Grant Programs 

Had Expired Grant 

Accounts Containing 

Undisbursed Funds 

 15As of June 2007, there were over 45,000 grantees in PMS with grants posted to their 

organization. This count includes all grantees that had a grant posted in PMS, at some time. 

The grantee may or may not have had an active account, as of that date. 

Page 12 GAO-08-432 Grants Management
through 2006, due to the burden of collecting comparable data from eight 

other federal civilian payments systems or for all closed grants in PMS. 

Without comparative data, we cannot know whether the program 

characteristics for these expired grant accounts represented a 

disproportionate share, compared to all closed federal grants or all closed

grants in PMS. Appendix I provides further information on our

methodology and program characteristics findings. 

In our review of past audit reports, we observed that the reports generally

focused on expired grants in specific agencies or grant programs. We also 

found that, when taken together, they suggested the presence of 

undisbursed balances in expired grant accounts was a long-standing 

problem. We and agency Inspectors General (IG) have reported for years 

that specific grant programs or awarding agencies have had expired grant

accounts with undisbursed funding. Moreover, by synthesizing the 

observations from these reports, we found that these grants shared 

common grants management problems. In recent years, three federal 

agencies, the Department of Justice’s (DOJ) Office of Justice Programs 

(OJP), HHS’s National Institutes of Health (NIH), and the Environmental 

Protection Agency (EPA), have made concerted efforts to improve their 

grant closeout processes. In 2006 and 2007, several auditors highlighted 

grants management problems as mission critical in their agency’s 

Performance Accountability Report (PAR). In 2006, EPA went further and 

reported a financial performance measure to track the agency’s progress 

in closing grants. 

We have reported that the timely closeout of expired grants was a problem 

at various agencies over the past three decades.16 In two recent examples, 

we reported that the State Department’s (DOS) United States Agency for 

International Development (a PMS customer) did not routinely follow 

prescribed closeout processes to identify and recover inappropriate 

expenditures or undisbursed funds17 and that EPA (an agency that does 

Grant Closeout 

Problems Attributed 

to Several Causes but 

Can Be Mitigated 

Several Grant Management 

Issues Contribute to 

Closeout Problems 

 16See GAO, HEW Must Improve Control Over Billions in Cash Advances, FGMSD-80-6

(Washington, D.C.: Dec. 28, 1979); Accounting Systems: HHS Grant Payment Operation 

Has Improved and Additional Corrective Actions Are Underway, GAO/AFMD-88-18 

(Washington, D.C.: Dec. 30, 1987); and Environmental Protection: EPA’s Progress in

Closing Completed Grants and Contracts, GAO/RCED-99-27 (Washington, D.C.: Nov. 20, 

1998). 

17See GAO, Foreign Assistance: U.S. Democracy Assistance for Cuba Needs Better

Management and Oversight, GAO-07-147 (Washington, D.C.: Nov. 15, 2006). 

Page 13 GAO-08-432 Grants Management
not use PMS) closed out only 37 percent of grants in fiscal year 2005 

within 180 days after the grant project ended as required by its own 

policy.18 IG reports identified a variety of awarding agencies or programs 

with closeout problems dating back to 2000. Maintaining undisbursed 

balances in expired grant accounts may prevent the deobligation of 

funding or expose the funding to improper spending or accounting. For 

example, the DOJ Office of Inspector General (OIG) reported in 2006 that 

$172 million in undisbursed funding could have been deobligated and that 

several million dollars in funding used from expired grant accounts was 

either unallowable or unsupportable. 

Audit reports identified several awarding agencies or programs with 

closeout problems. They generally attributed the problems to inadequacies

in awarding agencies’ grant management processes, including closeouts as 

a low management priority, inconsistent closeout procedures, poorly 

timed communications with grantees, or insufficient compliance or 

enforcement. While we reviewed several audit reports examining closeout

problems, this section summarizes examples from an HHS OIG and DOJ 

OIG report, and a GAO report on EPA—all issued within the last 3 years. 

Auditors indicated that grant closeouts were a low priority, at either the 

grantee organization or federal agency, which contributed to delays in 

grant closeouts. The audit reports described closeouts as a low priority in 

the context of staff-related issues. NIH and EPA reported that grantee staff 

resources were limited, staff were overburdened with other 

responsibilities, and staff considered grant closeout a low priority. NIH, 

DOJ, and EPA officials reported similar problems among agency grant 

staff. Staff turnover, at either the agency or the grantee organization, also 

led to lapses in the supervision of grants and the transfer of grant-specific 

information to new staff. Agency staff also reported that delaying grant

closeout added to staff workload. For instance, NIH and EPA reported that 

as time elapsed it became more burdensome for staff to close out an 

expired account. 

Auditors noted that grant offices did not always have consistent grant 

closeout procedures, such as due dates for closeout completion. For 

example, we reported that EPA used closeouts to ensure that grant 

 18See GAO, Grants Management: EPA Has Made Progress in Grant Reforms but Needs to 

Address Weaknesses in Implementation and Accountability, GAO-06-625 (Washington,

D.C.: May 12, 2006). 

Page 14 GAO-08-432 Grants Management
recipients had met all financial requirements and had provided final 

reports, and that any unexpended balances were returned to the agency. 

EPA’s policy stated that closeouts should occur within 180 days after the 

grant’s project end date. However, agency officials did not always comply 

with this policy—in fiscal year 2005 EPA closed out only 37 percent of the 

grants within 180 days. In its 2006 report, the DOJ OIG reported that two 

of the three DOJ grant offices had a deadline for closing out grants, while 

the third office did not; that each of the three DOJ grant offices conducted 

the closeouts process differently; and that each office had undefined and

undocumented “workarounds” that had evolved over time. 

Auditors reported that agency communication with grantees, either the 

content or the timing of the communication, also delayed grant closeouts. 

The communication of inconsistent policies and procedures contributed to 

grantee confusion, especially for grantees who work with multiple federal

programs of offices. For instance, DOJ reported OJP grantees, especially

those who dealt with multiple offices, were confused by the variation in 

language, time frames, requirements, and communications. Auditors found 

the mistiming of the agency closeout reminders, or the lack of such 

reminders, also contributed to delays in report submissions. For example, 

NIH reminded its grantees about their closeout reporting a year ahead of

time, too far ahead to serve as a timely reminder. 

Lastly, auditors also noted awarding agencies were not enforcing their 

closeout requirements through the application of controls, corrective 

actions, or penalties. For example, EPA grant officials told GAO they had

no realistic options for taking strong action against grantees, usually state

governments, for submitting late reports because the states had continuing

grants for environmental programs. The HHS OIG found NIH program 

guidelines provided few specifics about what type of corrective actions 

were appropriate and when the grant office should apply the actions. The 

OIG noted that NIH grant offices could impose special award conditions

on the grantees, such as additional monitoring or withhold future funding. 

However, the OIG found that grant officials rarely resorted to withholding 

future funding from a grantee due to late closeout because agency officials 

thought this penalty too severe and would slow down future project 

development. 

In response to auditors’ concerns, three federal agencies, DOJ’s OJP, 

HHS’s NIH, and EPA, undertook actions to improve their grant closeout 

processes. To varying degrees, the agencies’ actions included elevating 

grant closeouts to a higher agency priority in order to improve monitoring, 

Three Agencies Took 

Action to Improve Grant 

Closeouts 

Page 15 GAO-08-432 Grants Management
standardization of procedures, communications with grantees, 

compliance, or enforcement, or a combination of the above. Auditors 

reported that when federal grant managers took these actions, agencies 

generally improved the timeliness of grant closeouts, reduced grant 

closeout backlogs, or improved their ability to identify and deobligate 

unspent funds from expired grants, or a combination of the above. 

In 2000, DOJ’s OJP initiated a pilot project called “Operation Closeout” to 

deal with grant closeout backlogs. The agency reported that this initiative

accelerated the grant closeout process through revised closeout guidelines 

and elevated the importance of the closeout function as a required 

procedure in the administration of grants. Over a period of 6 months, 

“Operation Closeout” closed 4,136 grants, resulting in over $30 million in 

deobligated funds.19 In 2006, the DOJ OIG reported that since 2002 grant 

closeout was a higher priority within DOJ and that its awarding agencies 

made improvements in the timeliness of grant closeouts.20 For example, 

from 2001 to 2005, OJP reduced its backlog of expired grants from 11,356 

to 6,237. The report also indicated that OJP was recommending, among 

several recommendations, establishing a performance measure to monitor 

efficiency and compliance with its closeout process. In 2006, the DOJ OIG 

also reported that OJP updated the grant monitoring requirements in its 

Grant Manager’s Manual, automated its Grant Adjustment Notice (GAN) 

process, shortened its timeline for closeouts from 180 days to 120 days, 

and addressed the backlog of grants overdue for closure. By automating 

the GAN process, auditors reported that OJP reduced the time to respond

to grant adjustment requests by 10 days and planned to notify grantees of 

decisions regarding grant adjustment requests through the Grants 

Management System (GMS). OJP required that its grant staff conduct and 

document all its programmatic monitoring efforts in GMS.21

To address its grant closeout problems, NIH undertook several corrective 

actions in 2002 and 2003. The agency stated that it continued to emphasize 

to grantees that the submission of final closeout reports was an agency

priority and improve agency monitoring. To address its backlog of expired 

 19GAO, Office of Justice Programs: Problems with Grant Monitoring and Concerns about 

Evaluation Studies, GAO-02-507T (Washington, D.C.: Mar. 7, 2002).

20Department of Justice, Office of the Inspector General, The Department of Justice’s

Grant Closeout Process, Audit Report 07-05 (Washington, D.C., December 2006). 

21Department of Justice, FY 2006 Performance and Accountability Report (Washington,

D.C., 2006). 

Page 16 GAO-08-432 Grants Management
accounts and reduce the burden on monitoring staff, NIH management 

assigned dedicated staff to resolving the backlog of accounts. Corrective 

actions included creating a database to track receipt of final reports, 

which allowed NIH to send individualized reminders to grantees of 

outstanding reports. Another planned action was to provide technical 

assistance to grantees through general outreach efforts or through 

targeted follow-up with individual grantees. NIH also established a 

workgroup and a reminder system to improve grantee compliance with its 

closeout guidelines.22

Between 1995 and 2005, EPA efforts led to substantial progress in 

resolving its backlog of expired grants. By 2005, the agency nearly 

eliminated its backlog of over 23,000 expired grants accumulated between 

1999 and 2003. To continue its efforts and to hold program managers more 

accountable for grants management, EPA developed a corrective action 

plan. EPA planned to require all managers and supervisors to complete 

online grants management training; require baseline monitoring for all 

grants documented in the agency’s Integrated Grants Management System; 

and integrate grants with financial data and eliminate duplicate data entry. 

This plan also included incorporating grants management performance 

measures into the performance standards of project officers, supervisors, 

and managers with grants management responsibilities.23

 22Department of Health and Human Services, Office of Inspector General, NIH Grants

Management: Late Closeouts Audit Report, OEI-01-03-00021 (Washington, D.C., 2004).

23Environmental Protection Agency, FY 2006 Performance and Accountability Report 

(Washington, D.C., 2006). 

Page 17 GAO-08-432 Grants Management
In 2006 and 2007, eight agencies highlighted grants management problems 

as a management challenge or concern in their agency’s PAR to the 

President and Congress.24 Moreover, DOJ, HHS, and EPA reported to the 

President and Congress that timely grant closeout was a long-standing 

grants management challenge.25 In the 2006 DOJ and HHS PARs, both the 

IG and the independent auditor26 specifically addressed grant closeout 

problems and agency progress in addressing the problems. In each case, 

the IG listed grant closeouts as contributing to the department’s

difficulties with grants management at several of its agencies. In response, 

the departments described both agency-level and departmentwide 

initiatives to address the problems. In HHS’s 2006 PAR, the independent 

auditors reported the department had more than 64,000 grants, with a 

remaining balance of $1.6 billion, eligible for closeout, and that 75 percent 

of these grants had been expired for more than 2 years. In the HHS 2007 

Agency Financial Report,

27 the HHS Inspector General continued to cite 

grant management, and specifically grant closeouts, as a management 

challenge. In DOJ’s 2006 and 2007 PAR, the independent auditors 

highlighted the IGs findings and explained that the closeout delays 

contributed to misstatements in the department’s financial statements. In 

Agencies’ Performance 

and Accountability 

Reports Address Grant 

Closeouts 

 24In 2006, PARs from the following departments or agencies listed grants management as a 

management challenge or concern: USDA, DOI, DOC, Education, EPA, HHS, DHS, and 

DOJ. In 2007, PARs from the following departments or agencies listed grants management

as a management challenge or concern: DOI, DOC, Education, EPA, HHS, DHS, DOJ, and 

DOL. 

25Department of Health and Human Services, FY 2006 Performance and Accountability

Report (Washington, D.C., 2006). Department of Justice, FY 2006 Performance and

Accountability Report (Washington, D.C., 2006). Environmental Protection Agency, FY 

2006 Performance and Accountability Report (Washington, D.C., 2006). Department of 

Health and Human Services, FY 2007 Agency Financial Report (Washington, D.C., 2007).

Department of Justice, FY 2007 Performance and Accountability Report (Washington,

D.C., 2007). EPA, FY 2007 Performance and Accountability Report (Washington, D.C., 

2007). 

26Independent auditors are independent accounting experts who conduct impartial audits

of the financial statements of public and private organizations to ensure there are no 

misstatements and assess whether the organization’s systems to detect and prevent fraud 

(internal controls) are effective. 

27In fiscal year 2007 OMB initiated a pilot alternative to the annual PAR. The goal of the 

pilot is to allow agencies different formats to present financial and performance 

information that is more meaningful and transparent to the public. The pilot includes three 

components: (1) the Agency Financial Report (AFR); (2) the Annual Performance Report 

(APR); and (3) Highlights. The pilot requires the AFR to be published by November 15, 

2007, and the other two reports by February 2008. HHS is one of the agencies participating

in this pilot.

Page 18 GAO-08-432 Grants Management
its 2007 PAR, DOJ cited grant management process improvements by 

several of its program offices but also stated that grant management and 

closeout continued to be a major challenge. 

In our review of the 2006 EPA PAR, we found that EPA had a financial 

performance measure—the percentage of eligible grants closed out—

specifically to track the agency’s progress in closing grants. The EPA 

assessed its performance by calculating the percent of grants closed out in

the current year that had a “project end date” in the previous year. In 2005, 

EPA had goal of 90 percent grant closure, and it reported in its 2006 PAR 

achieving a 95 percent grant closure rate. In 2006, we concluded that, 

while EPA’s performance measure did not assess compliance since it did 

not reflect the 180-day closeout standard, the measure was a valuable tool

for determining if grants were ultimately closed.28 As indicated earlier, EPA 

also planned to incorporate its grant performance measures into 

performance standards for its grants professionals. 

EPA’s 2007 PAR reported that the agency had successfully put into place

grant management process improvements to correct long-standing 

problems identified by GAO and the OIG. EPA is also developing a new 

Grants Management Plan that will go into effect in 2008 to replace and 

update the plan established in 2003. Also in 2007, the EPA OIG removed 

the agency’s use of assistance agreements, including grants, from its list of 

EPA’s management challenges. The OIG attributed the removal of these

agreements from its list of management challenges to the substantial 

actions EPA had taken to improve its management of these agreements. 

The OIG noted that EPA planned to evaluate implementation of its new 

policies and the OIG would continue to monitor the agency’s corrective 

actions in this management area. 

As previously discussed, OMB Circulars No. A-102 and No. A-110 establish 

standards for consistency and uniformity among federal agencies in the 

administration of grants through the preaward, postaward, and closeout 

phases of the grant life cycle, and Circulars No. A-11 and No. A-136 

provide agencies with guidance on preparing and submitting their PARs in 

terms of performance and financial accountability. However, in our review 

 28GAO-06-625.

Page 19 GAO-08-432 Grants Management
of these circulars as well as selected agency regulations,29 we found no 

explicit instruction to agencies to track or report on undisbursed balances 

remaining in expired grant accounts.

Although not explicitly directed to do so by the OMB circulars, we found 

that the inclusion of undisbursed balances in expired grant accounts in a 

department or agency’s GPRA documents—as has been done by DOJ, 

HHS, and EPA—has the potential to raise the internal and external 

visibility of the problem. As we reported in 2004, developing strategic 

plans and reporting on progress toward performance goals can lead to 

cultural changes within an agency.

30 The focus on results can also 

stimulate internal problem solving and discussions about performance. 

Externally, OMB and Congress use GPRA documents, like the PAR, in 

discussions of agency performance and resource allocation. 

The existence of undisbursed grant balances in expired grant accounts 

may hinder the achievement of program objectives, limit deobligating 

funding for other uses, and expose the funding to improper spending or 

accounting. Our analysis showed that, taken together, quarterly 

undisbursed balances for expired grant accounts in HHS’s Payment 

Management System—which in 2006 handled about 70 percent of all 

federal grant disbursements—can be significant. Audit reports from 

agencies not participating in PMS indicate they also have expired grants 

with undisbursed balances. Data analysis of grant accounts in other 

federal payment systems may reveal additional expired grants with 

undisbursed balances. 

In reviewing audit reports for three agencies, we found that grant 

closeouts processes can improve when given a high priority and the 

agency addresses the multiple causes in a concerted fashion. The financial 

status of long-expired grant accounts is one aspect of agency performance 

that has implications for broader program and agency-level performance. 

By elevating this issue as a management priority in their annual 

Conclusion 

 29We reviewed the applicable regulations for eight executive departments (USDA, 

Education, DOE, HHS, HUD, DOJ, DOL, and DOS), SSA, and EPA to identify any 

differences in grant closeout guidelines between the OMB circulars and the agency 

regulations. 

30See GAO, Results-Oriented Government: GPRA Has Established a Solid Foundation for 

Achieving Greater Results, GAO-04-38 (Washington, D.C.: Mar. 10, 2004). 

Page 20 GAO-08-432 Grants Management
performance plans and PARs, the three agencies made grant closeouts a 

priority for improving program and agency-wide performance. However, 

OMB circulars relating to grants management and performance reporting 

do not currently instruct federal agencies to track and annually report on 

undisbursed funding in expired grant accounts. Given the federal 

government’s constrained fiscal position, the executive branch could 

minimize undisbursed funding in expired grant accounts if OMB instructed 

federal awarding agencies to use its federal financial information systems 

and GPRA’s performance-reporting infrastructure to track and annually 

report this information. 

We recommend that the Director, OMB, instruct all executive departments 

and independent agencies to take the following two actions: (1) annually 

track the amount of undisbursed grant funding remaining in expired grant 

accounts; and (2) report on the status and resolution of the undisbursed 

funding in their annual performance plan and report in their annual PAR 

on 

• the amount of undisbursed grant funding in expired grant accounts, 

• why these funds were undisbursed, 

• the actions taken to resolve the undisbursed funding and close the expired 

grants and related accounts, and 

• outcomes associated with these actions. 

We provided a draft of this report to OMB and HHS for review and 

comment. HHS replied via e-mail and had no substantive comments. OMB 

responded with written comments, which we have reprinted in appendix

III. 

OMB said it supported the intent of our recommendations to strengthen 

grants management by explicitly requiring federal agencies to track and 

report the amount of undisbursed grant funding remaining in expired grant 

accounts and that it believes agencies should design processes with strong 

internal controls to promote effective funds management for all types of

obligations. OMB’s comments did not indicate a commitment to 

implement our recommendations. OMB stated that, during its regular 

review, it would consider revising its grants management guidance, 

Circulars A-102, Grants and Cooperative Agreements with State and 

Local Government, and A-110, Uniform Administrative Requirements for

Grants and Other Agreements with Institutions of Higher Education, 

Hospitals, and Other Nonprofit Organizations, to include instructions for 

Recommendations for 

Executive Action 

Agency Comments 

and Our Evaluation 

Page 21 GAO-08-432 Grants Management
agency grant managers to track and report this information. OMB added 

that it does not favor having agencies report on these balances in their 

PARs and so would not offer instructions under its performance reporting 

guidance, Circular A-136, Financial Reporting Requirements. 

We agree that OMB should have discretion in instructing departments and 

agencies on how to track and report undisbursed balances in expired grant 

accounts. Our draft report recommended OMB instruct agencies to 

annually track and report in their PARs the amount of undisbursed expired 

grant balances. As we reported, some federal agencies such as EPA, HHS, 

and DOJ have already voluntarily included in their annual PARs their 

actions to track and reduce undisbursed balances in expired grant 

accounts. We found that such reporting had raised the internal and 

external visibility of the challenge and that these agencies had improved 

their performance. Accordingly, we continue to believe that the PARs 

would be appropriate vehicles to address on a governmentwide basis the 

issue of undisbursed balances in expired grant accounts. Such reporting 

may not be necessary for every department or agency, every year. Should

it choose, OMB could always attenuate its requirements by setting a 

threshold as part of its instructions for reporting these balances in the 

PARs. 

We will send copies of this report to the congressional committees with 

jurisdiction over HHS and its activities, the Secretary of HHS, and the 

Director of OMB. We will also make copies available to others upon 

request. In addition, the report will be available at no charge on the GAO 

Web site at http://www.gao.gov. 

If you have any questions about this report, please contact me at (202) 512-

6806 or czerwinskis@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. Key contributors to this report are listed in appendix IV. 

Stanley J. Czerwinski 

Director, Strategic Issues

Page 22 GAO-08-432 Grants Management
Appendix I: 

and Additio

Characteristics

Objectives, Scope, Methodology, 

nal Information on Program 

Page 23 GAO-08-432 

Appendix I: Objectives, Scope, Methodology,

and Additional Information on Program 

Characteristics 

Our objectives were to address the following: (1) to what extent are there

undisbursed grant balances in expired grant accounts and do they share 

any program characteristics?; and (2) do these expired grants share grant 

management challenges and what actions have federal agencies taken to 

improve grant closeout and diminish undisbursed balances? In the course 

of our work, we did not evaluate the implementation of closeout 

procedures for any specific grant program or awarding agency. The 

following describes the various procedures we undertook to answer these 

objectives.

We began our study by reviewing the key federal guidelines on grant 

closeouts: Office of Management and Budget (OMB) Circulars No. A-102, 

Grants and Cooperative Agreements with State and Local Governments, 

and No. A-110, Uniform Administrative Requirements for Grants and 

Other Agreements With Institutions of Higher Education, Hospitals, and 

Other Non-Profit Organizations. Since the President directed executive 

branch departments to adopt these OMB circulars in their regulations, we 

also reviewed applicable regulations for eight executive departments (the 

Departments of Agriculture [USDA], Education (Education), Energy 

[DOE]), Health and Human Services [HHS], Housing and Urban 

Development [HUD], Justice [DOJ], Labor [DOL], and State [DOS]), the 

Social Security Administration (SSA), and the Environmental Protection 

Agency (EPA) to identify any differences in grant closeout guidelines 

between the OMB circulars and the agency regulations. We selected these 

agency regulations for review because a recent audit had indicated that 

either a grantee or program had problems with grant closeouts. To identify

federal governmentwide guidance relating to federal agency performance 

reporting, we reviewed OMB Circular No. A-11, Preparation, Submission

and Execution of the Budget and Circular No. A-136, Financial Reporting 

Requirements. 

Review of Relevant 

OMB Circulars and 

Federal Regulations 

Grants Management
Appendix I: Objectives, Scope, Methodology, 

and Additional Information on Program 

Characteristics

To identify what other auditors found and recommended as strategies to 

diminish unspent funds in expired grant accounts, we interviewed various

grant program experts from GAO and federal Offices of Inspectors General 

(OIG),1

 as well as experts from the National Grants Management 

Association (NGMA), and the National Association of State Auditors, 

Comptrollers and Treasurers (NASACT). We also conducted a Web-based 

literature search for related audit reports and reviewed over 150 reports 

issued by GAO and various federal OIGs and independent agencies from

2000 to 2006 to identify some common grants management problems 

related to closing expired grants. During the 2000 to 2006 period, auditors 

issued reports to the following departments or independent agencies 

regarding either a grantee or program with grant management problems 

relating to closing expired grants: USDA, Education, DOE, HHS, HUD, 

DOJ, DOL, DOS, SSA, and EPA. We reviewed the 2006 and 2007 

Performance and Accountability Reports (PAR) from EPA and the 15 

cabinet-level executive departments2

 to determine whether grant 

management, specifically timely grant closeouts and undisbursed balances 

from expired grants, were identified as a problem, and strategies agencies 

were employing to address the problem. 

To identify the amount of undisbursed funding remaining in expired 

grants, we collected and analyzed data from HHS’s Payment Management 

System (PMS) and the U.S. General Services Administration (GSA) Catalog 

of Federal Domestic Assistance (CFDA). This section describes these two 

data systems, our collection of selected data from each system, our 

analysis of the data collected, and the results for the program 

characteristics analysis. 

PMS is a centralized grants payment and cash management system, 

operated by HHS’s Program Support Center (PSC) in the Division of 

Payment Management (DPM). According to DPM, the main purpose of 

PMS is to serve as the fiscal intermediary between awarding agencies and 

the recipients of grants and contracts. Its main objectives are to expedite

Collection and 

Review of Related 

Audit Reports and 

PARs 

Analysis of Expired 

Grant Account Data 

from PMS 

Description of Payment 

Management System 

 1

The OIGs we contacted for this review included those of HHS; DOJ; DOI; USDA; DOE; and 

DOL. 

2

USDA, the departments of Commerce and Defense, Education, DOE, HHS, the 

Department of Homeland Security, HUD, the Department of the Interior, DOJ, DOL, DOS,

and the Departments of Transportation, the Treasury, and Veterans Affairs.

Page 24 GAO-08-432 Grants Management
Appendix I: Objectives, Scope, Methodology, 

and Additional Information on Program 

Characteristics

the flow of cash between the federal government and recipients; transmit 

recipient disbursement data back to the awarding agencies; and manage 

cash flow advances to grant recipients. 

PMS is the largest of the nine civilian federal payment systems and 

executes payments for nine federal departments, one independent agency,

a government corporation and the Office of National Drug Control Policy 

(ONDCP), which, in 2006, represented about 70 percent of all federal grant 

disbursements. According to HHS, PMS is a full-service centralized grants

payment and cash management system. The system is fully automated to 

receive payment requests, edit them for accuracy and content, transmit the

payment to either the Federal Reserve Bank or the U.S. Treasury for 

deposit into the grantee’s bank account, and record the payment 

transactions and corresponding disbursements to the appropriate 

account(s). 

Appendix II lists the current PMS customers. A few statistics help to 

illustrate the volume of PMS’s payment processing. In 2006, PMS 

processed over $320 billion in payments to grant recipients. As of June 

2007, according to an HHS official, PMS contained over 200,000 open

grants. Cumulatively, the grants executing payments through PMS 

represent a significant amount of funding—open grants in PMS, as of May 

2007, represented over $1.3 trillion in total funding. Over the years, PMS 

has executed payments for tens of thousands of grantees. 

The DPM described its role, in operating the PMS, as an intermediary 

between awarding agencies and grant recipients. DPM personnel operate 

PMS, making payments to grant recipients, maintaining user/recipient 

liaison, and reporting disbursement data to awarding agencies. Awarding 

agencies’ responsibilities include PMS registration of grant recipients 

(DPM personnel perform this function for cross-serviced agencies), entry 

of authorization data into PMS, programs and grants monitoring, grant 

closeout, and reconciliation of their accounting records to the PMS 

information. Awarding agencies pay HHS a service fee for maintaining 

accounts and executing payments through PMS. PMS continues to charge 

agency customers a servicing fee until an account is closed. 

Several federal agencies collaborate with HHS in executing grant 

payments including the U.S. Treasury and Federal Reserve Bank. 

According to DPM, the U.S. Department of the Treasury is responsible for 

establishing cash management policies, operating the Government On-Line 

Accounting Link System and the electronic system for processing of 

payments, check payments, and certain transactions. The Federal Reserve 

Page 25 GAO-08-432 Grants Management
Appendix I: Objectives, Scope, Methodology, 

and Additional Information on Program 

Characteristics

Bank’s responsibilities include direct deposit payments to 

payees’/recipients’ bank accounts. 

HHS documentation indicated that other public and private organizations 

also have roles in executing payments, including the grant recipients and 

their financial institutions. Grantee responsibilities include executing 

grants, reporting cash disbursements to PMS, and maintaining their own 

accounting records. The grantee’s financial institutions are responsible for 

receiving payments for credit to recipient accounts, and maintaining 

recipient bank accounts. 

An independent auditor assessed PMS in 2006. The auditor reported that 

DPM’s internal controls were suitably designed and tested to provide 

reasonable assurance that control objectives, including proper payments 

and remittances, and accurate reporting, were met.3

To identify the status of undisbursed balances in expired grant accounts, 

we narrowed our focus to grants executing their payments through PMS. 

The awarding agencies provide the descriptive information for each grant 

account to PMS. The data set for each grant account contains over 900 

unique data fields. One of the required data fields in each PMS account

record is the CFDA number for the assistance program that is associated 

with each account. 

Each quarter, PMS distributes to its customers a “closeout” report listing 

the expired grant accounts that, according to the data system, have not 

completed all of their closeout procedures. HHS listed an account on a 

quarterly PMS closeout report if both the latest end date for the account 

was 3 months old and the latest date of disbursement was 9 months old. 

PMS does not close a grant account until instructed to do so by the 

awarding agency. For each grant account, the report includes such 

information as the identification number, the amount of funding 

authorized for the grant, the amount charged, and the beginning and end 

dates for the grant. 

Collection and Reliability 

Testing of PMS Closeout 

Data 

 3

Department of Health & Human Services, Division of Payment Management, Report of 

Independent Auditor on Controls Placed in Operation and Tests of Operating 

Effectiveness for the Payment Management System (PMS), for the Period October 1, 2005 

to June 30, 2006 (Washington, D.C., August 2006). 

Page 26 GAO-08-432 Grants Management
Appendix I: Objectives, Scope, Methodology, 

and Additional Information on Program 

Characteristics

We initially requested that HHS provide PMS quarterly closeout reports for 

the period 2000 through 2006, then narrowed our focus to the 2003 through 

2006 period. As part of the data request, we requested that HHS append to

the closeout data additional information available in PMS for each grant 

account: the CFDA numbers and the type of grantee organization. Having 

the associated CFDA number for each grant account enabled us to link the 

grant account information in the closeout report with the associated 

program information as listed in the catalog. 

To test the reliability of PMS closeout data, we (1) reviewed existing 

documentation related to PMS, including the most recent system audit by 

the independent auditor, (2) interviewed officials responsible for 

administration of the database on data entry and editing procedures and 

the production of closeout reports, and (3) conducted electronic testing 

for obvious errors in completeness and accuracy. We worked closely with

HHS officials responsible for the administration of the database and the 

production of the closeout reports. When we found discrepancies, we 

brought them to the attention of the agency officials and worked with 

them to make corrections before the analyses began. For example, our 

testing revealed that there were accounts in the PMS closeout data sets 

that: had CFDA numbers that did not match existing CFDA numbers; were

for nongrant programs that were not intended to be entered into the grant 

payment system; and were for grants that did not have a defined 

expiration date. We excluded these extraneous entries from our analysis.

After conducting these assessment steps, we found that the closeout data 

were sufficiently reliable for the purposes of this report. 

The Catalog of Federal Domestic Assistance (CFDA) is the single 

authoritative, governmentwide compendium and source document for 

descriptions of federal programs that provide assistance or benefits to the 

American public. According to GSA, the catalog does not include solicited

contracts; foreign activities that do not benefit the domestic economy; 

personnel recruitment programs; benefits or assistance only available for 

federal employees; new programs that do not have enacted appropriations; 

or inactive programs with expired authorization or appropriation. 

OMB created the catalog pursuant to the Federal Program Information 

Act4

 to ensure that comprehensive information on federal assistance 

Description of Catalog of 

Federal Domestic 

Assistance

 4

Pub. L. No. 95-220. 

Page 27 GAO-08-432 Grants Management
Appendix I: Objectives, Scope, Methodology, 

and Additional Information on Program 

Characteristics

programs was readily available to the public and interested parties. Later 

amended in November 1983,5

 revised guidelines transferred the 

responsibilities of the Federal Program Information Act from OMB to GSA. 

OMB serves as an intermediary agent between federal agencies and GSA, 

with oversight responsibility for the necessary collection of program data. 

OMB Circular No. A-89 provides the federal guidelines for the collection 

and dissemination of the program information. GSA is responsible for 

maintaining and distributing CFDA information. By law, federal agencies 

submit program data to OMB for review. OMB reviews the information and 

provides any comments to and obtains updates and clarifications from the

agency. OMB then submits each program description to GSA, which 

incorporates these submissions into the CFDA. According to a GSA 

official, GSA does not verify the accuracy of the information that the 

federal agencies provide for the program description. Each federal agency 

is responsible for assuring, among other things, the adequacy and 

timeliness of program information submitted to OMB. 

The law authorizing CFDA required that GSA establish and maintain a

computerized retrieval system capable of identifying all existing federal

domestic assistance programs. GSA now maintains the comprehensive 

database information on all federal domestic assistance programs. 

Information about these programs is made available to the public through 

periodic update and annual issuance of the catalog. Until 2006, GSA 

distributed printed copies of the CFDA for free. GSA’s free CFDA Web site 

(http://www.cfda.gov) is now the principal means of distributing the 

catalog. This Web site enables users to download an electronic file of the 

catalog or search its contents online. CFDA program description contains 

a wealth of financial and nonfinancial information, including program 

objectives, type of programs assistance provided, applicant eligibility 

requirements, and guidance on how to apply for assistance. 

To identify expired grants in PMS and two of the four program 

characteristics analyzed—funding award method and the contribution 

requirement—we obtained the October 2006 CFDA as an electronic data

file from the GSA. We were able to crosswalk the CFDA program data to

the PMS data using the CFDA number. The CFDA number is a five-digit 

number assigned to each assistance program listed in the catalog. In 

Collection and Reliability 

Testing of CFDA Data 

 5

Pub. L. No. 98-169. 

Page 28 GAO-08-432 Grants Management
Appendix I: Objectives, Scope, Methodology, 

and Additional Information on Program 

Characteristics

creating a grant account in PMS, HHS requires the awarding agencies to 

enter the CFDA number for the assistance program that is funding the 

grant. At our request, HHS appended the CFDA number to each of the 

accounts listed in the quarterly PMS closeout data given to GAO. We used 

information from the catalog to identify those grants that had specific time

limits, and thus, that we could consider “expired” once the period of 

availability had ended. We also used CFDA program information to 

identify the type of funding award method (project or formula-based), and 

whether a grantee was required to contribute resources, such as matching

funds, to the grant project. 

According to a GSA official, GSA does not verify the accuracy of the 

program description information submitted by the awarding agency for the 

catalog. To test the reliability of CFDA data, we selected a random sample 

of 25 CFDA program descriptions and compared selected information 

from the CFDA program description to the same program information 

from other federal sources. Specifically, we checked the reliability of six 

data fields: the CFDA number, awarding agency, program name, funding 

award method, contribution requirement and the period of availability of

the grant. As we found only one discrepancy for one of six data fields, we

can be 95 percent confident that fewer than 17.6 percent of cases in the 

catalog contain discrepancies between the electronic catalog and 

information available from other federal sources for these fields. We thus 

determined the selected CFDA data used in our analyses were sufficiently 

reliable for the purposes of this report. 

Prior to conducting the analysis of the 2003 through 2006 expired grants in 

PMS, we excluded extraneous accounts that appeared in the closeout 

data. The purpose of these exclusions was to avoid including accounts 

that might unduly distort the results on undisbursed funds in expired PMS 

grant accounts. 

We included accounts that were associated with grants or cooperative 

agreements. We excluded accounts if we could not associate them with a 

grant program. For instance, we found some PMS accounts were for 

nongrants. We also decided to exclude accounts that lacked a CFDA 

number, since without this number we could not verify that the account 

was for a grant or obtain other information used in our analyses. 

We included grant accounts that had a time limit for spending the funds 

made available and a zero or positive undisbursed balance. As described 

by HHS staff, the purpose of the PMS closeout report is to alert awarding 

Expired Grant Accounts 

Included in and Excluded 

from Analyses 

Page 29 GAO-08-432 Grants Management
Appendix I: Objectives, Scope, Methodology, 

and Additional Information on Program 

Characteristics

agencies of accounts in PMS that remain open after their posted end date. 

If a grant does not have a defined end date, such as the Temporary 

Assistance for Needy Families (TANF), then HHS staff consider the PMS 

closeout report merely as a reminder to the awarding agency of the open 

account and that PMS continues to charge fees on this open account. We 

identified “expired” grants, grants that had defined end dates, by 

conducting a content analysis of their associated CFDA program 

descriptions. Through the content analysis we identified 26 grant 

programs (HHS and non-HHS), and associated PMS grant accounts, where 

the CFDA program description indicated no time limit on the availability 

of grant funding, and excluded these grant accounts from our analysis. 

We included grant accounts that met the previous criteria and also had a 

readily identifiable CFDA number. We found well over 100 CFDA numbers 

listed for grant accounts in PMS that did not have a program description in 

the October 2006 edition of the CFDA. We searched the 1999 to 2005 

editions of the CFDA and the catalog’s historical index to find the program 

descriptions for these CFDA numbers. We excluded an account if we 

could not find any information on the CFDA number either in the CFDA or 

in the CFDA Historical Index, or if the CFDA number and program 

description had been deleted from the catalog before the 1999 edition of 

the CFDA. We excluded these grant accounts associated with very old 

CFDA numbers because pre-1999 catalogs are not readily available, 

making it unduly burdensome to obtain program information. We also 

excluded accounts in the 2003 through 2004 PMS closeout data if their 

associated CFDA numbers (1) were not in the 1999 through 2006 CFDAs, 

and (2) the accounts associated with the CFDA number did not have a 

cumulative undisbursed balance of greater than $100,000 for two 

consecutive quarters. We felt that, where the cumulative amounts of 

undisbursed funding for the accounts associated with these CFDA 

numbers were less than 0.1 percent of the quarterly totals and, by 2005, 

were at or near zero, it was unduly burdensome to collect the CFDA 

program information that was more than 7 years out of date. 

We also excluded expired accounts for several block grants in keeping 

with the 2006 independent audit of PMS which stated that (1) the funds for 

these block grants continued to be available to the grantees until the 

obligation/expenditure period expired, and (2) traditional financial 

reporting requirements do not apply to these programs. We excluded 

expired grant accounts associated with the following HHS block grant 

programs from our analysis based on this audit: Community Mental Health

Services Block Grant, Preventive Health and Health Services Block Grant, 

Substance Abuse and Preventive Treatment Block Grant, Maternal and 

Page 30 GAO-08-432 Grants Management
Appendix I: Objectives, Scope, Methodology, 

and Additional Information on Program 

Characteristics

Child Health Services Block Grant, Social Services Block Grant, Low 

Income Housing Energy Assistance Block Grant, and Community Services

Block Grant. 

To summarize, our reported results describe accounts listed in PMS’s 

quarterly closeout reports from 2003 through 2006, that 

• were grants or cooperative agreements; 

• had a time limit for spending; 

• had a zero or positive undisbursed balance; 

• had a readily identifiable CFDA number; 

• had a program description in the 1999 through 2006 CFDAs; and 

• did not have special financial reporting procedures. 

Having excluded the extraneous accounts, we analyzed the 2003 through

2006 payment closeout data as a complete set of current PMS customers, 

rather than analyzing specific federal agencies or grant programs. When 

we analyzed the quarterly PMS closeout data for the 2003 through 2006 

period, we identified two sets of expired grants accounts. One set 

consisted of expired accounts for which all of the funds made available 

had been disbursed, but still had not been closed. We identified a second 

set of accounts that included those expired accounts reported with a 

positive undisbursed balance. Most of our analysis focused on those 

expired accounts with undisbursed balances. For each quarter we totaled 

the amount of undisbursed funding in the expired grant accounts, without 

adjusting the amounts for inflation.

To identify common program characteristics of the expired grants with 

undisbursed balances, we conducted further analysis by linking data from 

the PMS closeout reports to selected program information from the CFDA. 

We identified four program characteristics for analysis: size of the funding 

award originally made available to the grantee; whether program funding 

was awarded based on a formula or on a competitive, project-by-project 

basis; the grantee organization (entity) receiving the grant; and whether 

the program required the grantee to make a contribution to support the 

grant activity. We selected these four characteristics because they are

fundamental elements of grant design that could be readily analyzed using 

the information from the PMS and the CFDA data sets. While grant 

programs have other fundamental design characteristics such as the 

purpose of the program (e.g., grant funds are to be used for construction 

or providing services), they could not be as readily analyzed. PMS grant 

closeout data provided the data on grant funding size and grantee 

Analysis of the PMS and 

CFDA Data to Quantify 

Undisbursed Funding in 

Expired Grant Accounts 

and Related Program 

Characteristics 

Page 31 GAO-08-432 Grants Management
Appendix I: Objectives, Scope, Methodology, 

and Additional Information on Program 

Characteristics

organization. The CFDA data provided information for the funding award 

method and the contribution requirement. 

We began our analyses by sorting the expired grants with undisbursed 

balances into 13 ranges of funding award size. These ranges were used 

because the average percentage of funds undisbursed were similar from 

quarter to quarter and minimally overlapped with the average percent for 

an adjacent range, reflecting natural breaks in the data analysis. The 

ranges varied from relatively small grants of under $25,000 to very large 

grants of up to $1 billion. For each funding range, we identified the 

quarterly balances of undisbursed funds for each of the 16 quarters from 

2003 through 2006. 

We next sorted the expired grants with undisbursed balances according to

the method used to award the funds to grantees. As described earlier, 

federal awarding agencies typically award their grant funding using a 

formula or on a project basis, or by using a hybrid of both methods. Our 

guideline in sorting by funding award method was that if a program 

description had more than one allocation method, we sorted the grant 

according to the first allocation method listed in the CFDA program 

description. Using this information, we found that of 328 unique grant 

programs in the 2003 through 2006 PMS closeout data with positive 

undisbursed balances, 54 were awarded on a formula basis and 274 were 

awarded on a project basis. 

Next, we analyzed the expired grants with undisbursed balances according 

to the type of grantee organization receiving the grant. For the grant 

organization characteristic, we collapsed the organization types used in 

PMS into six types (state, county, city, domestic nonprofit, domestic forprofit, and other). 

Lastly, we compared the quarterly undisbursed funding balances for those 

expired grants that required some form of grantee contribution to those 

that did not. As described in the CFDA, grant program regulations can 

require grantees to contribute some form of resources to support grantrelated activities, such as requiring the grantee to provide matching funds,

share in the costs, or provide in-kind contributions. We sorted grants as 

having required contribution if the CFDA program description indicated

grantees were required to contribute some form of resources to support 

grant-related activities, such as requiring the grantee to provide matching

funds, share in the costs, or provide in-kind contributions. 

Page 32 GAO-08-432 Grants Management
Appendix I: Objectives, Scope, Methodology, 

and Additional Information on Program 

Characteristics

For each program characteristic, we totaled the undisbursed funding 

according to the various types within each characteristic category. For 

example, for the method of funding award characteristic there were two 

types, project or formula-based. All of the program characteristic results 

are in comparison to other types of grants in the same characteristic 

category, such as sizes of grant authorizations or type of funding award 

method. 

When we compared the undisbursed balances among the types within 

each of the four program characteristic categories, we found certain types 

of grants consistently had the largest quarterly balances. Among the 13

funding award ranges, we found the largest quarterly balances of 

undisbursed funds in midsize grants, that had original funding awards 

ranging from over $100,000 to $100 million (in nominal dollars) for expired 

grants from 2003 through 2006. We also found that, between the two 

funding awards methods, grants awarded on a project basis consistently 

had the largest quarterly balances of undisbursed funding and that, among 

the six types of grantees, state grantees had the largest quarterly amounts 

of undisbursed funding, followed distantly by nonprofit organizations. 

When comparing grants requiring a grantee contribution and those grants 

that did not have this requirement—the fourth characteristic examined—

we found that neither type had consistently larger quarterly amounts of 

undisbursed funding. 

Our analysis has several limitations. First, each analysis of the quarterly 

undisbursed funding by program characteristic was an independent 

assessment of the variation in undisbursed funding among expired grant 

accounts. Consequently, the results for each program characteristic 

cannot be combined into a general statement about the four 

characteristics. Second, the results are limited to the expired grant 

accounts with undisbursed grants balances listed in the PMS closeout 

report from 2003 through 2006. We were not able to compare these results 

to all closed federal grants or all closed grants in PMS due to the burden of

collecting comparable data for all closed federal grants from the eight 

other federal civilian payments systems or for all closed grants from PMS. 

Lastly, we did not interview policy experts or agency grant managers to 

explore why expired grants with different program characteristics might 

have larger undisbursed balances. 

Expired Grant Accounts 

with Largest Undisbursed 

Balances Share Program 

Characteristics 

Page 33 GAO-08-432 Grants Management
Appendix II: Federal Agencies Using PMS Appendix II: Federal Agencies Using PMS 

The following is a list of the nine federal departments, one office within 

the Executive Office of the President, the independent agency, and the 

government corporation served by the Department of Health and Human 

Services’ (HHS) Division of Payment Management, Payment Management 

System (PMS), as of August 2007: 

Department of Health and Human Services 

• Administration for Children and Families 

• Administration on Aging 

• Agency for Healthcare Research and Quality 

• Centers for Disease Control and Prevention 

• Centers for Medicare & Medicaid Services, legacy Health Care

Financing Administration

• Food and Drug Administration 

• Health Resources and Services Administration 

• Indian Health Service 

• National Institutes of Health 

• Substance Abuse and Mental Health Services Administration 

Department of Agriculture 

• Agricultural Research Service 

• Cooperative State Research, Education and Extension Service 

• Food Safety and Inspection Service 

• Forest Service 

Department of Energy 

• Schenectady Naval Reactors Office 

Department of Homeland Security 

• Customs and Border Protection, legacy Customs 

• Emergency Preparedness and Response, legacy Federal Emergency 

Management Agency 

• Immigration and Customs Enforcement 

Department of the Interior 

• National Park Service 

• U.S. Fish and Wildlife Service 

• U.S. Geological Survey 

Department of Labor 

• Bureau of Labor Statistics 

• Employment and Training Administration 

• Mine Safety and Health Administration 

• Occupational Safety and Health Administration 

Page 34 GAO-08-432 Grants Management
Appendix II: Federal Agencies Using PMS 

• Veterans’ Employment and Training Service 

Department of State 

• Bureau of Administration, Office of Overseas Schools) 

• Bureau of African Affairs 

• Bureau of Democracy, Human Rights and Labor 

• Bureau of Diplomatic Security 

• Bureau of East Asian and Pacific Affairs 

• Bureau of Economic and Business Affairs 

• Bureau of Educational and Cultural Affairs, Fulbright Commission, 

Europe 

• Bureau of Educational and Cultural Affairs, Fulbright Commission, 

Western Hemisphere 

• Bureau of Educational and Cultural Affairs, Fulbright Commission, 

East Asia 

• Bureau of Educational and Cultural Affairs, Fulbright Commission, 

Near East/South Asia 

• Bureau of Educational and Cultural Affairs, legacy U.S. Information 

Agency 

• Bureau of European and Eurasian Affairs 

• Bureau of Human Resources 

• Bureau of Intelligence and Research 

• Bureau of International Narcotics and Law Enforcement Affairs 

• Bureau of Near Eastern Affairs 

• Bureau of Nonproliferation 

• Bureau of Nonproliferation, Office of Export Control Cooperation 

• Bureau of Oceans and International Environmental Scientific Affairs 

• Bureau of Political-Military Affairs, Office of Humanitarian Demining 

Programs 

• Bureau of Population, Refugees and Migration 

• Bureau of South Asian Affairs 

• The United States Agency for International Development 

Department of the Treasury 

• Community Development Financial Institution Fund 

• Internal Revenue Service 

• Office of Financial Institutions 

Department of Veterans Affairs 

• Health Care for Homeless Veterans 

• National Cemetery Administration 

• Veterans Health Administration 

Page 35 GAO-08-432 Grants Management
Appendix II: Federal Agencies Using PMS 

Executive Office of the President 

• Office of National Drug Control Policy 

Independent federal agencies 

• National Aeronautics and Space Administration 

• Ames Research Center 

• Dryden Flight Research Center 

• Goddard Space Flight Center 

• Johnson Space Center 

• Kennedy Space Center 

• Langley Research Center

• Marshall Space Flight Center 

• Stennis Space Center 

Government corporations

• Corporation for National and Community Service 

Page 36 GAO-08-432 Grants Management
Appendix III: Comments from the Office of Appendix III: Comments from the Office of Management and Budget 

Management and Budget 

Page 37 GAO-08-432 Grants Management
Appendix III: Comments from the Office of

Management and Budget 

Page 38 GAO-08-432 Grants Management
Appendix IV: 

A

GAO Contact and Staff 

cknowledgments 

Page 39 GAO-08-432 

Appendix IV: GAO Contact and Staff 

Acknowledgments 

Stanley J. Czerwinski, (202) 512-6806 or czerwinskis@gao.gov 

In addition to the contact named above, Thomas James, Assistant 

Director; Patricia Farrell Donahue, Analyst-in-Charge; Carlos Diz; Wesley 

Dunn; Sharon Hogan; Elizabeth Hosler; Susan Mak; Anna Maria Ortiz; Neill 

Martin-Rolsky; Minette Richardson; Jay Smale; and William Trancucci 

made key contributions to this report. 

Grants Management

GAO Contact 

Acknowledgments 

(450496) 
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