GAO 

United States Government Accountability Office

Report to Congressional Requesters

GRANT MONITORING

Department of 

Education Could 

Improve Its Processes 

with Greater Focus on 

Assessing Risks, 

Acquiring Financial 

Skills, and Sharing 

Information 

November 2009 

GAO-10-57 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

November 2009

GRANT MONITORING

Department of Education Could Improve Its

Processes with Greater Focus on Assessing Risks, 

Highlights of GAO-10-57, a report to Acquiring Financial Skills, and Sharing Information 

congressional requesters 

The Department of Education 

(Education) awards about $45 

billion in grants each year to school 

districts, states, and other entities. 

In addition, the American Recovery 

and Reinvestment Act of 2009 

provided an additional $97 billion in 

grant funding. In a series of reports 

from 2002 to 2009, Education’s 

Inspector General cited a number of 

grantees for failing to comply with 

financial and programmatic 

requirements of their grant 

agreements. GAO was asked to 

determine: (1) what progress 

Education has made in 

implementing a risk-based approach 

to grant monitoring, (2) to what 

extent Education’s program offices 

have the expertise necessary to 

monitor grantees’ compliance with 

grant program requirements, and (3) 

to what extent information is shared 

and used within Education to 

ensure the effectiveness of grant 

monitoring. To do this, GAO 

reviewed agency documentation 

related to Education’s internal 

controls and interviewed senior 

Education officials and staff in 12 of 

the 34 offices that monitor grants. 

What GAO Recommends

GAO recommends Education 

improve its oversight of risk 

management, increase financial 

expertise among its grant 

monitoring staff, and develop an 

accessible mechanism to share 

information. Education generally 

agreed with our recommendations 

and provided additional 

information on its monitoring 

practices. We incorporated that 

information when appropriate. 

In October 2006, Education began to look at ways to improve the efficiency 

and effectiveness of the department’s grant management processes; in 

particular, it sought ways to more effectively monitor its grants after they 

were made. In 2007, Education created the Risk Management Service (RMS) 

to work with all components of the department to ensure that each office has 

an effective risk management strategy in place. 

Effective monitoring protocols and tools based on accepted control standards 

are key to ensuring that waste, fraud, and abuse are not overlooked and 

program funds are being spent appropriately. Such tools include identifying 

the nature and extent of grantee risks and managing those risks, having skilled 

staff to oversee grantees to ensure they are using sound financial practices 

and meeting program objectives and requirements, and using and sharing 

information about grantees throughout the organization. Our review of 

Education’s current grant monitoring processes and controls found that it: 

• Has made uneven progress in implementing a department-wide, risk-based 

approach to grant monitoring. Education has not disseminated 

department-wide guidance on grantee risk assessment, but it has planned 

some new efforts in this area. In the absence of guidance on a departmentwide risk assessment strategy, individual program offices have developed 

their own strategies for assessing and managing risk that vary in rigor. 

• Has limited financial expertise and training, hindering effective monitoring 

of grantees’ compliance with financial requirements. Education has 

monitoring tools that aid in reviewing basic financial compliance, but the 

lack of staff expertise limits the ability to probe more deeply into grantees’ 

use of funds. 

• Lacks a systematic means of sharing information on grantees and 

promising practices in grant monitoring throughout the department. 

These shortcomings can lead to weaknesses in program implementation that 

ultimately result in failure to effectively serve the students, parents, teachers, 

and administrators those programs were designed to help. 

Gaps in Grant Monitoring at Education 

Properly

assessing

risk

Having

required

skills and

resources

Sharing

information

Source: GAO analysis.

View GAO-10-57 or key components.

For more information, contact Cornelia Ashby 

at (202) 512-7215 or ashbyc@gao.gov. 
Page i GAO-10-57 

Contents 

Letter 1

Background 4 

Education Has Made Uneven Progress in Implementing a 

Department-wide, Risk-based Approach to Grant Monitoring 8 

Limitations in Financial Expertise and Training Hinder Education’s 

Ability to Effectively Monitor Grantees 11 

Limitations in Education’s Information-Sharing Systems Hinder 

Effective Grant Monitoring 15 

Conclusions 18 

Recommendations for Executive Action 19 

Agency Comments and Our Evaluation 19 

Appendix I Comparison of Grant Funding in the Department of 

Education’s Principal and Program Offices 21 

Appendix II Comments from the Department of Education 23 

Appendix III GAO Contact and Staff Acknowledgments 25 

Table 

Table 1: Twelve Program Offices Reviewed 3 

Figures 

Figure 1: Organizational Structure at the Department of Education 5 

Figure 2: The Grant Life Cycle at the Department of Education 6 

Figure 3: Opportunities for Sharing Information about Recipients 

of Multiple Education Grants 16 

Figure 4: Comparison of Grant Funding in Education Department 

Principal Offices 22 

 Grant Monitoring 
Abbreviations 

Education Department of Education 

OCFO Office of Chief Financial Officer 

OPE Office of Postsecondary Education 

OSEP Office of Special Education Programs 

Recovery Act American Recovery and Reinvestment Act of 2009 

RMS Risk Management Service 

SASA Student Achievement and School Accountability 

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Page ii GAO-10-57 Grant Monitoring
Page 1 GAO-10-57 

 

United States Government Accountability Office

Washington, DC 20548 

 

November 19, 2009 

The Honorable John P. Kline 

Ranking Member 

Committee on Education and Labor 

House of Representatives 

The Honorable Michael Castle 

Ranking Member 

Subcommittee on Early Childhood, Elementary 

 and Secondary Education 

Committee on Education and Labor 

House of Representatives 

The Honorable Howard P. “Buck” McKeon 

House of Representatives 

The Department of Education (Education) administers about 200 

programs that award grants totaling about $44 billion per year to state and 

local educational agencies, institutions of higher education, and other 

eligible entities. Currently, there are 18,650 grantees with open grant 

awards from Education. In addition, as part of the American Recovery and 

Reinvestment Act of 2009 (Recovery Act),1

 Congress dramatically 

increased Education’s grant funding by an additional $97 billion. However, 

in a series of reports between 2002 and 2009, the Department of 

Education’s Office of Inspector General identified a number of problems 

related to the management of grant funding by state and local educational 

agencies and institutions of higher education. Such findings raise 

questions about Education’s ability to monitor its grantees, particularly 

when coupled with such a large increase in funding from the Recovery 

Act. How well Education, or any agency, can oversee grantees depends on 

the management and accountability tools and controls it has in place to 

properly implement monitoring in order to prevent or detect abuses by 

grantees. Such tools and controls include identifying the nature and extent 

of risks and managing those risks, having skilled staff to implement 

oversight activities to ensure that program objectives are fulfilled, and 

using and sharing relevant information throughout the organization. If any 

of the tools or controls are weak or not in place in a grant monitoring 

1

Pub. L. No. 111-5, 123 Stat. 115 (2009). 

 Grant Monitoring 
 

process, there is heightened risk of the program not fully meeting its 

objectives. 

Because of the Office of Inspector General’s findings and other reports on 

the improper use of funds by grantees and the implications for how well 

Education monitors its grants, you asked us to review Education’s grant 

monitoring process. In meeting with your staff, we agreed to examine 

various aspects of Education’s grant monitoring. Specifically, our 

objectives were to determine: (1) What progress has Education made in 

implementing a risk-based approach to grant monitoring? (2) To what 

extent do Education’s program offices have the expertise necessary to 

monitor grantees’ compliance with grant program requirements? (3) To 

what extent is information shared and used within Education to ensure the 

effectiveness of grant monitoring? 

To answer these questions, we used information collected from current 

and past GAO engagements related to grant monitoring,2

 and held 

additional discussions with department officials to gain an understanding 

of grant monitoring at Education. We documented our understanding of 

Education’s grant monitoring process and asked department officials to 

review the document and provide comments. They confirmed that our 

understanding was consistent with their grant monitoring practices and 

procedures. We based our evaluation of Education’s grant monitoring 

process on GAO’s standards for internal control in the federal government. 

We selected 12 of the department’s 34 program offices from which to 

obtain more detailed information about their grant monitoring activities 

(see table 1). We selected these program offices because they encompass a 

wide variety of grant programs and they administer approximately 91 

percent of grant funds in the department. Nine of the 12 program offices 

reside in four of the principal offices, which collectively administer the 

department’s largest grant programs in terms of total funding. To ensure 

that we included programs from all seven of the principal offices 

administering grants to entities that provide education or educationrelated services to students, we also selected the program offices that 

administered the largest amount of grant funds in the other three principal 

 

2

See, for example, GAO, Low-Income and Minority Serving Institutions: Management 

Attention to Long-standing Concerns Needed to Improve Education’s Oversight of Grant 

Programs, GAO-09-309 (Washington, D.C.: Aug. 17, 2009) and Teacher Quality: Sustained 

Coordination among Key Federal Education Programs Could Enhance State Efforts to 

Improve Teacher Quality, GAO-09-593 (Washington, D.C.: July 6, 2009). 

Page 2 GAO-10-57 Grant Monitoring
 

offices.3 (App. I illustrates where the offices we selected are in Education’s 

principal office structure.) 

Table 1: Twelve Program Offices Reviewed 

Principal office Program office 

Total grant funds 

administered

Percentage 

of Education 

grant funds

Office of Elementary and 

Secondary Education 

Student Achievement and School Accountability $14,429,333,331 32.6%

Academic Improvement and Teacher Quality Programs 5,130,800,896 11.6

Impact Aid Programs 1,240,717,000 2.8

Office of Migrant Education 415,009,353 0.9

Office of Special Education and 

Rehabilitative Services 

Office of Special Education Programs 11,957,593,817 27.0

Rehabilitation Services Administration 3,169,591,222 7.2

Office of Vocational and Adult 

Education 

Academic and Technical Education Division 1,271,880,064 2.9

Adult Education and Literacy Division 576,494,357 1.3

Office of Postsecondary 

Education 

Higher Education Preparation and Support Service 897,209,118 2.0

Office of English Language 

Acquisition 

Continuation and Professional Grants Division 720,547,414 1.6

Office of Innovation and 

Improvement 

Parental Options and Information 400,299,834 0.9

Office of Safe and Drug-Free 

Schools 

Drug-Violence Prevention - State Programs $290,102,482 0.7

 Percentage of total Education grant funds covered by review 91.5%

Source: GAO analysis of Department of Education data 

We interviewed the directors and other supervisory staff involved in grant 

monitoring in these 12 offices and held discussions in each office with 

groups of program specialists ranging from 4 to 10 program specialists.4

 In 

offices with large numbers of program specialists, we interviewed random 

 

3

We did not include the Office of Federal Student Aid, which oversees student financial 

assistance grants, or the Institute of Education Sciences because the grant programs they 

administer generally do not give funds for providing education or education-related 

services to students. 

4

When referring to program specialists throughout the report, we are referring to program 

specialists in the 12 program offices. 

Page 3 GAO-10-57 Grant Monitoring
 

samples of program specialists.5 In smaller offices, we interviewed all the 

program specialists who were available to meet with us. From these 

interviews, we obtained information on how grant monitoring was 

implemented by program office staff, which monitoring activities staff 

considered to be reasonably effective in ensuring compliance with federal 

requirements, and where improvements in the grant monitoring process 

were needed. 

We corroborated the information from the interviews and small group 

discussions with review and analysis of plans, guidance, and protocols 

used by each program office to conduct its monitoring, as well as 

documentation concerning monitoring outcomes, interviews with officials 

from department management, and the results of outside evaluations or 

audits. 

We conducted this performance audit from November 2008 to November 

2009 in accordance with generally accepted government auditing 

standards. The standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

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

evidence obtained provides a reasonable basis for findings and 

conclusions based on our audit objectives. 

Background 

Department of Education The Department of Education’s mission is to promote student 

achievement and preparation for global competitiveness by fostering 

educational excellence and ensuring equal access. Toward this end, 

Education distributes federal grant funds to applicants throughout the 

nation to improve access to and the quality of education. Education 

supplements and complements the efforts of states, local school systems, 

the private sector, public and private nonprofit educational research 

institutions, other community-based organizations, parents, and students. 

 

5

Although we used random sampling, we requested that program specialists with only brief 

experience in the offices be excluded. In addition, in some cases offices noted that they 

had a program specialist with financial expertise and we requested that the person be 

included in the group discussion. 

Page 4 GAO-10-57 Grant Monitoring
 

Education has seven principal offices that administer grants to entities 

that provide education or education-related services to students (see fig. 

1). The principal offices focus on specific areas of education, such as 

special education, elementary and secondary education, and 

postsecondary education. Within each of these principal offices, there are 

individual program offices responsible for one or more specific grant 

programs. For example, the Office of Special Education Programs and the 

Rehabilitation Services Administration are program offices in the principal 

Office of Special Education and Rehabilitative Services. Program offices 

have directors, supervisors, and program specialists responsible for the 

everyday administration of grants in the department. Department-wide 

offices—the Risk Management Service, Office of Chief Financial Officer, 

Office of General Counsel, and Budget Service—provide technical 

assistance and guidance to the principal and program offices. 

Figure 1: Organizational Structure at the Department of Education 

Source: GAO analysis of Department of Education information; seal (DOE).

a Program Director

one or more Supervisors

multiple Program Specialists

Program

Offices are

made up

of...

Technical

assistance

and guidance

Technical

assistance

and guidance

Office of General Counsel (OGC)

Budget Service (BS)

Risk Management Service (RMS)

Office of Chief Financial Officer (OCFO)

Office of

Safe and

Drug-Free

Schools

Office of

Postsecondary

Education

Office of

Innovation and

Improvement

Office of

Elementary

and Secondary

Education

Office of

Special Education

and Rehabilitative

Services

Office of

English

Language

Acquisition

Office of

Vocational

and Adult

Education

Number

of Program

Offices

Page 5 GAO-10-57 Grant Monitoring
 

Grant Monitoring at 

Education 

Education describes its grant management processes as a “cradle-to-grave” 

strategy. As shown in figure 2, this strategy includes phases for pre-award, 

award, post-award, and close-out. Monitoring to ensure administrative, 

financial, and performance compliance occurs primarily during the postaward phase, after the grantee has successfully applied for and been 

awarded a grant from Education. 

Figure 2: The Grant Life Cycle at the Department of Education 

Source: GAO analysis of Department of Education information.

Starts when project period 

ends and continues until 

all required reports are 

submitted and there are 

no funds left in grant 

account.

Close-Out

Monitoring

Activities necessary

for selecting applications, 

awarding new grants and 

making continuation 

awards for existing 

Education grants.

Financial

Compliance

Reviewing 

drawdowns and 

expenditures to 

ensure adherence

to federal cash 

management 

regulations

Performance 

Compliance

Assessing the

extent to which 

projects meet grant 

program goals and 

objectives

Administrative

Compliance

Seeking adherence to legislative 

and regulatory requirements, 

applicable policies, as well as

terms and conditions

of the grant.

Develops partnership

with grantees in order

to administer and

monitor grant awards.

GRANT MONITORING

Pre-Award and

Award Monitoring

Post-Award 

Monitoring

In Education, grant monitoring is the responsibility of each program 

office. Each program office has the flexibility to tailor its monitoring to its 

respective grant programs. For example, program offices that oversee 

formula grants to state agencies generally conduct on-site monitoring on a 

3-to-5-year cycle but can make more frequent visits if necessary. For 

discretionary grants, site visits to the recipients are generally less frequent, 

Page 6 GAO-10-57 Grant Monitoring
 

in part because of the relatively small size of the awards and the relatively 

large number of discretionary grant awards made by the department. 

Relatively more desk-top monitoring is used in monitoring discretionary 

grants. In general, recipients of grants from Education must: 

• conform to the approved grant application and approved revisions; 

• adhere to laws, regulations, conditions of the grant, and certifications; 

• share progress on established performance measures; and 

• manage federal funds according to federal cash management 

requirements. 

Education’s grant monitoring practices and procedures require that 

program office staff undertake numerous activities to monitor grantees for 

compliance with administrative, financial, and performance regulations 

and requirements to protect against fraud, waste, and abuse of federal 

resources. These activities include on-site visits and desk reviews of 

grantees, review of annual reports submitted by grantees, and evaluation 

of grant projects with respect to performance. For example, some 

financial monitoring activities that program office staff perform include 

reviewing reports generated in the Grant Administration and Payment 

System, Education’s primary information system and tool for financial 

oversight, and available audit reports. In cases where technical assistance 

and normal monitoring do not improve grantee performance, special grant 

conditions may be imposed on the grantee such as requiring the grantee to 

obtain prior approval for certain expenditures. Findings of material 

noncompliance are reported to other offices in Education, such as the 

Office of General Counsel, while findings of potential illegal activity 

involving fraud, waste, and abuse are reported to the Office of Inspector 

General for further action. Continuous monitoring of grantees offers 

program office staff the opportunity to provide customized technical 

assistance, appropriate feedback, and follow-up to help grantees improve 

in areas of need, identify project strengths, and recognize significant 

achievements. 

Page 7 GAO-10-57 Grant Monitoring
 

Education allows individual program offices to develop their own 

procedures for assessing grantee risk. While the department has not yet 

provided department-wide guidance on grantee risk assessment, the Risk 

Management Service (RMS) is planning to introduce several new efforts 

designed to help in this area. In the absence of a department-wide strategy 

for risk assessment procedures, we found that in the program offices we 

visited, the procedures for assessing grantee risk varied in rigor, with 

some offices using a variety of indicators or data elements to measure 

relative risk, while others had no formal grantee risk assessment process 

in place. 

Education Has Made 

Uneven Progress in 

Implementing a 

Department-wide, 

Risk-based Approach 

to Grant Monitoring 

Education Has Not Yet 

Provided Department-wide 

Guidance on Risk 

Assessment but Is 

Developing New Grantee 

Risk Assessment Tools 

Federal guidance directs that management should identify internal and 

external risks that may prevent an organization from meeting its 

objectives.6

 In 2007, the department’s Grants Pilot Project Team 

recommended the establishment of a coordinated, comprehensive, and 

department-wide approach to risk-based grant monitoring for 

discretionary and formula grants. The Secretary created RMS in October 

2007 to work with all components of the department to ensure that each 

office has effective procedures in place to assess and mitigate risk among 

its grantees. Specifically, RMS is to develop tools to assess grantee risk for 

use throughout the department and train department staff to use the 

tools.7

 RMS has not yet issued department-wide guidance on assessing 

grantee risk, and key guidance, such as the updated discretionary grant 

handbook, does not provide information on how to develop a risk-based 

approach to monitoring grants. Program officials said that such guidance

would be a valuable tool for program offices in developing their own risk 

assessment procedures. RMS is currently testing software it developed 

that would assist Education staff in evaluating grantee risk. For exampl

the new software collects financial information from Dun and Bradstreet,

among other sources, and uses that information to calculate a score 

reflecting the financial stability of grantees. The software will also h

with risk assessment by providing other information from agency and

outside sources, along with relevant findings from grantee audits. 

However, RMS does not have a timetable for using this new software 

throughout th

e, 

elp 

e department. 

 

6

Office of Management and Budget Circular A-123, Management’s Responsibility for 

Internal Control, December 21, 2004. 

7

U.S. Department of Education, FY 2007 Performance and Accountability Report, 

November 15, 2007. 

Page 8 GAO-10-57 Grant Monitoring
 

RMS has worked closely with the Office of Postsecondary Education 

(OPE) to develop risk assessment procedures, and hopes to work with 

officials in the other principal offices for this purpose. RMS helped OPE 

develop an index that ranks the potential risk level of grantees based on 

such risk criteria as net operating results, status with an accrediting 

agency, enrollment trends, and ability to manage federal funds. RMS also 

provides OPE with monthly analyses of grantees’ level of financial risk. In 

the meantime, some program offices have developed risk assessment 

procedures on their own. 

Grantee Risk Assessment 

Procedures Used by 

Program Offices Vary in 

Rigor 

We observed a wide range of risk assessment procedures that varied in 

rigor among the program offices we reviewed. In discussing how program 

offices assess grantees’ financial risk, we noted there was an indicator that 

program offices routinely reviewed to assess a grantee’s financial risk: the 

rate at which a grantee draws down grant funds, known as the drawdown 

rate. Although staff we met with in all of the offices that disburse funds 

through periodic drawdowns reported checking the drawdown rate, the 

frequency varied from office to office, with some checking the rate 

monthly and others checking it quarterly. Further, the drawdown rate is 

limited as an indicator of the soundness of a grantee’s financial 

management practices because it only shows when the grantee is using 

funds and does not show what the funds are used for. 

In addition to monitoring the grantees’ drawdown rates, staff in three of 

the offices we met with OPE, Student Achievement and School 

Accountability (SASA), and Office of Special Education Programs (OSEP) 

described using more rigorous risk assessment procedures than those 

developed in the other offices we visited. As discussed above, OPE 

worked with RMS to develop new risk assessment procedures. Staff in 

SASA have recently moved to risk-based monitoring procedures; they use 

a risk assessment procedure that incorporates an extensive list of risk 

indicators and numerous sources of information to determine an 

individual grantee’s level of risk and whether grantees are meeting 

performance expectations. These indicators include program performance 

data, the grantee staff’s level of experience, the size of the grant and the 

population served, and issues raised by the Office of Inspector General. 

Once the program specialists in that office collect and analyze the 

information, they tailor monitoring and technical assistance accordingly. 

The staff routinely track major compliance or performance issues, and 

also conduct staff briefings before site visits to share information the 

office has developed about the grantee and issues that may arise, and 

afterwards, to discuss findings and possible corrective action plans. 

Page 9 GAO-10-57 Grant Monitoring
 

Specialists in OSEP reported that they categorize grantees based on such 

factors as audit findings, data indicating how well the grantee is 

accomplishing its objectives, and special conditions attached to the grant. 

Based on this information, they categorize the level of risk for the grantee 

and the level of monitoring and technical assistance the grantee requires. 

For example, a grantee that has high staff turnover or recurring problems 

in external audits, or is unable to meet its performance expectations, 

would be monitored more closely and receive more technical assistance 

than a grantee with experienced staff that is consistently meeting the 

program’s administrative, financial, and performance requirements. 

Program specialists from OPE, Parental Options and Information, and the 

Continuation and Professional Grants Division told us that their risk 

assessment process begins when they first contact grantees and provide 

expectations for reporting performance and financial information. This 

early contact gives these program specialists a sense of the level of 

experience the grantee has in managing federal grants. In developing those 

assessments, the program specialists and supervisors said they can tailor 

their monitoring to provide additional technical assistance, for example, or 

reach out more frequently than they might otherwise to grantees that 

appear likely to have compliance problems. 

While some of Education’s program offices are making progress assessing 

and managing grantee risk as discussed above, staff in three other program 

offices described significant limitations of the risk assessment process in 

place for their grant programs: 

• Program specialists in one office told us that experienced program 

specialists rely on their skills and experience to determine what to look 

for. However, without a formalized risk assessment process, they said a 

new hire might miss key issues while monitoring a grantee. They added 

that a more formal risk assessment process would be helpful. 

• The program specialists in another office said they are not able to review 

all possible risk indicators that may pertain to grantees or do more indepth risk assessments because of competing demands on their time. For 

example, one program specialist described a situation in which grant 

funds were improperly paid out to a grantee because the program 

specialist did not have time to check whether the grantee was in good 

standing. He added that the office was able to recover the funds, but he 

was concerned this could happen again and result in losses. 

Page 10 GAO-10-57 Grant Monitoring
 

• One program office director told us that the large number of grantees 

makes it impossible to conduct routine risk assessments of them all. 

Program specialists from that office told us that because of their heavy 

work load—ranging from 85 to 260 grants per specialist—they did not 

have enough time to review all the grantees identified as being at risk. 

Directors and supervisors in the program offices we visited noted that 

while their staff generally have the expertise needed to perform their 

monitoring duties, limited financial expertise and training hinder effective 

monitoring of grantees’ compliance with financial requirements. In many 

of the program offices we visited, program specialists monitor grantees for 

compliance with administrative, financial, and performance requirements. 

In most program offices, staff we spoke with—including directors, 

supervisors, and specialists—said that the program specialists have 

limited financial knowledge and lack the skills needed for conducting 

financial reviews and ensuring grantees’ financial compliance. While 

monitoring protocols aid in reviewing compliance with basic financial 

requirements, the ability to verify or evaluate what grantees report about 

their use of funds is limited by a lack of expertise. For example, using 

findings from consolidated audit reports on grantees’ financial statements 

is an activity that aids in identifying monitoring issues, but staff in some 

program offices have difficulty accessing these reports or are not able to 

determine how to use the report findings to identify areas that need closer 

monitoring. Some program office staff said that training on performing 

financial reviews is needed to help fill the gap in this skill area. Education 

has identified the need for more financial review capability in its grant 

program staff through a skills assessment inventory it has conducted for 

the last several years. However, Education has not fully developed a 

strategy to enhance the financial review capacity of its grant program staff. 

Limitations in 

Financial Expertise 

and Training Hinder 

Education’s Ability to 

Effectively Monitor 

Grantees 

Lack of Financial 

Expertise Limits the Depth 

of Grantee Monitoring, 

Hindering Its Effectiveness 

According to federal control standards, as part of their management 

responsibilities, agencies should have standards or criteria for hiring 

qualified people. Program office directors and supervisors told us their 

staffs generally have the background and expertise needed to monitor 

grantees, but directors, supervisors, and staff in eight of the program 

offices we reviewed said their program specialists generally did not have a 

sufficient level of financial knowledge or skills needed to review grantee 

compliance in that area. Several noted that some of their program 

specialists previously worked in state or local education systems or have 

strong backgrounds in education programs, and that they seek individuals 

with these backgrounds or experience specific to their programs. 

Page 11 GAO-10-57 Grant Monitoring
 

However, program specialists from three of the groups we met with—that 

administer about 47 percent of Education’s total grant funding—told us 

specifically that they, as a group, did not possess the needed knowledge or 

skills for reviewing grantee financial compliance and that this hindered 

their offices’ ability to adequately monitor grantees. The director in one of 

those offices also expressed doubt that, in general, his staff have the 

ability to conduct more in-depth financial reviews of grantees beyond 

reviewing drawdown activity reports. 

Program offices took different steps to try to ensure proper financial 

reviews. Five of the 12 offices we reviewed addressed their need for 

financial expertise by designating staff to perform financial compliance 

reviews. However, the directors or supervisors from three of these offices 

said that more of their program specialist staff will need to be trained in 

financial monitoring as their office’s workload increases and as individuals 

with fiscal expertise retire. 

Program office staff can work with the department-wide offices that 

provide technical assistance and guidance (see fig. 1) on financial 

compliance issues. Six offices obtained assistance in conducting financial 

monitoring from other offices such as RMS and the Office of Chief 

Financial Officer (OCFO). However, these arrangements sometimes had 

limits. One program office found OCFO’s ability to assist was limited by 

their lack of program knowledge. RMS is responsible for providing 

principal and program offices with advice and assistance on issues 

concerning grant administration, but officials in RMS told us their offers of 

assistance to program offices are often met with skepticism or resistance. 

The director of RMS also has concluded that he would need additional 

staff to provide support to the program offices, including development of 

financial monitoring standards and training. 

In addition to designating staff to perform financial compliance reviews or 

obtaining assistance in conducting financial monitoring from other 

Education offices, four of the offices retained contractors to assist with 

monitoring activities, including participating in site visits. However, staff 

in two of these offices found that the contractor personnel also lacked 

sufficient knowledge and skills to conduct financial compliance 

monitoring. Another office terminated its contract because the contractor 

was not meeting the office’s standards for preparing site visit reports. 

Some of these program offices that used contractors did so to complement 

their own staffs with additional resources in order to meet their 

monitoring needs. One director told us he used contractors because more 

money was available for contractors than for hiring or training staff. 

Page 12 GAO-10-57 Grant Monitoring
 

Education has not assessed the effectiveness of using contractors to 

conduct fiscal monitoring. An official in the Office of the Secretary told us 

he was not aware of any attempts at such an analysis. 

Most of the program offices we reviewed use written tools or protocols 

that typically give instruction for monitoring compliance, including 

compliance with financial requirements, but these protocols generally do 

not provide instruction or guidance on verifying or evaluating information 

obtained during the review. The group of program specialists we met with 

in one office told us they usually have to rely on grantees’ self-reporting 

about their use of funds. These specialists said they do not have the 

background or skills needed to corroborate what the grantees are 

reporting, and the office’s protocols we reviewed do not provide further 

guidance or instruction on corroborating or evaluating information 

obtained. The director in this office also acknowledged his staff’s lack of 

financial skills and said he would like to see the department develop some 

better tools for assuring that grantees are complying with financial 

requirements and using their funds consistently with their plans. 

Education Has Not Fully 

Developed a Strategy to 

Enhance the Financial 

Review Capacity of Its 

Monitoring Staff 

While Education has begun an effort to inventory the skills of its grant 

monitoring staff, it has not yet developed a training program or other 

strategy to fill gaps in their financial monitoring capacity. Some program 

office staff noted that training specifically in financial monitoring is 

needed and would help improve skills. Also, the Grants Pilot Project Team 

concluded that initial training efforts in financial monitoring had not yet 

yielded long-term and sustained improvements or a critical mass of better 

trained staff. To identify where financial monitoring training is needed, the 

department has been conducting an inventory of the skills of its program 

specialist staff for the last several years.8

 Supervisory staff in the program 

offices are asked to identify the skills needs of each person reporting to 

them, including financial compliance knowledge. The results of the 

inventory are to be used to design training in financial compliance and 

determine how much training is needed in each office. Supervisors are 

encouraged to meet with their staff, discuss the skills needs, and inform 

those individuals about available training. However, under this program, 

financial management or analysis skills are not competencies on which all 

 

8

For purposes of describing staff covered under this skills inventory, we are including three 

job classifications among program specialist staff: program specialists, education research 

analysts, and management program analysts. 

Page 13 GAO-10-57 Grant Monitoring
 

program specialist staff are assessed. Only about 10 percent of staff with 

grant administration responsibilities are assessed on a financial skills 

competency. Based on the most recent year for which inventory results 

are available, 25 of the individuals assessed on financial skills were 

identified as needing training on financial compliance. 

Financial monitoring is currently available as a module in classes on grant 

monitoring, but the course material is limited to use of the Grant 

Administration and Payment System and grantees’ use of tools such as 

fund carryovers and budget transfers. In addition, there are two courses 

on understanding the role of audits in grantee compliance, but they have 

been offered only once in 2007 and once in 2008 with an enrollment limit 

of 30. Similarly, Education also offers a course on basic accounting theory 

and principles for any department staff without prior accounting training. 

One of its goals is to provide knowledge for monitoring use of funds by 

grantees. The course most recently has been offered three times in 2009, 

and department officials estimate about 23 program office staff with grant 

monitoring responsibilities have successfully completed or are currently 

taking it. 

Education is planning to make changes in the financial compliance 

components of its grant administration training, but these efforts are just 

beginning and management has not committed to a time frame for full 

implementation. RMS is developing a class on grants management that will 

focus on financial and administrative requirements and compliance. 

Preliminary materials we reviewed indicate it will cover such topics as 

grantee cash management and payment systems, cost principles for 

grantees, and financial reporting. Two program offices have expressed 

interest in registering their staffs to take this class when it becomes 

available. RMS is also planning to develop a curriculum for newly hired 

grant administration staff that would be offered through “just-in-time” 

modules, one of which would focus on financial compliance. According to 

the RMS official responsible for developing these courses, though, the 

development is being delayed while he implements similar courses for 

grantees and their subrecipients. He also noted that his own instructor 

staff have limited financial knowledge, which could impose a constraint on 

the success of the new training. 

Page 14 GAO-10-57 Grant Monitoring
 

Education staff responsible for grant monitoring generally do not have 

access to relevant information on how well grantees comply with the 

requirements of other Education grants and whether their performance 

with respect to those grants meets expectations. Because many grantees 

receive multiple grants from Education in a given year, program specialists 

said this type of information sharing could help program specialists carry 

out their grant monitoring responsibilities more effectively (see fig. 3). 

Additionally, the program offices responsible for grant monitoring lack a 

systematic means to share information on promising practices for 

conducting grant monitoring. Program office managers and staff said it 

would be helpful to have information on ways to improve or enhance 

current monitoring practices. 

Limitations in 

Education’s 

Information-Sharing 

Systems Hinder 

Effective Grant 

Monitoring 

Page 15 GAO-10-57 Grant Monitoring
 

Figure 3: Opportunities for Sharing Information about Recipients of Multiple 

Education Grants 

Source: GAO analysis of Department of Education grant programs.

Opportunities for sharing information

AITQ

Program

Specialist

OELA

Program

Specialist

POI

Program

Specialist

SASA

Program

Specialist

t S

PIRC

Grant

Title I,

Part A

Grant

LSL

Grant

FLAP

Grant

Information

exchanged

Information

exchanged

Information

exchanged

Information

exchanged

Note: Foreign Language Assistance Program (FLAP) grants are monitored by the Continuation and 

Professional Grants Division program office in the Office of English Language Acquisition (OELA). 

Parental Information and Resources Centers (PIRC) grants are monitored by the Parental Options 

and Information (POI) program office in the Office of Innovation and Improvement. Improving Basic 

Programs (Title I, Part A) and Improving Literacy through School Libraries (LSL) grants are monitored 

by the Student Achievement and School Accountability (SASA) and Academic Improvement and 

Teacher Quality (AITQ) program offices respectively, in the Office of Elementary and Secondary 

Education. 

Program office management and staff identified challenges in accessing 

information relevant to grant monitoring. Program management and 

specialists acknowledged that while it might be useful to share 

information with other principal or program offices, there is no formal 

mechanism to do so. One program office director, for example, said such 

exchanges might provide other program offices information about 

Page 16 GAO-10-57 Grant Monitoring
 

systemic management or personnel problems state grantees are 

experiencing, since these types of problems could affect a wide variety of 

the department’s grant programs. A supervisor in another office observed 

that if his staff find questionable issues with a grantee, they do not have

systematic method of reporting it to other pr

 a 

ogram or principal offices 

that may also be funding that same grantee. 

e 

ere is 

no formal process within the program office to share information. 

le to 

m 

 a 

ent 

wever, they have to notify each other of what is 

available on the drive. 

olves 

Moreover, program staff within the same office said they do not always 

have access to information about a grantee’s performance. In one of our 

discussion groups with program specialists, one participant was aware a 

grantee was having performance issues but another participant who also 

monitors the same grantee under a different grant was unaware of thes

performance issues. Had he known about these issues, he would have 

intensified his monitoring of that grantee. The program specialists in this 

office said they do not know who works with which grantees and th

Managers in several program offices said they have databases or other 

repositories housing grant monitoring information including findings and 

past program performance, but these databases are not available to staff 

outside their program office. In those offices, information is available for 

internal program office use but is not typically shared with or accessib

monitoring staff in other program offices. For example, one principal 

office has a database of monitoring findings and recommendations fro

the last 6 years, but we were told it was for use only in that principal 

office. Program office management and staff noted that Education has

shared computer drive where program offices may store current and 

historical information on grantees’ performance in folders, but access to 

their information on the drive is typically restricted to their own staff. The

shared drive was never intended for sharing information among differ

principal offices. Staff in one program office would need to be given 

access to browse files saved in another program office’s folder on the 

shared drive. However, even with access to the folders on the shared 

drive, the information may not be easily searchable according to some 

program staff. One program officer explained to us that in his office, he

and his colleagues can use this drive as a repository for all documents 

related to their work. Ho

One notable exception to the limitations in information sharing inv

the department-wide team headed by RMS that is responsible for 

coordinating the monitoring of designated high-risk grantees. The 

designation is assigned when the results of audits or other monitoring 

Page 17 GAO-10-57 Grant Monitoring
 

activities show the grantee has significant deficiencies and is not meeting 

program, financial, or administrative requirements. Currently there ar

grantees with this designation. This team meets weekly and includes 

representatives from the program offices, OCFO, and other departmentwide offices. At these meetings, the team shares information about the 

high-risk grantees, monitoring issues involving those grantees, progres

made in addressing corrective action plans, and other issues that may 

arise. As noted previously, RMS is nearing completion of an information

sharing tool for the department that would provide program specia

with relevant information related to all grantees department-wide. 

However, RMS does not h

e 17 

s 

-

lists 

ave a targeted implementation date for the 

information-sharing tool. 

e 

taff 

While 

on 

 to all offices and a good way to 

improve grant monitoring practices. 

sions in 

d 

er, 

n the planning stages and do not have an 

implementation timeline. 

onitoring 

Conclusions 

In addition to the limited accessibility of information on grantees, w

found there is limited information on promising practices in grant

monitoring. In 2007, the department’s Grants Pilot Project Team 

recommended disseminating promising practices for grant monitoring to 

all program offices. However, the program office directors and other s

we interviewed were generally not aware of a formal mechanism for 

sharing promising practices and desired a more formal approach. 

management staff in some offices said they share information on 

promising practices through informal contacts and networks, managers in

four of the offices we visited said that a means to share such informati

more systematically would be helpful

Since it created RMS in October 2007, Education has made progress in

developing a risk-based approach to monitoring its more than 18,000 

grantees. While allowing individual program offices to develop their own 

procedures might make sense given the range of programs and mis

the various offices, not all of the program offices have developed 

procedures for assessing grantee risk. RMS is developing training, 

software, and technical assistance that the program offices can use to ai

in the development of their own risk assessment procedures; howev

many of these efforts are i

The shortcomings we have identified in Education’s risk assessment 

practices provide challenges for the department in targeting its m

efforts to the grantees most likely to have compliance problems, 

identifying potential misuse or waste of grant funds that could deprive

other areas of needed scarce resources, and improving its monitoring 

Page 18 GAO-10-57 Grant Monitoring
 

processes through a wider exchange of information about grantees. Wit

regard to reviewing grantee financial compliance, the lack of financial 

expertise among program specialists and training opportunities prevents 

staff from routinely conducting more thorough reviews and probing more 

deeply into grantee financial information, risking failure to identify misuse 

or waste of grant funds. Without more widespread sharing of information

Education cannot ensure that problems with a grantee identified by one 

office become known to other offices supporting the same grantee, or 

promising practices that can improve t

h 

, 

he effectiveness of the monitoring 

process are adopted on a wider scale. 

aff 

mend that the Secretary of Education take 

the following three actions: 

rts to 

nd work with the program offices to ensure these tools 

are implemented. 

d 

ed staff or contractors to 

conduct grantee financial reviews. 

ll 

ffectively and efficiently perform all of their 

duties and responsibilities. 

to 

rt 

 for In order to better target grant monitoring and ensure that monitoring st

have the knowledge and information that would help them focus their 

monitoring efforts, we recom

Recommendations

Executive Action 

• Develop department-wide guidance on risk assessment, continue effo

develop new grantee risk assessment tools that can be implemented 

department-wide, a

• Implement a strategy to ensure each program office has staff with 

sufficient financial monitoring expertise to conduct or assist other 

program specialists in conducting financial compliance reviews. This 

could include proceeding with plans for enhanced financial training an

also assessing options such as using dedicat

• Develop an easily accessible mechanism for sharing information across a

offices about grantees’ past and present performance, and an accessible

forum for sharing promising practices in grant monitoring to ensure all 

program offices are able to e

We provided a draft of this report to the Secretary of Education. 

Education’s comments are presented in appendix II. Education generally

agreed with our recommendations and said it is taking various steps 

address them. However, Education believed the draft report should 

provide a more complete and accurate picture of its overall monitoring 

efforts and provided technical comments to provide a more complete and

accurate analysis of its monitoring practices. We believe our draft repo

rant Monitoring

Agency Comments 

and Our Evaluation 

Page 19 GAO-10-57 G
 

provided an accurate portrayal of Education’s monitoring

presented appropriate evidence for our conclusions and 

recommendations. We reviewed Educa

 efforts and 

tion’s technical comments and 

incorporated them when appropriate. 

t page 

of this report. Other major contributors to this report are listed in 

appendix III. 

We are sending copies of this report to appropriate congressional 

committees, the Secretary of Education, and other interested parties. In

addition, the report will be available at no charge on GAO’s Web site at 

http://www.gao.gov. Please contact me at (202) 512-7215 if you or your 

staff have any questions about this report. Contact points for our offices of

Congressional Relations and Public Affairs may be found on the las

Cornelia M. Ashby 

, Workforce, 

ssues 

Director 

Education

 and Income Security I

Page 20 GAO-10-57 Grant Monitoring
Appendix I: Comparison of Grant Funding in 

the Department of Education’s Principal and Appendix I: Comparison of Grant Funding in Program Offices 

the Department of Education’s Principal and 

Program Offices 

Each pie chart in figure 4 represents a principal office in Education that 

awards grants to state and local educational agencies, institutions of 

higher education, and other eligible entities. The chart for each office is 

sized according to its share of the total amount of Education’s grant 

funding in that office based on fiscal year 2008 appropriations. The 

program offices we included in our review, and their percentage of 

principal office grant funds, are shown by the labeled slices. The unlabeled 

slices represent the program offices that were not included in our review. 

Page 21 GAO-10-57 Grant Monitoring 
Appendix I: Comparison of Grant Funding in 

the Department of Education’s Principal and 

Program Offices 

Figure 4: Comparison of Grant Funding in Education Department Principal Offices 

Source: GAO analysis of Department of Education data.

OIE

$280 mil.

Parental Options and

Information

OII

$848 mil.

OELA

$721 mil.

OVAE

$1.9 bil.

100%

47%

Continuation and

Professional Grants

31%

Academic and 

Technical Education

69%

Adult Education

and Literacy

OSDFS

$684 mil.

Drug-Violence

Prevention-State

Programs

OPE

$2.8 bil.

32% Higher Education

Preparation and 

Support Service

42%

OSERS

$15.2 bil.

78%

21%

OESE

$21.8 bil.

66%

23%

Impact Aid Programs

2%

Migrant Education

Program Offices not reviewed by GAO

Program Offices reviewed by GAO

6%

Academic Improvement and 

Teacher Quality Programs

Student Achievement

and School Accountability

Rehabilitation Services

Administration

Office of Special

Education Program

Notes: OESE = Office of Elementary and Secondary Education; OPE = Office of Postsecondary 

Education; OSDFS = Office of Safe and Drug-Free Schools; OSERS = Office of Special Education and 

Rehabilitative Services; OII = Office of Innovation and Improvement; OELA = Office of English Language 

Acquisition;IES = Institute of Education Sciences; OVAE = Office of Vocational and Adult Education.

Page 22 GAO-10-57 Grant Monitoring
Appendix II: Comments from the Department Appendix II: Comments from the Department of Education 

of Education 

Page 23 GAO-10-57 Grant Monitoring 
Appendix II: Comments from the Department 

of Education 

Page 24 GAO-10-57 Grant Monitoring
Appendix III: GAO

A

 Contact and Staff 

cknowledgments 

Page 25 GAO-10-57 

Appendix III: GAO Contact and Staff 

Acknowledgments 

Cornelia M. Ashby, (202)512-7215, or ashbyc@gao.gov

In addition to the individual named above, other GAO staff who made key 

contributions to this report are Bill Keller, Assistant Director; Joel Marus, 

Analyst-in-Charge; Travis Hill; Jill Yost; Charles Willson; Kate Van Gelder; 

Luann Moy; Walter Vance; Jim Rebbe; and James Bennett. 

 Grant Monitoring 

GAO Contact 

Staff 

Acknowledgments 

(130897) 
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