International Exchange Programs: Open World Achieves Broad Participation; Enhanced Planning and Accountability Could Strengthen Program
Published: 2004-03-17T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Congress created the Russian Leadership Program in 1999 as a pilot project to promote mutual understanding by exposing emerging Russian leaders to the American economic system and democratic institutions. In 2003, Congress renamed the program the Open World Leadership Center, expanded its scope, and extended eligibility to a number of other countries. Because Open World had not been independently evaluated, GAO was asked to review (1) the program's progress toward achieving its overall purpose and (2) whether it has appropriate financial management and accountability mechanisms in place.
section_title: What GAO Found
paragraphs: Open World has exposed a large, broad, and diverse group of Russians to U.S. economic and political systems. As of December 2003, the program brought about 6,800 men and women from Russia's seven geographic regions to more than 1,200 U.S. communities. Our analysis found that most delegates generally hold highly favorable views of their experience in the program. Many found ways to adapt what they learned to the Russian environment. Also, embassy officials said Open World complemented U.S. mission activities. However, because the program does not have formalized strategic and performance plans with measurable indicators, it is difficult to determine the extent to which it is targeting and reaching the right people and giving them experiences that result in improved mutual understanding. While Open World does survey delegates about their experiences, it has not yet conducted a full program evaluation to determine progress toward its long-term goals. Open World officials agree that such an evaluation is necessary and hope to conduct one in the near future. Open World does not have the formalized financial management and accountability mechanisms that would provide Congress and other decision makers with timely and reliable information about its cost and performance. Now that Open World has permanent status and is expanding its scope, it is appropriate for the program to turn its attention to enhancing these mechanisms. Its procedures for reviewing program transactions and analyzing financial reports have neither been evaluated for their adequacy nor formalized in writing; and it does not prepare financial statements that can be subject to an independent audit. In addition, Open World does not have an audit or financial management advisory committee to advise the Board of Trustees on financial management, accountability, and internal control issues. Finally, Open World is not disclosing the value of services contributed by U.S. volunteers who support the program--information that generally accepted accounting principles encourage entities to disclose, if practicable.

section_title: Letter
paragraphs: Congress created the Russian Leadership Program as a pilot project within  the Library of Congress in 1999 and, about 2 years later, established it as an  independent entity on a permanent basis.  The program’s founders  envisioned it as a way to promote mutual understanding between the  United States and Russia to positively influence Russia’s development  following the collapse of the former Soviet Union. The program aimed to  expose emerging political leaders at all levels of government to the  American economic system and democratic institutions through visits to  communities across the United States, allowing participants to see how  Americans from all walks of life conduct their business and professions  and their private, social, and cultural lives.  The idea was to develop a cadre  of people committed to democratic and free market principles by reaching  out to emerging leaders, similar to the way that young German leaders  were targeted by the Marshall Plan after World War II.  In 2003, Congress  changed the program’s name to the Open World Leadership Center,  expanded its scope to a cultural leaders program for Russia, and extended  eligibility to the remaining 11 countries of the Newly Independent States  and 3 in the Baltic states.  Congress has appropriated about $64.4 million  for the program since it was created.
In light of this expansion and because the Open World Leadership Center  has not been independently evaluated since its inception, you asked GAO  to review (1) what progress Open World has made toward achieving its  overall purpose, and (2) whether the program has appropriate financial  management and accountability mechanisms in place.  Also, we are  providing information for illustrative purposes on the statutory authority  and governing structures of several entities that, like Open World, are  independent but unlike Open World, are funded through the executive  branch (see app. IV).
To address our objectives, we reviewed Open World’s organizational  structure, operational policies and procedures, program documentation,  and legislative history. We also observed selected program activities,  including the vetting process and a predeparture orientation in Moscow, as  well as program orientation and other events in Washington, D.C.  In  addition, we analyzed the results of program surveys that participants  completed from 2000 to 2003 and supplemented this analysis with  interviews of 56 program alumni during fieldwork in Moscow, St.  Petersburg, Petrozavodsk, and Samara, Russia. We assessed program and  survey data that we obtained from Open World for accuracy, and we  determined that the data were sufficiently reliable for the purposes of our  study.  We also met with Open World’s Chairman of the Board of Trustees,  Executive Director, and other staff and management; State Department  officials; major contractors, including the American Councils for  International Education; and representatives of national host  organizations.  In Russia and Ukraine, we met with the U.S. ambassadors,  U.S. embassy officials, contractors, and representatives of nominating  organizations. With regard to Open World’s financial management and  accountability mechanisms, we discussed the program’s related processes  with Open World officials and reviewed supporting documentation to gain  an understanding of the operation of these processes.  We did not conduct  an audit of Open World’s financial reports or individual transactions.  (For a  detailed discussion of our scope and methodology, see app. I.)
subsections: section_title: Background
paragraphs: While Congress originally envisioned Open World as a vehicle to bring  Russia’s emerging political leaders to the United States, Open World has  recently been authorized to expand the scope of its program.   As shown in  fig. 1, Open World has launched pilot programs in Lithuania, Ukraine, and  Uzbekistan, with the first groups of about 50 participants from each  country visiting the United States between December 2003 and February  2004.  While Congress also made 11 other countries in the Newly  Independent States and Baltic states eligible for funding, as of February  2004, there were no plans to extend the program to these countries.
Open World is governed by a Board of Trustees and works with numerous  partners to carry out the program.  U.S. embassies play a key role by  nominating individuals for the program, vetting applicants for final  selection, and processing visas for participants.  In addition, Open World  has contracts with several organizations, such as the American Councils  for International Education, which provides logistical support, and Project  Harmony, which coordinates alumni activities, along with a network of  26 Open World alumni coordinators throughout Russia.  Grants are  awarded to U.S. national host organizations that, in conjunction with local  partners, develop programs for participants and arrange home stays.  (See  app. II for a list of national host organizations in 2003.)  The following chart  illustrates Open World’s program operations and activities, as well as the  entities involved in carrying out the program.
subsections: section_title: Funding and Support
paragraphs: Congress appropriates an annual amount for Open World, which has  ranged from $8 million in fiscal year 2002 to $13.5 million in fiscal year  2004.  In addition, Open World is authorized to seek and accept private  donations and reports that it has received current gifts and pledges of  about $2 million.  Figure 3 shows the program’s total expenditures  (unaudited) for fiscal years 1999-2003 and expenditures by major category  during the same period.  Based on data for the program’s expenditures and  the number of participants for 2003 provided by Open World, we estimated  the average cost per participant, including facilitators, to be about $6,200.
When the program was established as an independent entity in December  2000, Congress provided the program with additional authority and  support, including the authority to receive donations and appoint an  executive director and to establish a trust fund in the Department of the  Treasury to be credited with appropriations and donations approved by the  program.  In addition, Congress authorized the Library of Congress to  provide the program with support services, including the ability to disburse  appropriated funds; pay the program’s personnel; and provide  administrative, legal, financial management, and other services.  The  Library was also authorized to collect the full costs of the services from the  program’s trust fund.  To formalize this arrangement, the Library and Open  World entered into an interagency agreement.  In addition to providing for  support services, the agreement enables Open World to use Library  personnel to conduct the program and the Library to recover the related  salary and benefit costs of such personnel.  According to Open World  officials, the Library currently has 14 established positions assigned to  assist the center in conducting its program.
As provided for in the interagency agreement, the Library of Congress  provides financial management services to the Open World Leadership  Center.  Open World officials review and approve financial management  documents before submitting them to the Library of Congress for  processing.  Much of Open World’s in-house financial management  activities are performed by a financial management consultant who makes  recommendations to both the Executive Director and the Program  Administrator regarding approval of program disbursements.
section_title: Types of Exchanges
paragraphs: In an effort to reach emerging leaders in various sectors, the program for  Russia focuses on three types of exchanges—parliamentary, civic, and  cultural.  Parliamentary visits match members of Russia’s two houses of  parliament—the Duma (the lower house) and the Federation Council (the  upper house)—with host U.S. senators, representatives, and governors.  The civic program in 2003 featured eight themes: economic development,  education reform, environment, federalism, health, rule of law, women as leaders, and youth issues (see fig. 4).  It targets, among others,  government officials and civic leaders at all levels, with an emphasis on  regional and local levels, and other community leaders. The new cultural  program for Russia is designed specifically for cultural leaders, including  museum professionals, visual and performing artists and administrators,  and librarians.
The typical exchange program runs for 10 days, including a 2-day  orientation program upon arrival in the United States.  Delegations usually  consist of five people—four delegates and one paid facilitator who acts as a  “bridge” between the Russian delegates and their American hosts.  Most  participants stay in private homes of American host volunteers for some or  most of their local visit—a special feature of the program.  In addition,  unlike some other U.S. exchange programs, English is not a requirement  for the Open World program.  As a result, Open World has been able to  send participants from each region of Russia to the United States—most  for the first time.
section_title: Program Has Reached a Large, Diverse Audience, but Measuring Improvements in Mutual Understanding Is Difficult
paragraphs: As of December 2003, Open World reported bringing 6,800 Russian  delegates from seven geographic regions to visit over 1,200 communities in  all U.S. states.  The percentage of delegates from each region is roughly  comparable to the proportion of the Russian population that each region  represents.  Figure 5 illustrates the representation of delegates, in terms of  the number and percentage, from each region in Russia and the number of  delegates that traveled to each state within the United States between 1999  and 2003.
Fifty-eight percent of the delegates in 2003 were women. The average age  of Open World delegates in 2003 was 39 years.  As shown in figure 6, 77  percent of the delegates in 2003 were 45 years of age or younger.
Delegates come from a wide variety of academic and professional  backgrounds.  Ninety-four percent of 2003 delegates reported having  completed higher education, 12 percent had the equivalent of a master’s  degree, and 1 percent had the equivalent of a doctorate.  Their degrees span  a wide spectrum, ranging from the fields of law and medicine to agriculture  and journalism.  Fifty-eight percent of the delegates reported that they had  authored publications.  Professions varied from Duma members and judges  to leaders of nongovernmental organizations.  Twenty percent of the  delegates reported they were elected officials.  Open World records as of  February 2004 showed that 140 members of the Duma and 20 members of  the Federation Council—representing about 31 percent and 11 percent of  the current Duma and Federation Council, respectively—have traveled to  the United States through Open World.  Also, 577 Russian judges have  participated in the program.  In addition, Open World officials noted that  Russia’s diverse ethnic groups were substantially represented among  program participants.
subsections: section_title: Stakeholders Generally Cite Positive Impacts of Program
paragraphs: Based on our analysis of responses to participant surveys conducted by  Open World, as well as our interviews with Open World alumni in Russia,  delegates generally hold highly favorable views of their experience in the  program.  Almost all of the delegates reported that the program was useful  and had partially or completely met their expectations.  They also reported  a greater willingness to cooperate with Americans as a result of the  exchange.  While overall comments were positive, some delegates cited not  having enough time to establish business contacts.
subsections: section_title: Delegates Give Open World High Marks Overall
paragraphs: Our analysis of Open World questionnaires that surveyed delegates for their  experiences in and immediate reactions to the program, and our own  interviews of past delegates, showed that Open World program alumni hold  highly favorable views of their exchange experience.  Almost all of them  reported the program was either probably or definitely useful to them.
Many alumni with whom we met offered concrete examples of actions they  had taken to implement what they learned from their U.S. visits in the  context of the Russian environment. For example, several members of the  Russian Ministry of Internal Affairs in Moscow used information they  gained from their visits with State Department officials and  nongovernmental organizations to draft legislation prohibiting the  trafficking of women.  The Chairman of the Judicial Council in Moscow and  several judges at the Supreme Court in Petrozavodsk told us that they  established court management structures modeled after U.S. courts and  developed a judicial code of ethics in consultation with American judges.  Librarians in Petrozavodsk told us that, after returning from the United  States, they helped to establish a library association in the Republic of  Karelia that is similar to the Russian Library Association, a counterpart to  the American Library Association. Another alumnus joined the Rotary Club  in Moscow after his Open World experience and was recently elected the  president of his chapter.  One woman said that upon learning about fund- raising efforts and philanthropy of private organizations in the United  States, she began soliciting donations for her nongovernmental  organization from private businesses in Russia.
In addition, almost all alumni said that since the exchange, they had  contacted other Open World alumni in other regions within Russia. Many of  them had been invited to and had attended alumni conferences or other  alumni events such as computer training seminars and professional  development workshops.  In addition, over half the alumni we interviewed  had used the Internet to view Open World’s Web site or keep in touch with  contacts made during their exchange experience.  The American Corners  facilities that we visited in Petrozavodsk and Samara, whose directors had  participated in Open World, have become a hub for alumni who use the  facilities’ computers for Internet access and other services.
The majority of the alumni we interviewed said that their views of the  United States changed in some way after the exchange.  For example, one  alumnus said she was unable to accurately visualize the United States  before participating in the program and had developed the impression from  Cold War propaganda that Americans had few opportunities and little hope  for the future.  Some alumni expected Americans to be hostile and were  surprised by their friendliness.
Open World surveys showed that, for the most part, delegates reported that  the program improved their understanding of American institutions to  some degree.  For example, in 2003, a large amount of delegates (74  percent) believed that their visit improved their understanding of ethnic  and cultural diversity in the United States, as well as their understanding of  democracy (74 percent), role of Congress (68 percent), higher education  system (70 percent), legal system (67 percent), freedom of speech (62  percent), market economy (50 percent), and role of religious organizations  (52 percent).  For example, among the past delegates we interviewed, one  was impressed with the religious diversity in America when he observed  Amish communities in Pennsylvania.   Another delegate was impressed by  the large Russian immigrant population in Brighton Beach, New York.   Many delegates were surprised by how open and transparent American  government institutions are to the citizenry, citing, for example, the  openness of and public access to city council meetings, congressional  sessions, courtrooms, and public hearings.
According to Open World’s 2003 surveys, 89 percent of delegates reported  they probably or definitely expect a positive long-term impact as a result of  their visit to the United States.  For example, 88 percent of delegates  reported that, as a result of the exchange, their readiness to cooperate with  American leaders had risen.  Eighty-six percent also reported that their trip  improved relations between Russian and U.S. citizens.  Fifty-four percent  indicated that they extended an invitation to their American counterparts  to visit them in Russia during the next year.  Seventy-six percent said they  plan to stay in contact with persons they meet in the United States.
section_title: Some Disappointment about Contacts
paragraphs: While overall comments in Open World’s surveys were positive, some  delegates cited areas that could be improved.  For example, 34 percent of  delegates in 2003 indicated they had not had sufficient time to establish  individual business contacts with their professional counterparts.  In  addition, 34 percent indicated they had not had sufficient time for  individual consultations on professional issues.  Although the majority of  the alumni we interviewed said they were satisfied with the contacts they  made during the program, a few of them wished they had met with higher- level officials.  For example, a deputy chief at the Moscow State Duma  reported Open World does not facilitate enough contacts with high-level  decision makers.  Another said that because he did not meet with his  American counterparts, he had the impression they did not have an interest  in meeting Russians.  Others said the program was simply too short to meet  with everyone they had hoped.   Nonetheless, Open World’s surveys  indicated that 56 percent of alumni felt that a 2-week program would be  optimal.  Open World officials said they considered 10 days as a reasonable  amount of time to expect participants to be away from their jobs.
section_title: Open World Seen as Valuable Tool to Enhance, Complement U.S. Mission Activities
paragraphs: Ambassadors and embassy officials with whom we met noted that Open  World complements U.S. mission activities and enhances outreach  efforts—citing, in particular, the program’s alumni as a valuable resource.   Although the U.S. mission offers several State Department-administered  exchange programs, none of these individual programs brings Russians to  the United States on the same scale as Open World, particularly from the  remote regions of the country.  (See app. III for a list of selected State  exchange programs.)  According to U.S. mission officials in Russia,  including those at the consulate in St. Petersburg, it is at locations outside  of the major cities that Open World has an advantage and can best target  potential delegates for the program who have not yet traveled to the United  States on other U.S. exchange programs.  In fact, when visiting various  regions within the country, embassy officials find it especially useful to  meet with Open World alumni, many of whom are in leadership positions.   For example, while visiting Volgograd, the U.S. ambassador met with Open  World alumni who shared some examples of direct results of their  exchange experiences.  One alumnus started several youth programs in his  district, while another started public information programs on healthy  lifestyles directed at Volgograd youth.
In addition to enhancing outreach efforts, State officials in Washington,  D.C., and U.S. embassy officials with whom we spoke in Russia said Open  World complements other U.S. mission activities.  Similarly, Open World is  able to build on relationships fostered by other U.S.-Russia assistance  activities to further its own program.  For example, the U.S. Agency for  International Development (USAID) worked through Open World to send  more Russian judges to the United States than it could have funded on its  own, as part of the Vermont-Karelia Project. This project was initially  established to bring representatives of the judiciary of Karelia, with which  the judiciary of Vermont has a long-standing working relationship, to meet  their counterparts and learn about the U.S. judicial system.  The program  has since grown to include an additional six Russian regions and six U.S.  states and is now called the Russian-American Rule of Law Consortium, of  which the Vermont-Karelia Project is a part.  Also, the State Department  targets Open World alumni for follow-up technical assistance and training  upon their return to Russia.   Thus, although Open World does not bring  Americans to Russia, under State or USAID sponsorship, some American  judges who had hosted Open World delegates later visited Russia to  provide technical assistance and training.
Embassy officials and State officials in Washington, D.C., noted that,  although there are other independent entities within the executive branch  that carry out international activities such as exchange programs, Open  World is the only exchange program within the legislative branch.  (For  illustrative purposes, app. IV provides information on some independent  entities funded through the executive branch.)  The officials told us that the  program’s independent status and current placement within the legislative  branch offered some advantages, noting that congressional sponsorship of  Open World lends a certain cachet to the program and allows it to attract  emerging leaders who otherwise might not participate.  The officials also  said that congressional involvement was important to sustaining the  support of Congress and other decision makers.
section_title: Program Has No Formalized Strategy by which to Measure Progress
paragraphs: Although Open World does deliberate and decide on programmatic themes  and target audiences that it would like to emphasize each coming year, it  does not have formalized strategic and performance plans that define  success, what it will take to succeed, and how it should be measured.  Without a framework that identifies long-term goals, explicitly links them  to U.S. mission priorities and plans overseas, and systematically identifies  the incremental outcomes expected at each step, along with measurable  indicators of such progress, it is difficult to gauge whether Open World is  targeting and reaching the right people, whether it is providing delegates  with the right types of experiences, and whether these experiences are  resulting in improved mutual understanding.  This also makes it more  difficult for Open World to adjust its course of action, when necessary, and  to determine whether it is using its resources in the most efficient and  effective manner.  Also, although Open World surveys all delegates on their  experiences in and immediate reactions to the exchange program, it does  not systematically compare delegate attitudes and knowledge both before  and after their participation in the program.  Open World has also  administered several different alumni surveys; however, these surveys are  of limited value in gauging improvements in mutual understanding.
Open World does provide nominating organizations with general criteria  for determining a person’s eligibility for the program.  To further screen  nominees, the vetting committee considers such factors as a person’s  active involvement in politics, the community, or teaching; the number of  publications issued; the number of people the person supervises; whether  the person is from outside the capital; and any prior visits to the United  States to make subjective judgments about the applicant’s potential to  influence change and apply the experience gained from participating in the  program. Nevertheless, it is difficult to determine whether these are the  optimal criteria for any given year, or whether they are being met, without  explicit and measurable performance targets that are designed and  sequenced to mesh with a larger strategy for achieving Open World’s long- term goals.
Similarly, the lack of a strategy makes it difficult to assess whether  delegates are gaining the desired experiences from their involvement in the  program.  We found varied responses among the past alumni we  interviewed regarding what would constitute an optimal mix of  experiences.  Some favored a more focused approach involving training  that is narrowly targeted toward specific professional needs.  Others said  that a broad exposure to the United States and its institutions is all that can  be expected during a 10-day visit.  One program nominator said that the  program should consist of two separate trips:  On the first, delegates would  simply gain an insight into the American political and economic systems,  while the second trip would be more focused on specific professional  experiences.  Without an explicit strategy that links particular target groups  with specific program content, approaches, and timing, it is difficult to  determine whether the experiences that delegates are gaining are optimal  at any given time.
section_title: Open World Surveys Are of Limited Value in Measuring Progress
paragraphs: Open World conducts surveys that attempt to capture delegates’  experiences in and immediate reactions to the exchange program,  including their impressions about whether their attitudes had changed as a  result of their participation in the program.  However, it does not  systematically compare delegate attitudes and knowledge both prior to and  following their participation.  Open World has also administered alumni  surveys; however, these surveys were not designed to determine the long- term impact of the program, including whether improved mutual  understanding has occurred. While measuring the impact of exchange  programs is difficult because the full effects of such programs may not be  known for years, Open World officials agree that such an evaluation is  necessary and hope to conduct one in the near future.
subsections: section_title: Program Surveys
paragraphs: American Councils conducts three types of surveys for the Open World  program—application, predeparture, and postprogram.   The application  survey primarily contains descriptive information regarding the applicant,  such as place of residence and occupation.  The predeparture survey, filled  out just before the participant leaves for the United States, contains  additional descriptive information, including the participant’s age,  ethnicity, educational profile, employment, and views on democratic  values.  The postprogram survey, which is filled out immediately after the  exchange program, contains information on delegates’ exchange  experiences and their impressions of how the program affected them.    These three surveys had very high response rates, all exceeding 90 percent.
Overall, Open World surveys do an adequate job of measuring delegates’  experiences and immediate reactions to the exchange program.  However,  the surveys miss the opportunity to measure whether a delegate’s attitude  toward the United States and its institutions changed as a direct result of  participation in the program by not measuring pre- and postparticipation  attitudes using parallel questions.  The postprogram survey asks  retrospective questions about whether delegates’ attitudes changed and  whether their expectations were met.  From a methodological standpoint,  this approach is useful but not as rigorous as measuring attitudes and  expectations before and after the program because it relies on the  delegates’ accurately recalling how they felt before the exchange program.   Open World staff told us they had not regularly analyzed responses to the  surveys for evaluative or management purposes; however, they have  recently embarked on an effort to redesign the surveys to use them for  these purposes.
section_title: Alumni Surveys
paragraphs: Open World alumni have been surveyed, but these surveys were primarily  designed to aid in program management, not to measure the long-term  impact of the program.   In 2000, American Councils conducted a survey to  gain constructive feedback on what 1999 alumni found useful about the  program and to obtain their opinions on what kinds of people should be  considered as future program candidates.  This survey was distributed  through alumni networks and had a response rate of less than 30 percent— too low to be representative of total delegates.  In 2002, American Councils  in Moscow administered a survey to elicit ideas from alumni on how the  program could be improved and to prepare them for upcoming alumni  activities. However, Open World officials reported that the survey was not  helpful because the answers were too general or vague and contained few  suggestions for cost-effective improvement.  Open World officials informed  us they conducted an alumni questionnaire in December 2003 to assist  Open World in planning future activities for alumni, but as of January 2004,  the results had not been analyzed.  Open World and American Councils  staff acknowledged that a full program evaluation of alumni to determine  the program’s progress over the long term was necessary and that they  hope to conduct such an evaluation in the future.
section_title: Open World Lacks Formalized Financial Management and Accountability Mechanisms
paragraphs: Open World does not have the formalized financial management and  accountability mechanisms—formalized policies, audited financial  statements, an audit or financial management advisory committee, or full  program data—that would provide Congress and other decision makers  with the timely, reliable cost and performance information that is especially  important for a permanent, expanding program.  Although Open World has  established procedures for reviewing and approving transactions and  analyzing financial reports, these procedures have not been formalized in  written policies.  For example, Open World has procedures for reviewing  budget submissions that accompany grant applications, for awarding  grants, and for reviewing grantee expenditures.  It also has procedures for  analyzing reports on program payroll and outstanding obligations.   However, it has not evaluated whether these procedures provide adequate  internal control or codified them into management-approved policies that  Open World staff are required to follow.  Documentation of policies and  procedures covering an entity’s internal control structure and all significant  transactions and events is fundamental to ensuring that all staff understand  and consistently apply procedures, while management assessment of these  procedures is an essential component of internal control.  Management  evaluation of controls, along with approval and documentation of  procedures, is particularly important when financial management services  are being performed by a contractor.  According to federal government  standards for internal control, written policies and related operating  procedures should address key control activities such as approvals,  verifications, reconciliations, and the creation and maintenance of related  records that provide evidence and appropriate documentation of these  activities.
The lack of formal policies, particularly in the grants management area,  may leave some critical elements of grantee accountability inadequately  addressed.  For example, as long as the total grant amount is not exceeded,  Open World allows up to a 10 percent variance between the actual and  budgeted amounts by budget category on an approved grant, but it does not  require grantees to report such variances as part of their reporting of grant  expenses; it also does not have follow-up procedures to deal with variances  of more than 10 percent.  Also, according to Open World officials, grantees  are required to submit receipts or other evidence for all grant expenses  unless Open World agrees, as part of the grant agreement, to permit a  grantee to submit the results of its “single audit” conducted pursuant to  OMB Circular A-133.  However, the officials acknowledged that Open  World does not have a formal policy that clearly defines the conditions  under which it will accept the results of a single audit in lieu of a grantee’s  submission of receipts or other evidence for all grant expenses.  For  example, in 2003, Open World began requiring, as a condition for accepting  the results of a single audit, that an audit’s coverage include a “significant  sample” of the costs incurred under the Open World grant.  However, Open  World has neither defined what audit coverage represents a “significant  sample” nor implemented procedures to ensure that the requirement has  been followed.  According to program officials, Open World has permitted  only a few grantees to submit single audit results in lieu of submitting  receipts and other evidence of grant expenses.  However, as the program  expands, it may become difficult to manage the detailed review of  supporting documentation for grantee expenditures; thus, Open World’s  use of audit reports as an oversight mechanism could increase.
subsections: section_title: Financial Statements Are Not Being Prepared and Audited
paragraphs: Open World obtains detailed accounting reports for the program from the  Library of Congress.  In addition, Open World has prepared for the Board of  Trustees various schedules that separately present the program’s planned  budget and actual obligations.  However, Open World does not currently  prepare summary financial statements that are subjected to independent  audit and used by the board in its oversight. Program officials plan to  prepare financial statements for Open World and initiate an audit by the  summer of 2004.  As discussed in our executive guide on best practices in  financial management, a solid foundation of control and accountability  requires a system of checks and balances that provides reasonable  assurance that the entity’s transactions are appropriately recorded and  reported, its assets protected, its established policies followed, and its  resources used economically and efficiently for the purposes intended.   This foundation is built and maintained largely through the discipline of  routinely preparing periodic financial statements and subjecting them  annually to an independent audit.  In fact, the April 2003 bylaws of the  Open World Board of Trustees require an annual audited financial  statement for the Open World Leadership Center Fund.  This requirement  further underscores the importance of Open World developing formal  financial management policies.  The auditor would use the financial  management policies and any related operating procedures to gain an  understanding of and evaluate Open World’s internal control environment.
section_title: Governance Structure Does Not Include an Audit Committee
paragraphs: Open World’s governance structure does not include either an audit  committee or financial management advisory committee to provide the  Board of Trustees and management with independent advice on financial  management, accountability, and internal control issues.  Such a committee  is a required element of the governance structure of publicly owned  companies and a best practice for other types of organizations.  The audit  committee of a publicly owned company plays a particularly important role  in assuring fair presentation and appropriate accountability in connection  with financial reporting and related external audits and general oversight of  an organization’s internal control.   In the federal government, audit  committees and advisory committees are intended to protect the public  interest by promoting and facilitating effective accountability and financial  management.  This is accomplished by providing management with  independent, objective, and experienced advice and counsel, including  oversight of audit and internal control issues.   In the case of Open World,  use of an audit or financial management advisory committee could  facilitate the process of formalizing financial management policies and  procedures, including related internal controls, and preparing for the  program’s first financial statement audit.
section_title: Value of Contributed Services Is Not Disclosed
paragraphs: Open World is not collecting data on the significant volume and value of  contributed services from U.S. volunteers.  According to Open World, 83  percent of program participants in 2003 stayed in the homes of American  host volunteers, a contribution that considerably reduces program  expenditures associated with housing participants during their stay.  As a  result, the amount expended by Open World does not reflect the full scope  and cost of operating the program.  The usefulness of information on the  nature and extent of similar contributed services is recognized under  generally accepted accounting principles, which encourage entities to  disclose, if practicable, the fair value of contributed services received.   Open World could obtain data, by geographic area, on the number of  program participants that stay in the homes of American host volunteers  and then apply standard per diem rates to estimate the value of meals and  lodging provided by host volunteers.  Collecting and disclosing this  information would provide management, the Board of Trustees, and  Congress with more complete information about the full scope of the  program.
section_title: Conclusions
paragraphs: Since its launch in 1999, Open World has organized large numbers of  diverse delegations from every region in Russia and brought them to the  United States.  Most delegates viewed their program experiences very  favorably, and many say they have taken concrete actions to adapt what  they learned from their U.S. visits to the Russian environment.  Also, U.S.  ambassadors and embassy officials consider Open World a valuable tool to  complement U.S. mission activities and outreach efforts and noted that  congressional sponsorship of Open World lends a certain cachet to the  program, allowing it to attract emerging leaders who otherwise might not  participate.  However, because the program does not have formalized  strategic and performance plans with systematic performance  measurement indicators, it is difficult to determine the extent to which  Open World is targeting and reaching the right people and providing  delegates with the right types of experiences, including those that result in  improved mutual understanding. Also, Open World lacks the formalized  financial management and accountability mechanisms that would help  provide decision makers with useful, relevant, timely, and reliable  information.  Open World began as a pilot project and was not established  as an independent entity until 2001.  Now that Open World has permanent  status and is expanding its scope, it is appropriate for the program to turn  its attention to enhancing its strategic and performance planning and  financial management and accountability mechanisms.  Such mechanisms  are particularly important to ensure that Open World’s efforts and the  related activities of embassies, contractors, grantees, and nominating  organizations are systematically integrated and managed to achieve  measurable progress toward Open World’s fundamental goals.   Strengthening these mechanisms will become even more important as the  program further expands.
section_title: Recommendations
paragraphs: To enhance Open World’s management, particularly in light of the  program’s expansion, this report makes recommendations to the Chairman  of the Board of Trustees of the Open World Leadership Center to (1)  establish strategic and performance plans that articulate Open World’s  direction and set measurable goals and indicators; (2) strengthen the  program’s mechanisms for collecting data and reporting on program  performance; (3) assess whether the current procedures provide adequate  internal control over expenditures and grantee oversight; (4) develop and  implement written, management-approved policies, procedures, and  internal controls for Open World’s resources and expenditures; (5) develop  and implement controls and requirements for grantees to provide  accountability for grant expenditures to ensure that funds are spent for  their intended purposes; (6) develop and implement plans for routinely  preparing financial statements that are annually subject to an independent  audit; (7) consider establishing an audit committee or financial  management advisory committee to provide the Board of Trustees and  management with independent advice on financial management,  accountability, and internal control issues; and (8) estimate and disclose  the value of contributed services from U.S. volunteers to better reflect the  total scope of the program.
section_title: Agency Comments and Our Evaluation
paragraphs: Open World provided written comments on a draft of this report (see app.  V).  Open World generally concurred with the report’s observations,  conclusions, and recommendations and acknowledged that the time has  come for strategic planning and for considering options to strengthen the  program’s administrative operations and financial reporting.  Open World  said that it is proceeding with measures to implement some of these  recommendations.  These measures include proceeding with plans to  develop strategic and performance plans, review the program’s data  collection efforts, and prepare financial statements and subject them to an  independent audit.  In response to other recommendations, Open World  said it would ask the Board of Trustees to consider forming an audit  committee for the board, evaluating the in-kind contributions of the  program’s American volunteer hosts, and implementing a system for more  regular summary financial statements for the board.  However, Open World  took issue with the report’s emphasis on measurable goals and indicators  of success, noting that the results of its programs can only be validated in  the medium or long term.  Open World also said that improving mutual  understanding is not a measurable, performance-based goal.
We recognize the long-term commitment required to measure the ultimate  success of exchange programs.  However, measuring short-term  incremental progress toward a program’s goals is also an important  component of any serious effort to assess progress over the long term.  It is  fundamental to making necessary course corrections along the way—a  capability that will become even more important as Open World further  expands.  While it is sometimes difficult to establish direct causal links  between exchange programs and their ultimate impact, we believe that  establishing convincing correlations is a reasonable expectation.  With  respect to mutual understanding, there are a number of internationally  recognized social science research and statistically valid methodologies  that can be used with questionnaires, interviews, and focus groups for  gauging changes in attitudes, knowledge, and behavior among exchange  program participants.
The State Department also reviewed a draft of this report for technical  accuracy.  State’s comments have been incorporated into the report, as  appropriate.
We are sending copies of this report to other interested members of  Congress, the Librarian of Congress and Chairman of the Open World  Leadership Center Board of Trustees, and the Secretary of State.  We will  also make copies available to others upon request.  In addition, this report  will be available at no charge on the GAO Web site at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  Jess Ford at (202) 512-4128.  Other GAO contacts and staff  acknowledgments are listed in appendix VI.
section_title: Scope and Methodology
paragraphs: To review the Open World Leadership Center’s progress toward achieving  its overall purpose, we reviewed Open World’s organizational structure,  operational policies and procedures, program documentation, and  legislative history, and we observed key program activities, including the  vetting process and a predeparture orientation in Moscow, as well as  program orientation and other selected events in Washington, D.C.  This  provided us with an understanding of the nature of Open World activities  and how they are carried out—from the time delegates are selected in  Moscow to their actual visit in the United States.  We also analyzed the  results of program surveys that delegates completed from 2000 to 2003.
We reviewed the surveys, which were carried out by American Councils  and translated into English for elements such as consistency, balance,  tone, and adherence to common survey design standards.  For example,  we considered whether the response scales used (1) were balanced, (2)  appeared to cover all possible response options, and (3) contained  “double-barreled” options—that is, whether questions asked about more  than one issue but allowed for only one response.
We studied the survey results to see if there was anything unusual or  unexpected that might indicate potential problems in the surveys’  design or structure.
We met with knowledgeable Open World and American Councils staff,  both in Washington, D.C., and in Moscow, to determine the  completeness of the data set and the accuracy of required data  elements.  We also engaged a GAO native Russian speaker to review the  translation of key questions from Russian to English.
Based on these assessments, we determined that data produced by many of  the survey items were sufficiently reliable and generally usable for the  purposes of our study. These data included descriptive information on  program delegates, such as education level; information on participants’  satisfaction with certain aspects of their exchange experience; and  opinions on how the experience affected them.  While we determined that  most data elements were sufficiently reliable, we did not use a few data  elements that we had questions about.
We supplemented our analysis of the program surveys with interviews of 56  alumni during fieldwork in Moscow, St. Petersburg, Petrozavodsk, and  Samara, Russia, in October and November 2003. We chose those four cities  for our review because they represent not only three of the seven  geographic regions in Russia where 60 percent of the Open World delegates  have come from but also a mix of urban and rural areas, and a diverse  group of alumni.  Because our interviews were limited to a few locations in  Russia (due to travel and time constraints), we did not generalize the  results of our interviews to the universe of delegates.  We recognize that the  opinions and experience of the group of delegates with whom we met may  not be representative of all program alumni; therefore, the results of our  interviews should be used for illustrative purposes only.  We conducted our  interviews as follows:  We developed a structured interview instrument for our meetings with  program alumni with the assistance of GAO social science analysts and  analysts fluent in Russian and in consultation with Open World.  The  interview instrument included questions regarding the contacts alumni  made during their trips, changes in their attitudes toward the United  States, and any actions they may have taken in Russia as a direct result  of their participation in the exchange program.
We conducted individual and group interviews with program alumni  from various years of the exchange program, including some who were  among the early delegates in 1999 and others who participated in the  program as recently as 2003.
Russian-English translators provided by the U.S. Embassy and the Open  World Leadership Center facilitated the interviews.
To review whether the program has appropriate financial management and  accountability mechanisms in place,  We discussed the nature and scope of existing mechanisms with Open  World officials.
We observed deliberations of an Open World panel that reviewed grant  proposals from organizations interested in hosting Open World  delegations.
We performed a “walk-through” of supporting documentation for a grant  and a contractor payment.
We performed this work solely to gain an understanding of Open World’s  existing financial management and accountability mechanisms, and as  such, we did not conduct an audit of Open World’s financial reports or  individual transactions.
To provide information on the statutory authorities and governing  structures of selected independent organizations funded through the  executive branch, we conducted legislative research on the purpose,  statutory authority, governance, and funding of four such organizations  that carry out various international activities, including exchange  programs: the African Development Foundation, The Asia Foundation, the  Inter-American Foundation, and the National Endowment for Democracy.
We conducted our work from July 2003 to January 2004 in accordance with  generally accepted government auditing standards.
section_title: National Host Organizations
paragraphs: The Open World Leadership Center awards grants to U.S.-based nonprofit  and governmental organizations to host visiting delegations. Some  organizations carry out Open World visits themselves or through their local  affiliates, while others develop and oversee a network of local  organizations to provide this hosting. These local organizations include  civic associations, academic institutions, and nonprofit international  training providers.  Open World selects its host organizations annually  through a competitive grants process.  Figure 7 provides information on the  16 national host organizations selected in the 2003 grants cycle, from May  2003 to April 2004, and includes hosting activities.
Russian American Rule of Law Consortium  (including the Vermont-Karelia Rule of Law Project)
An organization for partnerships matching the legal communities of seven Russian regions with  seven U.S. states to develop the rule of law in both countries Supports women's progress in building democracies, strong economies, and peace Focuses on improving municipal services, economic development, health, social welfare, and  quality of life in targeted communities CEC ARTSLINK was formerly known as CEC International Partners or Citizen Exchange Council.
section_title: Selected International Exchange Programs for Russia and the Newly Independent States That Are Administered by the State Department
paragraphs: The State Department facilitates exchange programs—like Open World— with other parts of the U.S. government, the private sector, and foreign  governments.  State’s Bureau of Educational and Cultural Affairs is  responsible for the management and oversight of U.S. international  educational and cultural exchange activities, as authorized by the Mutual  Educational and Cultural Exchange Act of 1961 (Fulbright-Hays Act).   American embassies collaborate with the bureau in administering and  supervising exchange activities.  As shown in fig. 8, State offers a wide  spectrum of academic, professional, and youth exchange programs in  Russia and the Newly Independent States.  The programs may run  anywhere from 2 weeks to 2 or more years, according to State officials, and  have varied in size from as few as 9 participants up to 675 participants.  The  State Department reported that the exchange programs operating in  Russia, including those highlighted in this appendix and others, brought a  combined total of more than 2,300 participants from Russia to the United  States in fiscal year 2003.
section_title: Selected Independent Entities Funded through the Executive Branch
paragraphs: For illustrative purposes, figure 9 provides basic information, including  statutory authority and governing structures, about selected grants-making  organizations and entities that Congress supports.  Like Open World, these  programs are independent entities; however, unlike Open World, they are  funded through the executive branch.
section_title: Comments from the Open World Leadership Center
section_title: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the person named above, Natalya Bolshun, Lyric Clark, Janey  Cohen, Martin De Alteriis, David Dornisch, Etana Finkler, Maxine Hattery,  Catherine Hurley, Ed Kennedy, Lori Kmetz, Joy Labez, David Merrill, John  Reilly Jr., Mark Speight, and Heather Von Behren made key contributions to  this report.
section_title: GAO’s Mission
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section_title: Public Affairs