International Labor Grants: DOL's Use of Financial and Performance Monitoring Tools Needs to Be Strengthened
Released: 2014-09-24T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: According to the International Labour Organization, millions of children worldwide are engaged in labor that hinders their development. Recent incidents, including a factory collapse in Bangladesh, have highlighted poor working conditions overseas. ILAB's child labor office and trade and labor office provide funding to improve working conditions by supporting worker rights and combating child labor, mainly through international and nongovernmental organizations. The child labor office obligated about $56 million and the trade and labor office obligated about $13.5 million in fiscal year 2013. You asked us to review issues related to ILAB's international technical assistance. This report examines how ILAB (1) ensures the financial accountability of its technical assistance funds, (2) monitors the performance of its projects, and (3) evaluates its projects and uses the results of the evaluations. To address these objectives, GAO reviewed ILAB documents on financial requirements, performance monitoring, and evaluation. GAO analyzed a nongeneralizable sample of 26 grants that were active in calendar years 2011-2013. GAO selected this sample based on several factors, including dollar value and geographic location.

section_title: What GAO Found
paragraphs: The Department of Labor's (DOL) Bureau of International Labor Affairs' (ILAB) child labor office and trade and labor office both have guidance for the financial monitoring of grants, but could improve their financial oversight. For example, we found that project managers completed their acceptance or rejection of about 20 percent of quarterly financial reports more than 90 days after receipt from the grantee, after the next quarter's report was due. ILAB does not have guidance that provides time frames and criteria for accepting or rejecting quarterly financial reports. In addition, although the child labor office supplements federal financial requirements with attestation engagements of selected projects to, among other things, assess the accuracy and reliability of grantee financial and performance data, the trade and labor office has not yet implemented its plan to conduct such attestation engagements of its grants, although officials said they plan to do so by November 2014. Without addressing these gaps in financial oversight, it could be difficult for ILAB to ensure federal resources are used efficiently and effectively to achieve desired objectives. The figure below outlines selected financial and performance monitoring tools and requirements from each office.

ILAB uses a number of tools to monitor the performance of its projects, but the trade and labor office's monitoring could be strengthened. Twenty-two of 26 grant files we reviewed included key monitoring documents, such as periodic performance progress reports. The child labor office requirements have generally been more comprehensive than those of the trade and labor office. For example, in contrast to the child labor office, the trade and labor office does not have common indicators that are used across projects and, as stated above, has not conducted attestation engagements of its grants. Without common indicators and attestation engagements, it is difficult for the trade and labor office to assess overall progress across projects and toward the office's goals, and whether its grantees are in compliance with relevant regulations.

ILAB conducts final evaluations for all projects to assess the performance of the project, including an assessment of performance against goals and objectives. Officials said they have drawn lessons learned from these evaluations that they have incorporated into subsequent projects, including addressing monitoring and evaluation issues earlier in a project. ILAB has also commissioned impact evaluations to determine whether a project has an effect and to quantify how large the effect is, and two have been completed to date.

section_title: What GAO Recommends
paragraphs: GAO recommends that the Secretary of Labor take actions such as establishing guidance on time frames and criteria for accepting or rejecting financial reports, and implementing the trade and labor office's plans to conduct attestation engagements and develop common indicators. DOL agreed with GAO's recommendations.

section_title: Letter
paragraphs: According to the International Labour Organization (ILO), millions of  children worldwide are engaged in labor that hinders their education,  development, and future livelihoods. In addition, recent incidents,  including the collapse of a garment factory building in Bangladesh, have  highlighted poor working conditions overseas. In response to concerns  about working conditions for children and adults, the U.S. government, in  part through the Department of Labor’s (DOL) Bureau of International  Labor Affairs (ILAB), provides technical assistance mainly through  international and nongovernmental organizations to improve working  conditions by supporting worker rights and combating child labor.

You asked us to review issues related to ILAB’s international technical  assistance. This report examines how ILAB: (1) ensures the financial  accountability of its technical assistance funds, (2) monitors the  performance of its projects, and (3) evaluates its projects and uses the  results of the evaluations. We issued a previous report examining ILAB’s  grant award process.

To address these objectives, we reviewed relevant documents, including  ILAB project manager manuals, management procedures and guidelines,  a sample of grantee financial and technical progress reports, and project  evaluations. We selected a nongeneralizable sample of 26 projects out of  a total of 98 projects that were active in calendar years 2011, 2012, and   We selected the sample based on several factors, such as dollar 2013. value and geographic location. The sample represents about 44 percent  of ILAB funding over these years and includes seven of the nine grants  with the highest dollar value ($10 million or above). Our sample includes  projects that are: single-country, multi-country, completed, on-going,  direct services (such as education or livelihood support that the  implementing organization provides directly to the targeted beneficiaries),  capacity building, and in most geographic regions. We also discussed  ILAB’s processes for financial and performance monitoring, as well as  evaluation of grants with officials from ILAB. In addition we discussed  these processes with ILAB grantees in Washington, D.C., and during  fieldwork in Cambodia, Ecuador, Peru, and Thailand. We selected these  locations based on, among other factors, size of grant, geographic  location, and phase of the project. To assess the reliability of the financial  reports, we interviewed DOL officials about the E-grants system and  asked about discrepancies we found during our review. We determined  the data were sufficiently reliable for the purpose of determining the  timeliness of acceptance of the financial reports and the amount of cash  balances. To assess the reliability of the monitoring and project  performance data, we verified the data in our sample by checking source  documentation and followed up with ILAB to address any discrepancies.  We determined that the data were sufficiently reliable for the purpose of  reporting on compliance with monitoring requirements and project  performance. Appendix I provides more information about our scope and  methodology.

We conducted this performance audit from May 2014 to September 2014  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: The mission of ILAB involves improving working conditions, promoting  workers’ rights, and addressing the workplace exploitation of children and  other vulnerable populations overseas. This work is carried out by its  Office of Child Labor, Forced Labor, and Human Trafficking (OCFT,  referred to here as the child labor office) and its Office of Trade and Labor  Affairs (OTLA, referred to here as the trade and labor office), through  projects developed and funded by the offices and generally implemented  by international or nongovernmental organizations. Figure 1 shows the  structure of the ILAB office. In fiscal year 2013, Congress appropriated  about $66.5 million to ILAB for international technical assistance and  microfinance programs provided that “$40 million shall be for programs to  combat exploitative child labor internationally” and “not less than $6.5  million shall be used to implement model programs that address worker  rights issues.” Of that amount, the child labor office obligated about $56  million, and the trade and labor office obligated about $6.5 million for  technical assistance projects.2013, ILAB obligated a total of about $225 million. During that time, the   From fiscal year 2011 through fiscal year  child labor office obligated about $176 million and the trade and labor  office obligated about $49 million.

ILAB-funded projects are typically managed using cooperative  agreements between ILAB and the project-implementing organization.  According to child labor office management procedures and guidelines, a  cooperative agreement is a form of a grant in which substantial  involvement is anticipated between DOL and the grantee during the  performance of the proposed activities. Furthermore, the procedures and  guidelines state that the level of monitoring and accountability required by  DOL is less than what is required in a contract, but more than in a regular  grant. ILAB generally utilizes cooperative agreements with grant  recipients to outline the project’s goals and implementation requirements,  timelines, key project personnel, and roles and responsibilities of ILAB  and grantee staff, as well as to set forth general provisions on  administration, allowable costs, property acquisition and management,  and closeout procedures upon completion of the project.

The child labor office’s technical assistance includes direct educational  services, livelihood services, capacity building, and supporting research  on international child labor, forced labor, and human trafficking. Among  other responsibilities, the office funds and oversees cooperative  agreements with organizations engaged in efforts to eliminate exploitative  child labor around the world, particularly the elimination of the worst forms  of child labor. Child labor includes those children (minors under age 18)  working in the worst forms of child labor as outlined in ILO Convention   and children engaged in work that is exploitative and/or interferes  182with their ability to participate in and complete required years of  schooling. ILO Convention 182 defines, for the purposes of the  convention, the worst forms of child labor as  1.  all forms of slavery or practices similar to slavery, such as the sale  and trafficking of children, debt bondage and serfdom and forced or  compulsory labor, including forced or compulsory recruitment of  children for use in armed conflict;  2.  the use, procuring, or offering of a child for prostitution, the production  of pornography or for pornographic performances;  3.  the use, procuring, or offering of a child for illicit activities, in particular  for the production and trafficking of drugs as defined in the relevant  international treaties; and  4.  work which, by its nature or the circumstances in which it is carried  out, is likely to harm the health, safety, or morals of children.

According to ILO Convention 182, the types of work referred to in number  4 above “shall be determined by national laws or regulations or by the  competent authority, after consultation with the organizations of  employers and workers concerned, taking into consideration relevant  international standards.” Therefore, forms of work identified as  hazardous for children may vary from country to country. According to  ILAB, hazardous child labor could include children working in agriculture,  in which they may use dangerous tools, carry heavy loads, and apply  harmful pesticides. In El Salvador, for example, many children harvest  sugarcane and coffee. These children are exposed to extreme weather,  toxic substances, long workdays, and injuries from machetes and sharp  knives. Other hazardous activities could include child labor in mines, as in  the Democratic Republic of Congo, in which children are forced to mine  diamonds, copper, gold, and other minerals, exposing them to heightened  risks of disease, inadequate shelter, and fatal accidents from the collapse  of mineshafts and explosions. However, some work done by minors is  considered acceptable. According to the ILAB website, children of legal  working age (as defined by their country’s government) who perform work  that does not hinder their mental, physical, or emotional development can  be acceptable and contribute to their families’ welfare.

The child labor office funded 40 projects between fiscal years 2011 and  2013. For example, in fiscal year 2011, the child labor office funded a $13  million project to combat rural exploitative child labor in Peru that included  education services, livelihood assistance, and research on child labor.  Objectives of the project included reducing child dropout rates, increasing  the agricultural productivity of households with child laborers to reduce  the use of child labor, and reducing hazardous labor among adolescents.  During our visit to the project, we observed a school that had extended  class hours to keep children in school in the afternoons to provide an  alternative to working. In addition, the project provided the community a  threshing machine so children no longer needed to separate grains from  stalks by hand.

The trade and labor office’s technical assistance focuses on projects to  improve worker rights. According to the trade and labor office website,  while there is no single definition or definitive list of workers’ rights, ILO  identifies what it calls “fundamental principles and rights at work” that all  ILO members have an obligation to respect and promote, including  freedom of association and the effective recognition of the right to  collective bargaining, elimination of all forms of forced or compulsory  labor, effective abolition of child labor, and elimination of discrimination in  respect to employment and occupation. Additionally, according to DOL’s  website, United States trade law adds factors such as acceptable  conditions of work with respect to minimum wages, hours of work, and  occupational safety and health to that list, calling them “internationally  recognized labor rights.”

Workers around the world face unsafe working conditions, forced labor,  long hours, workplace discrimination, and little or no right to  representation or collective bargaining. In Peru, for example, indigenous  communities are vulnerable to forced labor, including in the Amazon  region, where indigenous adolescents and adults have been found under  forced labor conditions, particularly in timber production and domestic  service. Additionally, since 1991, Ukraine has experienced the second  worst coal mine fatality rate in the world, with over 4,000 fatal accidents  stemming from explosions and unsafe work conditions.

The trade and labor office funded 34 projects between fiscal years 2011  and 2013, including multicountry projects to advance worker rights and  improve working conditions, such as the ILO Better Work program, which  includes an independent monitoring system of garment factory conditions,  as well as capacity building efforts targeting employers, workers and  government officials. The trade and labor office has funded Better Work  projects in several countries, including Cambodia and Haiti. For example,  in fiscal year 2011, the trade and labor office provided $1 million to  improve labor compliance in the footwear industry in Cambodia and to  improve the capacity of labor law enforcement. Specifically, the project  sought to address working conditions and improve the application of labor  law and occupational health and safety regulations through training labor  inspectors and providing capacity building and training to the Cambodian  government to strengthen its capacity to govern the labor inspection  system. During our visit to the project, we accompanied a project factory  audit that included inspecting lighting, noise, and temperature levels in  the factory; determining whether the factory conducted fire drills and  provided access to first aid kits; and assessing the prevalence of sexual  harassment.

section_title: ILAB Could Improve Its Processes for Financial Oversight
paragraphs: The child labor office and trade and labor office both have guidance for  the financial monitoring of projects, but could improve their financial  oversight. For example, we found that project managers completed their  acceptance or rejection of about 20 percent of quarterly financial reports  more than 90 days after receipt from the grantee, after the next quarter’s  report was due. ILAB does not have guidance that provides time frames  and criteria for accepting or rejecting quarterly financial reports. In  addition, although the child labor office supplements federal financial   of selected projects to,  requirements with attestation engagementsamong other things, assess the accuracy and reliability of grantee  financial and performance data, the trade and labor office has not yet  implemented its plan to conduct such attestation engagements of its  grants, although officials said they plan to do so by November 2014.  Without addressing these gaps in financial oversight, it could be difficult  for ILAB to ensure federal resources are used efficiently and effectively to  achieve desired objectives.
subsections: section_title: ILAB Guidance Lacks Deadlines and Criteria for Accepting or Rejecting Quarterly Financial Report Review
paragraphs: Standard provisions generally in ILAB cooperative agreements and  federal regulations require ILAB-funded grantees to submit quarterly  federal financial reports no later than 30 days after the end of each  quarter. These grant-specific financial reports include information such  as the grantee’s cash receipts, expenditures, and on-hand cash  balances.

Project managers said they use the financial reports,  combined with other grantee information, to monitor the financial status of  the project by comparing the rate of planned versus actual expenditures.

The child labor office has policies and guidance for project managers to  review the grantee’s quarterly financial report within 30 days after receipt.  Officials said review could entail project managers’ examining the report  to ensure all required information is provided and following up with the  grantee if there are any questions. The guidance requires project  managers to accept the financial report in the DOL electronic grant  management system to which the financial reports are submitted, called  E-grants and provide a written response by e-mail to the grantee, but  the guidance does not specify a time frame in which the acceptance or  rejection of documentation in E-grants is to occur, nor does it define  circumstances in which project managers should accept or reject a report.  According to officials, the project manager’s review can take place without  anything being recorded in E-grants, since E-grants records only the  eventual formal acceptance or rejection of the quarterly financial report.  According to officials, they do not want to reject a quarterly financial  report for something that could be easily corrected, in part because  rejecting the quarterly financial report can create delays for payments to  the grantee. However, officials said that they can reject a financial report  if they determine it is appropriate to do so. Child labor office officials told  us that their staff who manage projects have an element in their  performance standards related to meeting the 30-day review requirement.

Similarly, the trade and labor office also has policies and guidance for  project managers to review the quarterly financial reports. According to  the July 2013 trade and labor office guidance, project managers shall  accept the financial report no later than 10 days after receipt if there are  no issues with the report. If any discrepancies occur, according to the  guidance, the project manager shall instead provide comments in E- grants and work with the grantee to address any issues prior to accepting  the financial report. However, the guidance does not outline the  circumstances in which project managers should reject a financial report.  Officials told us that as of fiscal year 2014, project managers are now  required to accept or reject the quarterly report no later than 30 days after  receipt. According to trade and labor officials, the policy was revised in  order to harmonize the standards with the child labor office and after  determining there would not be a detrimental effect on the management  of their projects. Trade and labor office officials also told us that their staff  who manage projects have an element in their performance standards  related to meeting this requirement.

In addition, ILAB’s 2014 Operating Plan includes an indicator that reports  the number of financial reports reviewed and processed. The indicator  defines financial reports as reviewed and processed when accepted in E- grants. However, child labor officials said that project managers’ quarterly  reporting on the status of their review does not require that they formally  accept the reports in E-grants. Child labor officials said that the data they  report in the Operating Plan is based on the results of the project  managers’ quarterly report review. We found that, for the quarter ending  June 30, 2013, this indicator in the operating plan included 2 reports from  the child labor office that were not accepted in E-grants. Officials said  they intend to amend the definition to measure the number of financial  reports accepted or rejected (rather than reviewed and processed).

Our analysis of ILAB project managers’ review of grantees’ financial  reports for the quarter ending June 30, 2013 showed that ILAB received  74 financial reports. We analyzed 71 financial reports for the timeliness of  project manager review, as well as formal acceptance in E-grants.  Forty-three of these reports were for child labor office grants, and 28 were  for trade and labor office grants. Child labor officials provided evidence  that 12 of the 43 child labor office financial reports (about 28 percent)  were reviewed within 30 days after receipt from the grantee, as described  in the child labor office’s policy manual (see table 1). Further, we found  that 11 trade and labor financial reports (39 percent) were reviewed within  30 days after receipt from the grantee.

Table 2 shows the percentage of quarterly financial reports ILAB project  managers accepted in E-grants more than 90 days after the grantee’s  submission. We found that child labor office project managers accepted  financial reports more than 90 days after the grantee’s submission of the  report in about 12 percent (5 reports) of the cases we reviewed. Trade  and labor project managers accepted the financial reports more than 90  days after grantee submission in 32 percent (9 reports) of the cases we  reviewed. Overall, we found that, for both offices in ILAB, 14 of the 71  financial reports we reviewed (about 20 percent) were accepted more  than 90 days after receipt from the grantee. In these cases, acceptance  of the report was not completed before the next quarter’s financial report  was due. According to ILAB officials, the project manager’s acceptance of  10 of these 14 reports was late because of the lack of adequate transition  of responsibilities between project managers, as well as problems  grantees and ILAB project managers had using E-grants, which officials  said were outside their control.

Standards for Internal Control in the Federal Government states that  agency management is to develop policies, procedures, and practices  that fit the agency’s operations as it implements internal control  standards.must have relevant, reliable, and timely communications relating to  internal as well as external events. Pertinent information should be  identified, captured, and distributed in a form and time frame that permits  people to perform their duties efficiently. Without guidance on a time  frame in which federal financial report review must be completed,  including acceptance in E-grants, or guidance on criteria for accepting or  rejecting a financial report in E-grants, it can be difficult for ILAB project  managers to identify and address financial issues in a timely manner, and  determine if federal funds are being used as intended.

section_title: Most Grantees Do Not Maintain Excess Federal Funds
paragraphs: Federal regulation requires that cash advances to a grantee be limited to  the minimum amount needed and be timed to be in accordance with the  actual, immediate cash requirements of the grantee in carrying out the  purpose of the program. In addition, standard provisions generally in  ILAB’s cooperative agreements explain that advance payments to the  ILAB-funded grantee are authorized provided that the grantee’s financial  management system meets certain requirements, including that the  grantee have written procedures to minimize the time between the  transfer of funds to the grantee and the grantee’s payments for project  expenses. Further, the standard provisions in ILAB’s cooperative  agreement template state that advances must be based on actual and  immediate cash needs in order to minimize federal cash on hand in  accordance with established policies. ILAB officials told us that its  project managers are responsible for monitoring excess cash on hand  as part of their review and acceptance of the financial report. According to  ILAB officials, any concerns about excess cash require the project  manager to follow up with the grantee.

As shown in table 3, we found that 47 out of 74 (over 60 percent) of the  financial reports we reviewed did not show any federal cash on hand;  however, 3 of the 74 financial reports had cash balances over $250,000. ILAB officials told us that project managers noticed this excess during  their review of the financial reports and contacted the grantees to correct  the issues.

We determined that these 3 grants represent over 70 percent of total cash on hand. In  addition, 24 grants had less than $250,000 cash on hand, with balances ranging from  $1,825 to $121,141. told us that they contacted the grantee, and the grantee responded that  the balance was high because the grantee had not reconciled its  accounts and had payments coming due, and would make the correction  in the subsequent financial report. This grantee told us in September  2013 that it did not have written procedures for transferring cash from the  federal payment management system to the grantee. These procedures  could minimize the time between transfer of funds and payment of project  expenses, as described by standard provisions generally found in ILAB’s  cooperative agreement. The grantee provided its written cash transfer  procedures to ILAB in December 2013.

section_title: Child Labor Office Has Used Attestation Engagements to Monitor Grantees, while the Trade and Labor Office Is Planning Its First Engagement
paragraphs: The child labor office has contracted for over 40 attestation engagements  since 2005, while the trade and labor office is planning its first  engagement and is in the process of developing guidance to manage the  engagements. Attestation engagements are a key control to ensure that  grants are operating as intended. GAO’s Standards for Internal Control in  the Federal Government state that management is to implement control  activities such as policies, procedures, techniques, and mechanisms  needed to enforce its directives.
subsections: section_title: The Child Labor Office Uses Attestation Engagements to Provide Additional Oversight of Cooperative Agreements
paragraphs: According to child labor office officials, to supplement federal government  reporting requirements for grantees,an attestation engagement program to provide additional financial and  performance oversight of grantee activities. They engaged a certified  public accounting firm to conduct attestation engagements of non-O:P   in 2005 they designed and began  grantees. ILO projects are audited by ILO’s designated external  auditor.reviewed.

During the period 2005–2013, 41 non-ILO projects were  According to child labor office guidance, the purpose of these attestation  engagements is to: (1) determine whether grantees are complying with  the terms of their cooperative agreements and with DOL’s regulations for  grants, (2) ensure that grantee financial reports are accurate and  reliable, and (3) ensure that grantee performance data are accurate and  reliable (performance will be discussed later in this report). The  attestation engagement is divided into several broad areas, including the  following: administrative procedures, internal controls, and fraud risk performance data, measures, and goals; budget; cash management; disbursements and financial reporting; and procurement and inventory management.

We reviewed the 7 attestation engagement reports issued between 2010  and 2013. These reports found 12 significant findings, 11 of which were  related to performance issues, and 1 related to disbursements and  financial reporting. According to the attestation report, the significant  financial finding was of discrepancies between the actual amounts an  implementing organization paid to employees, teachers, and volunteers  and the amounts charged to the project during the period of performance.  Other financial-related findings in these attestation reports that resulted in  recommendations include the late submission of quarterly federal  financial reports and unsupported payroll costs.

section_title: The Trade and Labor Office Has Not Yet Conducted an Attestation Engagement or Developed Guidance to Manage Such Engagements
paragraphs: The trade and labor office’s management procedures and guidelines state  that all grantees are subject to attestation engagements (although it is not  required), and at the time of our review, the trade and labor office had not  engaged a contractor to perform attestation engagements. However,  trade and labor office officials said they expect the first attestation  engagement to take place by November 2014 after being delayed. In  addition, at the time of our review, the trade and labor office had not yet  developed official guidance for project managers to manage the  attestation engagement. Attestation engagements are a key control that  help ensure that cooperative agreements are operating as intended.  GAO’s Standards for Internal Control in the Federal Government states  that control activities are the policies, procedures, techniques, and   In addition, these  mechanisms that enforce management’s directives.standards also call for continual monitoring and separate evaluations to  assess the quality of performance over time.

In July 2014, trade and labor office officials said they were using the child  labor office’s existing contract agreement to finalize a task order for the  attestation contractor to conduct an attestation engagement and prepare  guidance for future project managers to follow when utilizing attestation  engagements to monitor their projects. They expect the guidance, which  officials indicated will be similar to the child labor office’s guidance, to  take about 6 weeks to complete once the task order is awarded. ILAB  officials plan to have the contractor use this guidance to carry out the first  attestation engagement.

Without attestation engagements, the trade and labor office may not be  able to determine whether grantees are in compliance with the terms of  their agreements, ensure that financial reports are accurate and reliable,  and ensure that performance data are accurate and reliable. Further,  without guidance on managing these engagements, the trade and labor  office may not be achieving the objectives of the attestation  engagements.

section_title: Guidance for Reporting Subgrantee Inventory of Equipment and Real Property Needs Improvement
paragraphs: The child labor office and trade and labor office require grantees to report  an inventory of all equipment and real property to DOL to comply with  federal regulations on DOL grants. Specifically, the guidance requires  grantees to submit a list within 12 months of the award, at least once  every 2 years, and as part of the closeout process. Each office’s  guidance states that applicable provisions, including provisions in the  cooperative agreement with the grantee, apply to the subgrantee.  Standard provisions generally in ILAB’s cooperative agreements state  that grantees must follow DOL’s policies in the acquisition, accounting for,  and disposition of property. However, ILAB’s guidance does not  specifically state that the grantee’s list include equipment and real  property purchased by any subgrantees. For example, the child labor  office’s inventory list template included in its 2013 management  procedures and guidelines does not refer to subgrantees. Officials stated  that ILAB’s legal and financial relationship is with the grantee, who is  responsible for the subgrantee, including any inventory the subgrantee  purchased with federal funds. ILAB officials said they would expect any  subgrantee inventory to be included in the grantee’s inventory list at  closeout if the equipment was purchased using federal funds. GAO’s  Standards for Internal Control in the Federal Government states that  agency management is to develop policies, procedures, and practices  that fit the agency’s operations as it implements internal control standards  and that internal controls and all transactions need to be clearly  documented. Without specific guidance, it may not be clear whether  grantees are including equipment and real property purchased by  subgrantees. If the equipment and real property purchased by the  subgrantees are not accurately reported by the grantee, there is a risk of  a lack of accountability for assets purchased with DOL funds.

section_title: The Trade and Labor Office’s Performance Monitoring Efforts Need Improvement
paragraphs: While ILAB uses a number of tools to monitor its grants, the child labor  office requirements have generally been more comprehensive than those  of the trade and labor office. For example, in contrast to the child labor  office, the trade and labor office does not have common indicators that  are used across projects to assess overall progress in key areas.  Grantees from both offices had difficulty meeting annual performance  targets. Further, as stated above and again in contrast with the child labor  office, the trade and labor office has not conducted attestation  engagements of its grants. Without common indicators and attestation  engagements, it is difficult for the trade and labor office to assess  progress across projects and overall progress toward the office’s goals,  and whether its grantees are in compliance with relevant regulations.  Finally, both offices use midterm evaluations, conducted at about the  midpoint of a project’s implementation, to make adjustments during the  remainder of the project.
subsections: section_title: While the Child Labor Office Has More Comprehensive Performance Monitoring Requirements than the Trade and Labor Office, Both Offices Complied with Monitoring Requirements
subsections: section_title: The Child Labor Office Has More Comprehensive Monitoring Requirements than the Trade and Labor Office, Which Lacks Common Indicators and Attestation Engagements
paragraphs: The child labor office has monitoring requirements that the trade and  labor office does not, including common indicators and attestation  engagements. See figure 2 for a list of selected monitoring tools used by  the child labor office and the trade and labor office.

The child labor office’s monitoring system has evolved over the years and  includes technical progress reports (TPR), a comprehensive monitoring  and evaluation plan (CMEP) for direct services and capacity-building  grants, and common indicators that are used across projects. The office  also uses project-specific attestation engagements as mentioned  previously to assess financial and performance issues. The requirements  are described in the child labor office management procedures and  guidelines.

Child labor office officials said that they emphasize the importance of  monitoring and evaluation starting with the solicitation for applications.  For fiscal year 2014 child labor office projects, solicitations require that  about 8 percent of the grant award funding be used for monitoring and  evaluation, according to officials. In addition, the monitoring and  evaluation officer for the project is considered key project personnel so  his/her qualifications are submitted with the grant application for ILAB’s  review.

The trade and labor office, which, according to officials, generally funds  projects that have shorter timeframes and smaller budgets than those of  the child labor office, has somewhat different monitoring requirements.  The trade and labor office requirements include TPRs, a performance  monitoring plan (PMP), and project-specific indicators. The requirements  are described in the trade and labor office management procedures and  guidelines.

Officials from the trade and labor office said that they are in the process  of developing new monitoring initiatives, including using attestation  engagements—to assess both financial and performance issues—and  developing common indicators for selected grants. The trade and labor  office’s management procedures and guidelines state that all grantees  are subject to attestation engagements, although they are not required.  However, as stated above, the trade and labor office has not yet  conducted any attestation engagements, although officials said they plan  to conduct the first one by November 2014. Without attestation  engagements, it is difficult for the trade and labor office to assess how  well its grantees comply with DOL regulations and provisions of the  cooperative agreement, as well as the reliability of the grantee’s financial  and performance reports.

Officials from the trade and labor office said that they currently do not  have common indicators because the types of projects the office currently  funds are different in nature than projects funded in previous years. For  example, the office’s current priority on strengthening the capacity of  labor inspector governmental bodies is a new area for them. According to  officials, the trade and labor office had common indicators in the past, but  those indicators are not applicable to current projects, and they do not  provide historical data on which to develop indicators that can be used  across projects. The Government Performance and Results  Modernization Act requires agencies to report an update on agency  performance including actual results in achieving performance goals for  the 5 preceding years. While the trade and labor office does include  indicators in the agency’s fiscal year 2013 annual performance report,  including the number of countries in which worker rights and/or working  conditions are improved, the report also states that the indicator does not  accurately represent the scale of improvements that might be made in a  country or group of countries, and that ILAB will refine the indicator in  fiscal year 2014 to more accurately measure ILAB’s work. According to  trade and labor office officials, they are developing common indicators to  better track progress over time. Without common indicators, it is difficult  for the trade and labor office to assess overall progress toward its goals.

section_title: The Majority of Grant Files Included Required Monitoring Elements
paragraphs: Four (3 from the child labor office, 1 from the trade and labor office) of the  26 grant files we reviewed were missing one or more key monitoring  elements, such as CMEPs or PMPs, baseline surveys, or indicator  targets. Twenty-two of the grants included the required monitoring elements.

CMEP/PMP: 2 projects (from the child labor office) did not complete  the required CMEP or PMP. According to officials, the CMEPs for  these projects are in draft form. Both projects are scheduled to end in  less than a year.

Baseline survey: 1 trade and labor project in the Maldives and 1 child  labor project in Pakistan did not have a baseline survey.

Targets: 1 trade and labor office project in the Maldives did not have  targets for the project’s indicators.

Officials from both offices told us they use additional means to monitor  grants, including site visits, phone calls, and e-mails, since they do not  have an overseas presence. Officials from the child labor office and trade  and labor office said they also rely on other ILAB staff and embassy  officials to meet with grantees when they make site visits. We found that  22 of 26 grants in our sample had received at least one site visit. Project  managers try to visit at least twice during the life of the project for child  labor grants, according to officials. Trade and labor officials said they  prioritize site visits according to need and budget. Four grants in our  sample had not had site visits at the time of our review. For example,

Officials said they were not able to visit 1 project (Pakistan) because  of security issues.  ILAB officials said that manager for a project that began operating in  2013 in Cambodia, a site visit is planned for December 2014.

In our fieldwork countries, grantee officials stated that ILAB project  managers are well informed and knowledgeable about the issues facing  the projects. Grantee officials also said they have frequent  communication with ILAB, and that ILAB project managers often have  numerous comments on TPRs. Also during our fieldwork, we noted that  U.S. embassy involvement in ILAB grants varied. For example, the labor  officer in one of the embassies we visited in Asia was knowledgeable  about ILAB projects in that country. In contrast, the labor officer in an  embassy we visited in South America said there had been little  information provided about a new ILAB project that was starting.

section_title: Grantees from Both Offices Had Difficulty Meeting Annual Performance Targets
paragraphs: According to child labor and trade and labor offices’ guidance,  performance indicators and their associated targets are required for   Officials from the child labor office said  monitoring project performance.that they require potential grantees to submit life-of-project targets for the  common indicators in their grant applications, and these targets then  become part of the cooperative agreement. The child labor office’s  common indicators include the measurement of the provision of education  and livelihood services.

The child labor office also requires grantees to set annual fiscal year  targets, including for the common indicators, to monitor project  performance against overall life-of-project targets. Child labor office  officials said that these annual targets can be modified, in consultation  with ILAB, in the October TPR for the subsequent year.

For the most recent fiscal year, 2013, there were 9 active projects with  common indicators in our sample that had fiscal year 2013 targets.analyzed 7 projects (see fig. 3).

Of these 7 projects, 1 project met or exceeded targets for both common  indicators, 4 projects met or exceeded the target for one indicator, and 2  projects did not meet the target for either indicator. For the 4 projects that  met or exceeded the target for one indicator, these projects achieved 74  to 92 percent of the target for the other indicator.

As discussed previously, the trade and labor office does not have  common indicators, but requires projects to develop project-specific  indicators and targets. According to trade and labor office officials, in  2013, the trade and labor office began requiring the Better Work country  projects it funds to develop and submit semiannual performance  monitoring plans with indicators, targets, and actual results. Officials said  that these indicators and targets were developed by Better Work. Each  project has numerous individual indicators and targets.

For the most recent project time period available (varying between the  end of 2012 and the end of 2013), we counted the number of indicators  with targets for each of 6 projects, determined for how many of those  indicators the target was met or exceeded, and determined how many  projects achieved various levels of success in meeting or exceeding their  targets (see fig. 4).

For 5 projects, the projects met or exceeded the targets for more than 50  percent of their indicators with targets. One project met or exceeded the  targets for 14 percent of its indicators with targets, meaning it did not  meet the targets for 86 percent.

A project could miss an annual target but still achieve its life-of-project  targets, and there are many reasons why grantees might not achieve their  targets, according to ILAB officials. For example, natural disasters or civil  unrest are outside of the grantee’s control and can result in a need to  change project targets. However, projects can also miss their targets  because of a flawed strategy that did not fully take into account the  realities of the implementing environment. Child labor office officials said  that they encourage grantees to set ambitious but realistic annual targets.

section_title: The Child Labor Office Uses Attestation Engagements and Both Offices Use Midterm Evaluations to Make Adjustments during the Remainder of the Project
paragraphs: Both offices hire independent contractors to conduct midterm project  evaluations to assess project performance. Midterm evaluations for both  offices and attestation engagements for the child labor office (which  assess both financial and performance issues) identify areas for  improvement during the second half of the project. We reviewed five child  labor project midterm evaluations, five trade and labor project midterm  evaluations, and seven child labor project attestation engagements to  identify such improvements.

The midterm evaluations and attestation engagements we reviewed  found that ILAB projects are making progress toward goals, but identified  areas for improvement. Evaluators and auditors highlighted several  positive aspects of the projects. For example, auditors found that, in  several projects, parents, teachers, and other community members were  appreciative of the project and noted that children in the project are  improving literacy skills and learning other new skills, and have stopped  work or are working fewer hours. In addition, in Jordan, auditors reported  that parents and teachers said that children were exhibiting fewer  aggressive behaviors, and some children are gaining access to education  for the first time. In Nicaragua and Indonesia, auditors found that  awareness of exploitive child labor had increased in the target  communities. The midterm evaluation of a Better Work project in Vietnam  found that the project was likely to achieve its intended objectives,  including strengthening the capacity of unions in export-oriented  workplaces within the garment sector.

Evaluators and auditors also noted several areas for improvement, and  ILAB officials responded. For example, project managers told us they use  evaluations and attestation engagements as one way to have a check on  source documentation that supports reported indicator results in TPRs  because they do not and are not expected to examine source  documentation, in part because it is not feasible for the material to be  sent to Washington, D.C. Evaluators and auditors found cases in several  projects where reported beneficiary data were not accurately supported.  In addition, one attestation engagement we reviewed found that the  project had misclassified beneficiaries because of incorrect understanding  of the child labor office’s definitions for children withdrawn or prevented  from involvement with child labor. As a result, according to the attestation  report, the project provided training to its staff so that they could correctly  classify project beneficiaries to more accurately report the correct number  of beneficiaries to the child labor office. Further, the midterm evaluation of  a project in Jordan found that children were not able to participate in  education activities because they lacked transportation. In response, the  project began providing children with transportation. Midterm evaluations  for three Better Work projects noted that the projects lack long-term  sustainability. Trade and labor office officials acknowledged that  sustainability takes a long time to achieve and much effort from  stakeholders and funding from the host government. In response to a  2012 evaluation of the global Better Work program, DOL stated that it  would like a better understanding of the role that host country  governments will play in either the general sustainability aspect of Better  Work or in the specific area of enforcement, and how that government’s  role ties into the future vision for the program. Trade and labor office  officials said that while ILO’s approach to sustainability has been focused  on cost recovery and financing of the Better Work program itself, trade  and labor office officials said they have a broader view about what  sustainability can mean. For example, training and improving the capacity  of government labor inspectors so that a Better Work project is not  needed is a form of sustainability. Updates on project activities in  response to evaluation and attestation engagement recommendations are  also included in TPRs, as relevant.

section_title: Final Project Evaluations Have Informed Changes to Child Labor Projects, but Most Impact Evaluations Are Not Yet Complete
paragraphs: ILAB officials said they have drawn lessons learned from final project  evaluations that assess performance against goals and objectives, but it  is too early to determine the usefulness of impact evaluations. The child  labor office and trade and labor office both require final evaluations for all  completed projects and have general guidance for disseminating the  evaluation results to inform new projects. Project evaluations, such as the  midterm and final evaluations, are assessments of performance against  goals and objectives. They are used to answer questions about design,  implementation, and results. The final evaluations identify project  achievements as well as cross-cutting areas for improvement. Child labor  office officials said they have drawn some lessons learned from the  evaluations that they have incorporated into subsequent projects,  including addressing monitoring and evaluation issues earlier in a project.  Impact evaluations, in contrast to project evaluations, seek to answer  cause-and-effect questions. Their purpose is to determine whether a  program has an impact and to quantify how large the impact is. Because  only two impact evaluations have been conducted to date for the child  labor office, it is too early to determine the usefulness of their results.  Officials from the trade and labor office said that they had not previously  had dedicated funding to conduct impact evaluations, but are planning to  start them with funding assistance from DOL’s Chief Evaluation Office.
subsections: section_title: Final Project Evaluations Underline Positive Effects as well as Cross-cutting Weaknesses
paragraphs: As with the midterm evaluations, the child labor office and the trade and  labor office hire independent contractors to carry out final project  evaluations to assess project performance. These evaluations are  assessments of performance against goals and objectives. They are used  to answer questions about design, implementation, and results. According  to ILAB guidance, the final project evaluation is a key tool that helps both  offices better prepare for new projects because evaluation findings are  used for planning future projects. The child labor office requires a final  evaluation no later than 3 months before the end of a project; the trade  and labor office requires the final evaluation to take place at least 4 to 6  months prior to the end of the project period. Exceptions to these rules  are allowed on a case-by-case basis. Both offices in ILAB have guidance  about procedures project managers and independent evaluators need to  follow. For example, the terms of reference for the evaluation specify key  areas of focus that a final evaluation needs to cover, such as relevance,  effectiveness, efficiency, and sustainability.

Final evaluations make recommendations to grantees and ILAB for  improvement. In our sample of 26 projects covering both offices, there  were 8 completed projects, all of which were funded by the child labor  office between fiscal year 2006 and fiscal year 2013. Of these 8, 1 did  not have a final evaluation on file. Although the grantee of this project  commissioned a contractor to perform the final evaluation, the child labor  office could not accept the report because of its poor quality, according to  officials.

The evaluations found that the projects were generally relevant to the  local context and supported the main goals of DOL. Projects also had  positive effects on raising awareness of child labor issues and, in some  cases, empowering communities. However, our analysis of the  evaluations found the following cross-cutting areas of weakness—issues  with data, livelihoods and other support services, and project staffing— with potential consequences for project effectiveness and sustainability:

Data concerns: In 3 projects, the number of children withdrawn and  prevented from involvement with child labor were not always counted  or targeted in a consistent manner. In 2 projects, an emphasis on  achieving preset numerical targets raised evaluators’ concerns about  the quality of services delivered. Child labor officials told us  establishing targets is a balancing act. For example, setting targets  too low and ending up with final numbers far in excess of targets  could also indicate flaws in project design.

Weaknesses in livelihoods and other support services: Four of the  final evaluations we reviewed found that vocational or skill training  programs were not always appropriate, either because they were too  short in duration, did not provide the beneficiaries the necessary tools,  or lacked local labor market research, which could have secured  beneficiary children apprenticeships and practical training with local  employers. In addition, the evaluations of three projects found support  could be strengthened for family livelihood and income generation  activities to tackle the root causes of child labor, including household  poverty and lack of educational opportunities. Further, four of the  evaluations we reviewed recommended adding psychosocial support  for beneficiary children.

Staffing concerns: Staff problems in projects, such as high turnover  rates, low pay, varying degrees of skill, and workload were raised in 4  final evaluations. One project experienced delays because the host  government instituted a requirement that the project’s country director  be a host country national, and as a result, would not grant a visa to  the foreign-national director hired by the grantee.

In addition, to inform staff of recurring themes across project evaluations,  the child labor office commissioned a synthesis report in 2012 that  systematically reviewed the findings of 48 final project evaluations. The  report found that projects generally met ILAB’s goals, such as achieving  targets for withdrawing and preventing children from child labor, and  increasing awareness about the importance of education for all children.  The report also points to promising activities that were implemented  across several countries, including well-conducted remedial classes and  early-childhood development initiatives. However, the report found that  the goal of ensuring the long-term sustainability of activities was not  always achieved, mainly because recipient countries generally lack the  necessary resources.

section_title: ILAB Has Drawn Lessons Learned from Project Evaluations
paragraphs: Both the child labor office and the trade and labor office have guidance  stating that one of the roles of project managers is to ensure that the  office is applying learning from evaluations and feeding knowledge back  into new and ongoing projects, as appropriate. Child labor officials told us  they make adjustments to projects and strengthen processes based on  evaluation recommendations, as needed. For example, the office  anticipates fewer data quality issues with recent projects because the  new CMEP process, which all new direct beneficiary projects have had to  implement since fiscal year 2012, requires grantees to focus on data  collection and reporting early in the project. Child labor officials also said  they now require grantees to assess local labor market conditions, if they  include vocational training in their project proposals, to ensure there is  demand for the skills they plan to teach. For example, a 2013 solicitation  for a project in Morocco states that applicants’ strategies must be based  on labor market research to ensure that the services available through the  project are linked with local employment options. In addition, the fiscal  year 2010 appropriations conference report directed that funds may be  used to support livelihood assistance activities as part of projects, which  officials said addresses some of the issues about family livelihoods that  evaluators raised in the past. Child labor officials also told us they  strongly encourage grantees to hire local nationals as key personnel for  their projects to satisfy potential host government requirements and avoid  delays in project start, as well as build local capacity.

To disseminate the results of evaluations and their related lessons, the  child labor office keeps an internal electronic repository of project  evaluations organized by country, region, and topic, which staff can  consult when scoping projects, according to officials. Child labor officials  said they do not currently plan to produce more of the synthesis reports of  evaluations, relying instead on the repository.

Similarly, the trade and labor office’s guidance lists steps project  managers should follow to disseminate evaluation findings, including  briefing interested parties in DOL within 2 weeks and sharing the report  and its findings with all relevant stakeholders. Officials from the trade and  labor office said all evaluations are on a shared drive accessible to project  managers. ILAB officials also told us project managers share the findings  and recommendations of evaluations in informal meetings.

In addition, external stakeholders can find evaluations on ILAB’s website,  which makes publicly available most midterm and final evaluations of  projects. DOL is in the process of uploading more evaluations, officials  told us, as part of website improvements. It aims to have all evaluations  available on its website. Two grantees we spoke to said that they used  project evaluations from ILAB’s website to help them develop their grant  proposals. One project manager also said that she encourages grantees  to review these evaluations to see if they have lessons that are applicable  for the grantees’ projects.

section_title: While ILAB Has Funded Impact Evaluations of Selected Components of Projects, Most Remain Incomplete, Making The Usefulness of Their Results Difficult to Determine
paragraphs: In addition to final project evaluations, since 2008, the child labor office  has provided funding to several organizations to carry out impact  evaluations of specific activities in 7 projects. Two of these are  complete. Unlike project evaluations, ILAB does not require impact  evaluations, but conducts them to obtain information on what types of  interventions are effective in reducing child labor and can be used as the  basis for replicating successful activities.

Impact evaluations seek to answer cause-and-effect questions. Their  purpose is to determine whether a program has an impact and to quantify  how large the impact is. For example, impact evaluations often involve  randomly assigning eligible individuals or children to two groups, one of  which participates in the program or activity that is being evaluated  (treatment group), while the other does not (control group). The random  assignment ensures that the two groups are statistically the same, and  any difference seen later can be attributed to one group having  participated in the program and the other not. Thus, impact evaluations  measure program effectiveness typically by comparing the outcomes of  the two groups.

So far, two impact evaluations have been completed. Three are still  ongoing, and two have been halted, largely because of concerns about  data quality, as well as delays and deviations from original  implementation plans, which would potentially skew results, according to  officials.

The child labor office considered a number of factors when selecting  projects for impact evaluation, according to officials, including the size of  the population served by the project; the implementing environment— whether the country was stable and receptive to the idea of an impact  evaluation, as not all countries are—and whether the project included  livelihood services. In 2013, the child labor office held a workshop for  impact evaluation implementers to share lessons learned from their  experience and report on progress.

One impact evaluation found that an extended-hours school activity in  Bolivia had mixed effects on the school or work situation of beneficiary  children, possibly increasing school enrollment among rural children while  decreasing it among urban children. The evaluation also found no impact  on participation in hazardous child labor. The other completed impact  evaluation, of a project combating child labor through education and  livelihood support in Egypt, found that the project had a significant  positive impact on school enrollment, attendance, and time spent on  school-related activities, especially for girls and young children. It also  found that the amount of time beneficiary children were working had been  reduced, but no evidence that the education project had an impact on the  children’s overall participation in work, or their exposure to workplace  hazards, suggesting that the intervention may need to be reformulated to  reach the ultimate objective of withdrawing and preventing children from  involvement in hazardous child labor.

In 2006, the child labor office also funded ILO to undertake six tracer  studies, as part of the broader work on impact assessment, with an  expected delivery date in 2011. Tracer studies look back at a sample of  children who have already been provided educational services and  present evidence on the extent to which such interventions have long- term effect on the lives of beneficiary children. ILO has supplied only four  tracer studies to date, two of which are not available in English.

Because there are only two completed impact evaluations, both of which  were carried out in 2013, out of the seven that have been funded by the  child labor office since 2008, it is too early to gauge how the office will use  them to inform future project design. As indicated earlier, the two impact  evaluations conducted so far suggest that the education projects likely  need modifications to have a significant effect on withdrawing and  preventing children from participating in child labor. Similarly, since only  four of the six tracer studies commissioned in 2006 were delivered, it is  unclear how the tracer studies will inform future project design for the  child labor office, especially when a language barrier limits their wide  dissemination.

Trade and labor officials said that in the past, the office did not have  dedicated funding to commission impact evaluations of their projects but  that they have recently begun one with financial assistance from DOL’s  Chief Evaluation Office for that purpose. However, they noted that this  assistance is not guaranteed in future years. According to officials, lack of  funding is a real constraint given that the cost of evaluation is high  compared with the cost of projects. For example, an impact evaluation  currently under way of a worker rights project in Colombia cost about  $950,000, which is over 60 percent of the project cost. Trade and labor  officials told us the Colombia project was selected because similar  projects are being considered in other Central American countries, so  finding out about the impact of the project is important. Until recently,  most of the trade and labor office’s largest grants have been directed  towards the Better Work projects implemented by ILO, and ILO has  commissioned an impact evaluation of these projects. Because DOL is  not providing funding for this effort, the trade and labor office officials told  us that it has access only to reports and data that ILO makes publicly  available.

section_title: Conclusions
paragraphs: Congress funds the child labor and trade and labor offices to, among  other things, combat exploitative child labor internationally and implement  model programs that address worker rights issues. These funds are used  to address the conditions that could lead to disasters such as the factory  collapse in Bangladesh and the tragedy of millions of children around the  world facing harsh employment conditions and missing out on educational  opportunities. DOL project managers use many tools to monitor whether  projects are on track to meet objectives, but improving use of some of  these tools could help DOL achieve its goals for the projects it oversees.

Project managers use the quarterly financial report to ascertain how  projects are managing their funds; however, ILAB guidance lacks  deadlines and criteria for when quarterly financial reports must be  formally accepted or rejected. For about 20 percent of the reports we  reviewed, project managers did not formally accept them in DOL’s  electronic grant management system until after the next quarter’s  reports were due. This can make it difficult to identify and address  financial issues in a timely way.

Because of a lack of specific guidance, grantees may not be clear  about requirements to ensure that submitted inventory lists include  inventory lists of subgrantees. If the equipment and real property  purchased by the subgrantees are not accurately reported by the  grantee, there is a risk of a lack of accountability for assets purchased  with DOL funds.

Attestation engagements can be key to ensuring that grants are  operating as intended. Although the child labor office uses attestation  engagements, the trade and labor office to date has not used them,  although it plans to by November 2014. Without attestation  engagements, it is difficult for the trade and labor office to assess how  well its grantees comply with DOL regulations and provisions of the  cooperative agreement, as well as the reliability of the grantees’  financial and performance reports.

While the trade and labor office has project-specific indicators to  measure the progress of individual grants, it lacks a way to assess  performance across all of its grants. Without common indicators, it is  difficult for the trade and labor office to assess overall progress toward  its goals.

Financial and performance monitoring tools are key to ensuring that  federal funds are used as intended and that programs are as effective as  possible. Without improved oversight, these programs are at increased  risk of not meeting the goals of improving working conditions, protecting  workers’ ability to exercise their rights, and addressing the workplace  exploitation of children and other vulnerable populations.

section_title: Recommendations for Executive Action
paragraphs: To improve ILAB’s financial and performance monitoring, we recommend  that the Secretary of Labor, in concert with ILAB management, take four  actions:  1.  to facilitate the effective financial oversight of its grants, establish  guidance specifying time frames in which project managers must  accept or reject quarterly financial reports and the criteria for  accepting or rejecting the reports;  2.  to better ensure accurate accounting of federal funds, revise ILAB  policies to specify that subgrantee inventories of equipment and real  property purchased with federal funds are included in inventory lists  submitted by the grantee;  3.  to improve financial and performance monitoring of trade and labor  grants, implement the trade and labor office’s plan to conduct  attestation engagements and develop guidance on the management  of these engagements; and  4.  to improve performance monitoring of trade and labor grants, ensure  that the trade and labor office implement its plan to develop common  indicators to track progress across projects.

section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to DOL for comment. We also provided  relevant sections to the State Department for technical comment.

In its written comments, which are reproduced in Appendix II, DOL stated  that it agreed with GAO’s recommendations to improve their financial and  performance monitoring. Specifically, DOL reported that the child labor  office is incorporating into its operation manual the same standard that  the trade and labor office has recently established—which is for project  managers to accept or reject quarterly financial reports within 30 days  after the reports are due. In addition, DOL said that it will translate its  informal guidance and standards for accepting or rejecting financial  reports into formal written criteria. DOL also stated that it has taken  measures to revise the language in ILAB’s cooperative agreements and  management procedures and guidelines to specify that grantee inventory  reporting requirements must include items purchased by subgrantees.  Further, DOL explained that the trade and labor office has initiated the  planning process for its first attestation engagement, including  development of guidance for managing these engagements. Finally, DOL  said that the trade and labor office is including six new common indicators  in ILAB’s internal fiscal year 2015 operating plan.

DOL and the State Department also provided technical comments, which  we incorporated as appropriate.

We are sending copies of this report to interested congressional  committees. We are also sending copies of this report to the Secretary of  Labor. In addition, the report is available at no charge on the GAO  website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-9601 or melitot@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made key contributions to this report  are listed in appendix III.

section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: This report reviews issues related to the Department of Labor’s (DOL)  Bureau of International Labor Affairs (ILAB) international technical  assistance. The objectives of this report examined how ILAB: (1) ensures  the financial accountability of its technical assistance funds, (2) monitors  the performance of its projects, and (3) evaluates its projects and uses  the results of the evaluations.

To assess how ILAB ensures the financial accountability of its technical  assistance funds, we reviewed ILAB management procedures and  guidelines and operations manuals of the child labor office and the trade  and labor office. These manuals contain chapters on cooperative  agreements and procedures for audits of technical assistance programs.  We also reviewed the ILAB cooperative agreement template and  attestation engagement reports. To determine whether ILAB project  managers are following ILAB’s guidance regarding timely review of  quarterly financial reports, we selected the entire population of 74  financial reports submitted to ILAB for the quarter ending June 30, 2013.  We selected the quarter ending June 30, 2013 on a nonprobability basis.  We compared the date the grantee certified the financial report with the  date ILAB project managers accepted it to determine whether the project  manager was in compliance with ILAB’s guidance. Further, we analyzed  the financial reports to determine the amount of cash the grantee reported  as of June 30, 2013. To assess the reliability of the financial reports, we  interviewed DOL officials about the E-grants system and asked about  discrepancies we found during our review. We determined the data were  sufficiently reliable for the purpose of determining the timeliness of  acceptance of the financial reports and the amount of cash balances. In  addition, we interviewed ILAB officials to understand the processes for  financial monitoring of cooperative agreements. To the extent necessary,  we compared the information obtained with GAO’s Standards for Internal  Control in the Federal Government.

We selected a nongeneralizable sample of 26 projects out of a total of 98  projects that were active in calendar years 2011, 2012, and 2013. To  select this sample, we used lists of projects from fiscal years 2003  through 2012. These project lists are maintained by the child labor and  trade and labor offices in ILAB. To determine the reliability of these lists,  we met with the responsible officials and discussed how the lists are  updated and maintained. We determined that these data were sufficiently  reliable for the purposes of reporting ILAB’s funding and selecting our  sample of awards to review. We selected the sample based on several  factors, such as dollar value and geographic location. The sample  represents about 44 percent of ILAB funding over these years and  includes seven of the nine grants with the highest dollar value ($10 million  or above). Our sample includes projects that are single-country,  multicountry, completed, ongoing, direct services (such as education or  livelihood support that the implementing organization provides directly to  the targeted beneficiaries), capacity building, and in most geographic  regions. Because our sample is nongeneralizable, it cannot be used to  make inferences about the population of ILAB grants.

To examine how ILAB monitors the performance of its projects, we  reviewed ILAB monitoring guidance, including management procedures  and guidelines and operations manuals of the child labor office and trade  and labor office. These manuals contain chapters on technical  assistance/cooperative agreements, project administration, project  oversight, and monitoring and evaluation. We developed a data collection  instrument to assess the compliance of the 26 grants in our sample with  selected monitoring requirements, such as technical progress reports,  monitoring plans, and site visit reports. We identified these requirements  based on ILAB guidance documents, including the management  procedures and guidelines and the operations manuals from both the  child labor office and the trade and labor office. One analyst completed  the data collection instrument and another analyst verified the entries. In  addition, we interviewed ILAB officials about any questions related to the  data. To assess the extent to which the 12 active child labor projects in  our sample achieved fiscal year 2013 targets for the child labor office’s  two common indicators, we used the office’s indicator tracking sheet. To  assess the reliability of the data in the tracking sheet, we used the actual  results and fiscal year 2013 targets reported in each project’s October  2013 technical progress report. For 8 projects, we identified discrepancies  between the tracking sheet and the technical progress reports. ILAB  provided additional supporting documentation to resolve the  discrepancies for 6 of those 8 projects and indicated that it was working  with the grantees for the other 2 projects to clarify the data they had  reported. We excluded these 2 projects from our analysis. We also  excluded 3 projects that did not have fiscal year 2013 targets, leaving a  total of 7 projects in our analysis. In addition, since the trade and labor  office does not have common indicators used across all projects, we  counted the number of indicators with targets for each of 6 ongoing trade  and labor projects Better Work country projects in our sample and  analyzed how many of those targets the project met or exceeded for the  most recent project time period available (varying between the end of  2012 and the end of 2013). We pulled the indicator targets and results  data from the data-tracking tables provided by these projects to ILAB. To  assess the reliability of the data, we met with trade and labor officials to  discuss how they verify grantee data. According to officials, the grantee is  responsible for the accuracy of the data, and data quality is checked  through audits and evaluations. However, the ILAB project manager does  not engage in ongoing data validity checks. We determined that the data  were sufficiently reliable for the purpose of reporting on compliance with  monitoring requirements and project performance for the projects in our  sample. We also met with knowledgeable officials from ILAB, including 11  project managers, to discuss how they provide oversight of their grants. In  addition, we met with grantees at their headquarters in Washington, D.C.,  and in Ecuador, Peru, Cambodia, and Thailand, to obtain their  perspectives on how ILAB monitors grants. We selected these locations  based on, among other factors, size of grant, geographic location, and  phase of the project.

To examine how ILAB evaluates its projects and uses the results of its  evaluations, we reviewed seven final evaluations for the completed child  labor projects in our sample  and the two completed impact evaluations  ILAB had conducted. We discussed the completed final evaluations and  impact evaluations with ILAB officials, including project managers  responsible for the projects, to discuss the evaluation findings and how  ILAB used those findings. We also discussed ongoing impact evaluation  efforts.

The trade and labor office projects in our sample were still ongoing at the time of our  review, and thus did not yet have a final evaluation. the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

section_title: Appendix II: Comments from the Department of Labor

section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact

section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Leslie Holen, Assistant  Director; Christina Werth; Rachel Girshick; Jeff Isaacs; Seyda Wentworth;  and Josiah Williams made key contributions to this report. Jill Lacey,  Grace Lui, Karen Deans, and Etana Finkler provided technical  assistance.


Question-summary annotations: questions: question: What does DOL's ILAB offer?
answer: The Department of Labor's (DOL) Bureau of International Labor Affairs' (ILAB) child labor office and trade and labor office both have guidance for the financial monitoring of grants, but could improve their financial oversight.
child_questions: question: What was the nature of these gaps in financial oversight?
answer: For example, we found that project managers completed their acceptance or rejection of about 20 percent of quarterly financial reports more than 90 days after receipt from the grantee, after the next quarter's report was due. ILAB does not have guidance that provides time frames and criteria for accepting or rejecting quarterly financial reports.

question: To what extent does the trade and labor office provide adequate oversight?
answer: In addition, although the child labor office supplements federal financial requirements with attestation engagements of selected projects to, among other things, assess the accuracy and reliability of grantee financial and performance data, the trade and labor office has not yet implemented its plan to conduct such attestation engagements of its grants, although officials said they plan to do so by November 2014.

question: What risks might emerge from this lack of oversight?
answer: Without addressing these gaps in financial oversight, it could be difficult for ILAB to ensure federal resources are used efficiently and effectively to achieve desired objectives.

questions: question: What is the purpose of ILAB's final evaluations?
answer: ILAB conducts final evaluations for all projects to assess the performance of the project, including an assessment of performance against goals and objectives.
child_questions: question: How have officials used these evaluations?
answer: Officials said they have drawn lessons learned from these evaluations that they have incorporated into subsequent projects, including addressing monitoring and evaluation issues earlier in a project.

question: What is the purpose of impact evaluations?
answer: ILAB has also commissioned impact evaluations to determine whether a project has an effect and to quantify how large the effect is, and two have been completed to date.

questions: question: What does the International Labour Organization say about child labor?
answer: According to the International Labour Organization, millions of children worldwide are engaged in labor that hinders their development. Recent incidents, including a factory collapse in Bangladesh, have highlighted poor working conditions overseas.

question: What does ILAB's child labor office provide funding for?
answer: ILAB's child labor office and trade and labor office provide funding to improve working conditions by supporting worker rights and combating child labor, mainly through international and nongovernmental organizations. The child labor office obligated about $56 million and the trade and labor office obligated about $13.5 million in fiscal year 2013.

question: What does this report examine?
answer: You asked us to review issues related to ILAB's international technical assistance. This report examines how ILAB (1) ensures the financial accountability of its technical assistance funds, (2) monitors the performance of its projects, and (3) evaluates its projects and uses the results of the evaluations.
child_questions: question: How did GAO get information for this report?
answer: To address these objectives, GAO reviewed ILAB documents on financial requirements, performance monitoring, and evaluation. GAO analyzed a nongeneralizable sample of 26 grants that were active in calendar years 2011-2013.
child_questions: question: How did GAO select this sample?
answer: GAO selected this sample based on several factors, including dollar value and geographic location.