The Head Start program was established in 1965 to promote the school readiness of low-income children by enhancing their cognitive, social, and emotional development by providing a range of individualized services to pre-school aged children and their families. The program is overseen by ACF, which awards grants directly to a network of about 1,600 public and private nonprofit and for-profit agencies to help pay for health, educational, nutritional, social, and other services to primarily low-income children from birth to age 5, and their families. ACF monitors the success of local agencies that receive Head Start grants in meeting Head Start program goals and complying with program requirements by conducting on-site monitoring reviews of grantee programs every 3 years; administering an extensive, annual PIR survey of grantees; and reviewing required financial reports and annual audit reports. Reviewers assess Head Start grantee compliance with all program requirements, including those specified in the Improving Head Start Act, the Head Start Program Performance Standards, and other relevant federal, state, and local regulations. These requirements consist of administrative, financial management, and other standards, such as using age-appropriate materials to help children learn to recognize letters and numbers, and providing safe play areas. By law, each Head Start grantee must receive a full review at least once every 3 years. New grantees must receive a full review after completion of their first year of providing Head Start services and at least once every 3 years thereafter. ACF’s policy is to conduct these reviews on-site. Except for new grantees, Head Start grantees are reviewed on a rotating basis, and approximately one-third of all grantees are monitored each year. Reviews are conducted by a team of reviewers led by a federal Head Start program specialist from one of ACF’s 10 regional offices. In our February 2005 report, we identified a number of weaknesses in ACF’s oversight of Head Start grantees. Specifically, we found that ACF did not have a strategy for bringing information from its various monitoring processes together in order to comprehensively assess Head Start program risks, and identified problems with each of its strategies for monitoring grantees. We found that ACF did not have procedures to ensure that on-site reviewers performed their responsibilities in accordance with established guidelines or to ensure that managers and staff in ACF regional offices were held accountable for the quality of the on-site reviews. We also found that ACF did not have procedures for independently verifying data submitted by grantees in its annual PIR survey, which, in addition to providing information about grantee performance, is used to provide information to Congress and the public about important program characteristics, such as program design and staffing, and numbers and characteristics of children enrolled and attending Head Start programs nationwide. Finally, we found that ACF made limited use of financial reports and audits to ensure that all grantees effectively resolved financial management problems and had made little use of its authority to terminate grantees that did not meet program, financial management, and other requirements, and fund new grantees to replace them. We made a number of recommendations to address the problems that we identified, including: 1. producing a comprehensive risk assessment of the Head Start 2. strengthening on-site reviewer training and certification procedures; 3. developing a more consistent approach to conducting on-site reviews 4. implementing a quality assurance process that ensures on-site reviews are conducted within established guidelines and ACF managers are held accountable for the quality of on-site reviews; 5. ensuring the accuracy of PIR survey data by independently verifying key data submitted by grantees, or ensuring that grantees have systems in place to collect and report accurate, verifiable data; 6. making greater use of available information on the status and use of 7. taking steps to obtain competition for grants that are being refunded if it is determined that current grantees have failed to meet program, financial management, or other requirements. In 2006, ACF reorganized its regional offices in order to streamline program operations. (See fig. 1.) Currently, ACF regional program staff report directly to its central program offices, rather than to regional office administrators. The regional administrators no longer have direct authority to manage individual program activities. As a result, Head Start program specialists are directly accountable to central office management. Also, financial management specialists, who monitor financial management of all ACF grants, including Head Start grants, are now directly accountable to the central Office of Grants Management, which is located within the ACF Office of Administration. The Office of Administration provides support to ACF’s program offices on a range of administrative issues, such as managing personnel, information resources, procurement, and grants. The Office of Grants Management carries out the Office of Administration’s grants administration duties and provides leadership and technical guidance to ACF program and regional offices on grant operations and grants management issues. The Head Start program was revised and reauthorized in the December 2007 Improving Head Start Act. Prior to this, the program was last reauthorized in 1998, for fiscal years 1999 through 2003. In the years between the 1998 and 2007 reauthorizations, the program remained funded through the annual appropriations process. ACF has not undertaken a comprehensive assessment of risks to the federal Head Start program, despite our 2005 recommendation, and little progress has been made in ensuring that the data from its annual PIR survey of grantees, which could facilitate such an assessment, are reliable. Although ACF has two systems in development to address risk assessment, neither system provides for a comprehensive, programwide risk assessment for the Head Start program. Further, both systems depend to some extent on unreliable data from the annual PIR survey of grantees. Although ACF has known about the problems with PIR survey data, it has done little to address them. ACF has not undertaken a comprehensive assessment of risks to the federal Head Start program. Risk assessment is one of five internal control standards that together provide the foundation for effective program management and help government program managers achieve desired results through effective stewardship of public resources. To carry out a comprehensive risk assessment, program managers need to identify program risks from both external and internal sources, estimate the significance of these risks, and decide what steps should be taken to best manage them. Although such an assessment would not assure that program risks are completely eliminated, it would provide reasonable assurance that such risks are being minimized. For the Head Start program, this might include anticipating and developing strategies to minimize the impact of changes in resources available to oversee and assist local grantees, or to develop initiatives to address social and demographic changes that may result in changing service needs for families with young children. In 2005, we reported a similar finding, noting that despite efforts to collect information and assess risks, ACF did not have a strategy for bringing this information together in order to comprehensively assess program risks, and recommended that ACF produce a comprehensive risk assessment of the Head Start program. To address our 2005 finding, ACF has attempted to bring together information about local programs and to assess risk on a grantee-by-grantee basis; however, it has yet to develop a systematic approach to assessing risks that may arise from other sources and, if undetected, could hinder ACF’s ability to achieve Head Start program objectives, or for developing strategies to prioritize and address risks proactively. ACF is in the process of developing two systems that may help it assess programwide risks; however, significant limitations or uncertainty exist with respect to each that could constrain ACF’s ability to use them to conduct a meaningful risk assessment. The first system, the refunding analysis system, is a process whereby ACF evaluates the performance of individual grantees each year before it refunds, or renews, their grants. The second system, the Head Start Enterprise System (HSES), is still under development. As envisioned by ACF, the HSES may one day integrate all available Head Start program data into a single, interactive database that may one day facilitate analysis across many program areas. The first system is limited in how it could be used for risk assessment, and the completion of the second system is uncertain. The refunding analysis system is limited because it assesses risk from only one source—grantee performance—and does not assess other types of risk, such as inadequate procedures for ensuring that staff follow policies for monitoring grantee activities or for minimizing payments that are not in accordance with program requirements. Although the planned HSES has the potential for assessing a wider range of potential program risks, it has been in development for at least 4 years, and it is unclear when or how it will actually be used. The refunding analysis system is an evolving system for evaluating grantee financial management and performance annually and determining which grantees require additional assistance. Each month, regional program staff who are responsible for overseeing Head Start grantees bring together and assess all available information about grantees that are scheduled to re- apply for their grants. The information is reviewed by grants management staff and Head Start central office staff. Although the refunding analysis system is intended to provide analysis of grantee performance prior to refunding, it serves primarily as a means of identifying grantees that need assistance and not as a means of discontinuing grants for underperforming grantees. Although the refunding analysis system allows grantees that are considered high risk to be brought to the attention of Head Start program managers, it does not allow for a broader assessment of other sources of risk, such as those we previously identified. For example, in 2005, we identified improper payments to contractors as a source of potential risk for the Head Start program. Under the Improper Payments Information Act of 2002, agencies are required to annually identify programs and activities that may be susceptible to significant improper payments; provide Congress with the annual estimated amount of improper payments; and, for programs and activities with estimated improper payments that exceed $10 million, report on actions taken to reduce improper payments.