Corporation For National And Community Service:

Better Internal Control and Revised Practices Would Improve the Management of AmeriCorps and the National Service Trust

GAO-04-225: Published: Jan 16, 2004. Publicly Released: Feb 20, 2004.

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The Corporation for National and Community Service (the Corporation) was created to help meet community needs and expand educational opportunity by providing education awards to participants. The Corporation oversees and funds the AmeriCorps program as well as the National Service Trust (the Trust), which pays the education awards. From November 2002 to March 2003 the Corporation suspended AmeriCorps enrollments because there would not have been sufficient funds in the Trust to pay education awards. GAO was asked to determine (1) if all AmeriCorps enrollments were accurately recorded, (2) how the Corporation estimated its funding needs, and (3) if the Corporation made changes to prevent another enrollment suspension and to address requirements established in the Strengthen AmeriCorps Program Act. GAO analyzed laws, reviewed documents, interviewed officials, assessed the reliability of the Trust database, examined the model used to estimate funding needs, and surveyed Americorps grantees.

Discrepancies between information in the Trust database and participant documentation indicate that not all AmeriCorps participant information was accurately reflected in the Trust database. An estimated 5 percent (8,300) of about 158,000 enrollments from program years 2000 to 2002 have discrepancies, and about 3 percent (4,400) have discrepancies that could affect estimates of future probable expenditures of the Trust. Further, the users' manual for the Trust database system had not been updated. In 2003 the Corporation began using a new model with conservative assumptions of participant behavior to develop its funding estimates. Corporation officials explained that they used conservative assumptions because the AmeriCorps program does not have a long history from which to extrapolate participant behavior, and the Corporation wanted to regain credibility after the enrollment suspension in 2002. Using the new model may be prudent until the Corporation gains more experience. However, because the new model increased the Trust's funding estimates, the Corporation will need to monitor actual experience compared with the model's assumptions and may need to deobligate unused Trust funds. Further, the new model does not incorporate external factors, such as downturns in the economy, which may affect funding estimates or the Trust's balances. The Corporation recently formed a team to assess the costs and benefits of adding external factors in its model. The Corporation has made some changes to its operations that minimize the likelihood it will need to suspend enrollments in the future. Corporation officials have been obligating Trust funds when positions are approved since June 2003, and the communication and coordination among officials have greatly improved. Changes have also been implemented and planned to address the Strengthen AmeriCorps Program Act requirements. However, changes to improve oversight of grantees have not been fully implemented, and policies related to refilling vacated positions and converting unfilled positions may limit enrollments, hinder service delivery, and contribute to the accumulation of a larger Trust balance.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: The Corporation agreed with this recommendation. Data supporting member enrollment and exit status is maintained by the Corporation's grantees, which are primarily nonprofit organizations and state governments. Grantees are required to obtain an audit under OMB Circular A-133. For the AmeriCorps program, OMB Circular A-133 requires testing of enrollment and exit data submitted by grantees to the National Service. In December 2004, officials reported that the Corporation had reemphasized with its grantees, state offices and sponsors the importance of timely processing of member exit information. The Corporation also noted that it would regularly review performance in this area to ensure compliance with the requirement. However, the Corporation's auditors for its fiscal year 2005 and 2006 financial statements recommended that the Corporation coordinate with grantees to reemphasize the importance of timely processing of enrollment and exit information after finding instances in which such forms were not processed in a timely manner. In fiscal year 2006, approximately 25 percent of enrollments and 14 percent of service completions (exit forms)were not processed in a timely manner.

    Recommendation: To ensure the National Service Trust receives accurate data for use in its model estimates and Trust database, the chief executive officer of the Corporation for National and Community Service should implement a strategy to correct discrepancies between the Trust database and the enrollment and exit forms.

    Agency Affected: Corporation for National and Community Service

  2. Status: Closed - Implemented

    Comments: In 2008, the Corporation began phasing out its primary reporting system--WBRS--and moving its functions to a new system--the My AmeriCorps portal. All transactions that have implications for the Trust will be performed in this portal once it is fully functional. The Corporation opted to make this conversion because WBRS would require a number of updates to reflect policy changes in the AmeriCorps programs and the portal is designed in a manner that allows consolidating data from multiple systems. In January 2008, the Corporation's OIG reported that the Corporation had adequate controls to: (1) allow only the refilling of slots vacated by members who served less than 30 percent of their term who did not win and education award; (2) allow refilling of a slot only once; and (3) provide the Corporation with visibility, although not in real time, of when refills have reached 97 percent of awarded slots or when the number of refilled slots reaches 5 percent of awarded slots. The report recommended that the Corporation incorporate automated controls of refills in the My AmeriCorps portal in order to provided real-time visibility of when the 97 and 5 percent thresholds are reached in order to prevent over-enrollment.

    Recommendation: To ensure the National Service Trust receives accurate data for use in its model estimates and Trust database, the chief executive officer of the Corporation for National and Community Service should review and document the effectiveness of its data assurance processes.

    Agency Affected: Corporation for National and Community Service

  3. Status: Closed - Implemented

    Comments: The Corporation reported that it submitted nearly 85,000 SSNs (45,605 for FY 2002 and 38,967 for FY 2003) to the Social Security Administration (SSA) for verification in April 2004. The results of the verification were received back from SSA in May 2004 and more than 96% of the SSNs matched without any errors. The files containing the errors were sorted and distributed to the field offices to research and verify the information by comparing to original documents, such as the social security cards of the members, and checking for typographical or data entry errors. The Corporation completed several requests for documents and received approximately an 85% response rate. In December 2004, the Corporation reported that it reinforced its policy and provided guidance to grantees to ensure that member files properly document eligibility. The Corporation submitted about 109,000 records to SSA for the next two fiscal years (53,424 for FY 2004 and 55,633 for FY 2005). Of these, 96% matched without any errors. Most errors were related to last name changes. According to agency officials, the Corporation renewed its Interagency Agreement with SSA to match SSNs of new members enrolled through the end of FY 2006 and planned to submit the data for matching in October 2006.

    Recommendation: To ensure the National Service Trust receives accurate data for use in its model estimates and Trust database, the chief executive officer of the Corporation for National and Community Service should regularly verify the accuracy of the SSNs of its participants.

    Agency Affected: Corporation for National and Community Service

  4. Status: Closed - Implemented

    Comments: According to Corporation officials, the Corporation has strengthened the documentation within Oracle Designer by implementing more rigorous style guidelines and adding additional details to the current data dictionary to enable it to be more user-friendly. Several projects have further enhanced the documentation of all aspects of the entire eSPAN system. These include: (1) a documentation style guide; (2) the incorporation of RoboHelp for all online help documentation; and (3) a Report Library, which will serve as repository for all system report requests. To further increase the accuracy of the system documentation, a Business Intelligence project was undertaken to scrutinize the data dictionary and provide an inventory of the entire system and its interconnections. Corporation officials reported that while the initial phase has concluded, the project continues to expand the data being placed in the data warehouse. The Corporation anticipates the system will continue to expand and further refinements will be made to the data dictionary for the foreseeable future and enhancements will continue to be made to some features as the eSPAN system increases in functionality.

    Recommendation: To better ensure that the Corporation for National and Community Service has data that are readily available and is positioned to continue operations in the event of a disaster, emergency, or employee turnover, the chief executive officer of the Corporation should update the users' manual for the National Service Trust database and develop an inventory of edit and data checks used for the database.

    Agency Affected: Corporation for National and Community Service

  5. Status: Closed - Not Implemented

    Comments: The Corporation's Office of Inspector General (OIG) contracts with an independent public accounting firm to perform the annual audit of the Corporation's financial statements and testing of internal controls. As of September 2004, the Corporation provided this recommendation to the OIG for its consideration and the Corporation agreed to institute an A-123 internal control review. Upon completion of this review, the Corporation would make an assertion that its internal controls were adequate and the financial statement auditors would be able to audit and opine on their adequacy. The Corporation completed the review during 2006 but has not made the necessary assertions on adequacy. The independent public accounting firm that audited the FY 2004 through FY 2006 financial statements of the Corporation reported in each of those years that their objective was not to provide assurance on the Corporation's internal control and, therefore, did not provide an opinion on internal control. Their testing was limited to those controls necessary to achieve the objectives described in "Government Auditing Standards" (Yellow Book). As of 2006, this recommendation was not implemented.

    Recommendation: To provide additional assurance over internal control and to minimize the related risks, the chief executive officer of the Corporation for National and Community Service should obtain an auditor's opinion on the adequacy of the internal control over financial reporting as part of the annual financial statement audit.

    Agency Affected: Corporation for National and Community Service

  6. Status: Closed - Implemented

    Comments: The Corporation contracted with Econometrica, Inc. to assess the trust model. Econometrica issued a report in June 2005 documenting testing it performed for six external factors. It recommended incorporating one into the model--undergraduate enrollment. In August 2006, Econometrica issued a second report describing changes it made to the model for the Corporation such as including anticipated trends in undergraduate enrollment.

    Recommendation: To enhance the accuracy of National Service Trust budget estimates and ensure the Trust does not accumulate large balances, the chief executive officer of the Corporation for National and Community Service should create a means to take into account the possible impact that external factors may have on participant behavior in its funding estimates and budget requests.

    Agency Affected: Corporation for National and Community Service

  7. Status: Closed - Implemented

    Comments: The Corporation revised its procedures and included steps to monitor Trust activity and deobligate funds for AmeriCorps positions not utilized by grantees. As of September 2004, Corporation officials used an eSPAN query to analyze Trust obligations and determine whether funds could be deobligated. In FY 2006, the Trust reserve had a balance of $40 million and the Corporation requested an additional $7 million for FY 2007. As part of GAO's annual budget justification review of the Corporation's FY 2007 budget request, we advised Congress not to provide the requested $7 million. However, the Corporation responded that the additional $7 million for the reserve would be offset by $9.7 million it expected to deobligate from expired, unused AmeriCorps member slots awarded in prior years. In it's FY 2008 budget justification, the Corporation included a schedule of estimated funds available for deobligation in FY 2007 and FY 2008. It also opted not to request funds for the Trust Reserve. It continued this practice in its FY 2009 budget request.

    Recommendation: To enhance the accuracy of National Service Trust budget estimates and ensure the Trust does not accumulate large balances, the chief executive officer of the Corporation for National and Community Service should establish and execute a periodic deobligation schedule for unused Trust obligations.

    Agency Affected: Corporation for National and Community Service

  8. Status: Closed - Implemented

    Comments: The Corporation reported that it regularly monitors Trust activity. Per Congressional direction, the Corporation prepares monthly Trust financial reports, which include updated enrollment, earning, and usage data. As of October 2004, the Corporation continued to use conservative assumptions for enrollments to calculate Trust obligations and budgetary needs. In April 2005 and in early 2006, Corporation officials said that its estimating process has a short history and the National Service Trust provides a buffer in the event its estimates are incorrect. The Corporation added that it lacks sufficient data to justify a change to its policy of growing the National Service Trust and when more experiential data becomes available, it will analyze reserve requirements and make adjustments as appropriate. In FY 2006, the Trust reserve had a balance of $40 million and the Corporation requested an additional $7 million for FY 2007. According to the Corporation's FY 2008 and FY 2009 budget justifications, it continues to use the same conservative assumptions in its funding model.

    Recommendation: To enhance the accuracy of National Service Trust budget estimates and ensure the Trust does not accumulate large balances, the chief executive officer of the Corporation for National and Community Service should review the assumptions being used in the new funding model after the Corporation gains more experience with the new model and current participant behavior.

    Agency Affected: Corporation for National and Community Service

  9. Status: Closed - Implemented

    Comments: After evaluating the impact of the refill policy on grantees, Corporation officials revised the policy for program year 2004-2005. The revised policy allows programs that have fully enrolled their member slots to replace any member who terminates service before completing 15 percent of his or her term. The policy includes a fail-safe mechanism--refilling will be suspended if total enrollment reaches 97 percent of awarded slots or the number of refills reaches 5 percent of awarded slots. According to the policy announcement, the Corporation planned to modify its data systems to ensure that only eligible programs were able to refill slots and to track refill activity. The Corporation further revised this policy for the 2007-2008 program year to allow grantess to replace members that had completed 30 percent of his/her term, provided the terminating member is not eligible for and does not receive a pro-rated education award.

    Recommendation: To ensure its policies support its mission and grantees' efforts to deliver services while also providing adequate management controls, the chief executive officer of the Corporation for National and Community Service should evaluate the enrollment policies regarding refilling and converting positions.

    Agency Affected: Corporation for National and Community Service

 

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