This is the accessible text file for GAO report number GAO-06-373R 
entitled 'Community Services Block Grant Program: HHS Needs to Improve 
Monitoring of State Grantees' which was released on February 7, 2006. 

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February 7, 2006: 

The Honorable Wade F. Horn: 
Assistant Secretary for Children and Families: 
U.S. Department of Health and Human Services: 

Subject: Community Services Block Grant Program: HHS Needs to Improve 
Monitoring of State Grantees: 

Dear Mr. Horn: 

As you know, the House Committee on Education and the Workforce has 
asked GAO to review the administration of the Community Services Block 
Grant (CSBG) program. As part of this review, we are examining the 
Department of Health and Human Services' (HHS) efforts to monitor 
states' use of CSBG funds. Specifically, we have been reviewing efforts 
undertaken by HHS's Office of Community Services (OCS), which has 
primary responsibility for administering the CSBG program. The purpose 
of this letter is to bring to your attention concerns that we have 
about OCS' ability to effectively fulfill its CSBG monitoring 

Under the Community Services Block Grant Act, as amended, OCS is 
required to evaluate several states' use of CSBG funds annually and 
issue reports on the results of those evaluations to the states and 
Congress. In addition, the standards pursuant to 31 U.S.C. section 
3512(c), (d), commonly referred to as the Federal Managers' Financial 
Integrity Act of 1982, require federal agencies to establish and 
maintain internal controls to provide reasonable assurance that 
agencies achieve the objectives of effective and efficient operations, 
reliable financial reporting, and compliance with applicable laws and 
regulations.[Footnote 1] In order to have sufficient internal controls, 
managers should have policies and procedures in place that, among other 
things, ensure that statutory responsibilities are fulfilled; agency 
information and communications are available, reliable, and timely; and 
staff have adequate training and skills. 

In the course of our work to date, we found that OCS does not have the 
policies, procedures, and internal controls in place needed to carry 
out its monitoring efforts. Specifically, we found that: 

* OCS staff that conduct monitoring visits told us they lacked the full 
range of necessary skills to perform these visits, and procedures are 
not in place to ensure that monitoring teams collectively have 
requisite skills. Specifically, CSBG staff told us they lacked the 
expertise needed to assess the financial operations of state CSBG 
programs--a key component of the CSBG monitoring process. 

* OCS did not issue mandatory reports on monitoring results to any of 
the six states it visited during fiscal years 2003 and 2004. OCS 
officials informed us that they intend to issue reports for fiscal year 
2005 visits. However, 6 months after completing these visits, OCS has 
yet to issue a final report to any state. Although OCS monitoring 
procedures direct staff to write reports after visits and send draft 
reports on their findings to state agencies for review and comment 
before final issuance, the procedures do not include instructions with 
regard to specific time frames for completing these steps. 

* OCS cannot locate key documents pertaining to its monitoring visits 
of states conducted in 2003 and 2004. Although OCS officials stated 
that program files should include documentation of its monitoring 
visits, we found that OCS's file management policies do not include 
directions on retaining these monitoring documents. Additionally, 
officials told us that staff responsible for carrying out monitoring 
activities had retired and their files could not be located. 

OCS's most recent CSBG report to Congress, which covers fiscal years 
2000 to 2003, did not include information on the results of its state 
evaluations, as required by statute. In its previous report to 
Congress, which covered fiscal year 1999, OCS provided information on 
these results and acknowledged that it is statutorily obligated to do 
so. Additionally, OCS has not been timely in issuing these reports and 
has not submitted them annually to Congress, as required. For example, 
OCS issued a consolidated report for fiscal years 2000 to 2003 in 
December 2005. Officials in OCS and the Administration for Children and 
Families' (ACF) Office of Legislative Affairs and Budget said that the 
report was issued just recently because of time lags in receiving data 
from states and the length of the agency's internal review process. 

In conclusion, OCS's procedures and controls are not adequate to ensure 
that it performs its monitoring responsibilities in a timely and 
effective manner. As a result, states and congressional oversight 
committees are not receiving information that is required under law. 
States may not have made improvements to how they administer CSBG funds 
because they were not made aware of findings from OCS's evaluations. 
Furthermore, OCS's failure to provide timely reports that include the 
results of these evaluations hinders Congress' ability to carry out its 
oversight responsibilities. Also troubling is that OCS will not be able 
to produce this information for the years for which monitoring 
documentation has been lost. Finally, by sending staff without 
sufficient expertise in financial management on monitoring visits, OCS 
failed to ensure that states spent federal dollars appropriately. 

In order to ensure that OCS has the internal controls to fulfill its 
CSBG monitoring responsibilities, we recommend that you instruct the 
director of OCS to establish formal written policies and procedures 

* ensuring that teams conducting monitoring visits include staff with 
requisite skills, 

* ensuring the timely completion of monitoring reports to states, 

* maintaining and retaining documentation of monitoring visits, and: 

* ensuring the timely issuance of annual reports to Congress. 

We met with OCS and other ACF staff on February 2, 2006 and presented 
these findings. These staff had no comments on the findings but stated 
that they are beginning to undertake actions intended to address issues 
we raised with their monitoring efforts. In the meantime, we are 
continuing our review of the CSBG program. We will include the issues 
raised in this letter, and any actions that your agency has taken to 
resolve them, along with the other findings in our final report. If you 
or your staff have any questions about this correspondence, please 
contact me at (202) 512-7215. 

Sincerely yours, 

Signed by: 

Marnie S. Shaul: 

Director, Education, Workforce, and Income Security Issues: 


[1] For more information on internal control standards, see GAO, 
Standards for Internal Control in the Federal Government, GAO/AIMD-00- 
21.3.1 (Washington: D.C.: November 1999), and Office of Management and 
Budget, Circular No. A-123, Management's Responsibility for Internal 
Control, (Washington: D.C.: December 21, 2004).