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entitled 'International Labor Grants: DOL's Use of Financial and 
Performance Monitoring Tools Needs to Be Strengthened' which was 
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United States Government Accountability Office: 
GAO: 

Report to Congressional Requesters: 

September 2014: 

International Labor Grants: 

DOL's Use of Financial and Performance Monitoring Tools Needs to Be 
Strengthened: 

GAO-14-832: 

GAO Highlights: 

Highlights of GAO-14-832, a report to congressional requesters. 

Why GAO Did This Study: 

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. 

What GAO Found: 

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. 

Figure: Financial and Performance Monitoring Tools and Requirements: 

[Refer to PDF for image: table] 

Monitoring: Financial; 
Child labor office: 
* Federal financial report: due each quarter[A]; 
Trade and labor office: 
* Federal financial report: due each quarter[A]. 

Monitoring: Financial; 
Child labor office: 
Inventory list of all equipment and real property: 
* Not specified for subgrantees[A]; 
Trade and labor office: 
Inventory list of all equipment and real property: 
* Not specified for subgrantees[A]. 

Monitoring: Performance; 
Child labor office: Common indicators; 
Trade and labor office:	No common indicators[A]. 

Monitoring: Performance and financial; 
Child labor office: Attestation engagements: for selected grants since 
2005; 
Trade and labor office: No attestation engagements[A]. 

[A] Indicates areas GAO identified for improvement. 

Source: GAO analysis based on Department of Labor documents and 
officials. GAO-14-832. 

[End of figure] 

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. 

What GAO Recommends: 

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. 

View [hyperlink, http://www.gao.gov/products/GAO-14-832]. For more 
information, contact Thomas Melito at (202) 512-9601, melitot@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

ILAB Could Improve Its Processes for Financial Oversight: 

The Trade and Labor Office's Performance Monitoring Efforts Need 
Improvement: 

Final Project Evaluations Have Informed Changes to Child Labor 
Projects, but Most Impact Evaluations Are Not Yet Complete: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Comments from the Department of Labor: 

Appendix III: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Percentage of Financial Reports Reviewed within 30 days after 
Grantee Submission: 

Table 2: Percentage of Financial Reports Accepted More Than 90 days 
after Grantee Submission: 

Table 3: Grantee Cash Balances Shown on Financial Reports for the 
Quarter Ending June 30, 2013: 

Figures: 

Figure 1: Bureau of International Labor Affairs Organization Chart 
with Offices That Provide Technical Assistance: 

Figure 2: Child Labor and Trade and Labor Offices' Selected Tools to 
Monitor Grantees: 

Figure 3: Number of Child Labor Office Projects in Our Sample That Met 
or Exceeded Fiscal Year 2013 Common Indicator Targets: 

Figure 4: Number of Trade and Labor Office Projects in Our Sample That 
Met or Exceeded Targets for Various Percentages of Indicators: 

Abbreviations: 

CMEP: comprehensive monitoring and evaluation plan: 

ILO: International Labour Organization: 

ILAB: Bureau of International Labor Affairs: 

DOL: Department of Labor: 

OCFT: Office of Child Labor, Forced Labor, and Human Trafficking: 

OTLA: Office of Trade and Labor Affairs: 

PMP: performance monitoring plan: 

TPR: technical progress report: 

[End of section] 

United States Government Accountability Office: 
GAO:
441 G St. N.W. 
Washington, DC 20548: 

September 24, 2014: 

The Honorable Orrin G. Hatch: 
Ranking Member: 
Committee on Finance: 
United States Senate: 

The Honorable Lamar Alexander: 
Ranking Member: 
Committee on Health, Education, Labor and Pensions: 
United States Senate: 

According to the International Labour Organization (ILO),[Footnote 1] 
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,[Footnote 2] 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.[Footnote 3] 

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 2013.[Footnote 4] 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, 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. 

Background: 

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."[Footnote 5] 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.[Footnote 6] From 
fiscal year 2011 through fiscal year 2013, ILAB obligated a total of 
about $225 million. During that time, the child labor office obligated 
about $176 million[Footnote 7] and the trade and labor office 
obligated about $49 million.[Footnote 8] 

Figure 1: Bureau of International Labor Affairs Organization Chart 
with Offices That Provide Technical Assistance: 

[Refer to PDF for image: Organization Chart] 

Bureau of International Labor Affairs: 

Office of International Relations[A]; 
Office of Child Labor, Forced Labor and Human Trafficking[B]: 
* Monitoring and Evaluation[B]; 
* Latin America and the Caribbean[B]; 
* Asia/Europe/Middle East and North Africa[B]; 
* Africa[B]; 
* Research and Policy[B]; 
Office of Trade and Labor Affairs[B]: 
* Monitoring and Enforcement of Trade Agreements[A]; 
* Trade Policy and Negotiations[A]; 
* Economic and Labor Research[A]; 
* Technical Assistance and Cooperation[B]. 

[A] Offices that do not provide technical assistance; 
[B] Offices that provide technical assistance. 

Source: Department of Labor. GAO-14-832. 

[End of figure] 

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 182[Footnote 9] and 
children engaged in work that is exploitative and/or interferes with 
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."[Footnote 10] 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.[Footnote 11] 

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. 

ILAB Could Improve Its Processes for Financial Oversight: 

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 requirements with 
attestation engagements[Footnote 12] 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. 

ILAB Guidance Lacks Deadlines and Criteria for Accepting or Rejecting 
Quarterly Financial Report Review: 

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.[Footnote 13] These grant-specific financial reports include 
information such as the grantee's cash receipts, expenditures, and on-
hand cash balances.[Footnote 14] 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[Footnote 15] 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.[Footnote 16] 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.[Footnote 17] 

Table 1: Percentage of Financial Reports Reviewed within 30 days after 
Grantee Submission: 

Child labor office: 28% (12 of 43 reports); 
Trade and labor office[A]: 39% (11 of 28 reports). 
Total ILAB: 32% (23 of 71 reports). 

Source: GAO analysis of Bureau of International Labor Affairs data. 
GAO-14-832. 

[A] At the time the federal financial reports we reviewed were 
submitted, the trade and labor office required project managers to 
accept or reject them within 10 days. Since the trade and labor office 
has since changed its policy to 30 days, we assessed the office's 
review against the new policy. 

[End of table] 

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.[Footnote 18] 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. 

Table 2: Percentage of Financial Reports Accepted More Than 90 days 
after Grantee Submission: 

Child labor office: 12% (5 of 43 reports); 
Trade and Labor office: 32% (9 of 28 reports); 
Total ILAB: 20% (14 of 71 reports). 

Source: GAO analysis of Bureau of International Labor Affairs data. 
GAO-14-832. 

[End of table] 

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.[Footnote 19] In addition, for an entity to run and control 
its operations, it 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. 

Most Grantees Do Not Maintain Excess Federal Funds: 

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.[Footnote 20] ILAB 
officials told us that its project managers are responsible for 
monitoring excess cash[Footnote 21] 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.[Footnote 22] 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. 

Table 3: Grantee Cash Balances Shown on Financial Reports for the 
Quarter Ending June 30, 2013: 

Amount of cash shown on financial report: None; 
Number of financial reports: 47. 

Amount of cash shown on financial report: Less than $250,000; 
Number of financial reports: 24. 

Amount of cash shown on financial report: Over $250,000; 
Number of financial reports: 3. 

Source: GAO analysis of Bureau of International Labor Affairs data. 
GAO-14-832. 

[End of table] 

One grantee was responsible for two of the instances of excess cash 
balances over $250,000, specifically with balances of $806,160 and 
$870,000. According to ILAB officials, this grantee incorrectly 
transferred funds for other projects against these accounts. After the 
error was discovered, the grantee refunded the funds to these 
accounts. In the third instance, a grantee had a balance of 
approximately $263,000. Officials 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. 

Child Labor Office Has Used Attestation Engagements to Monitor 
Grantees, while the Trade and Labor Office Is Planning Its First 
Engagement: 

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.[Footnote 23] 

The Child Labor Office Uses Attestation Engagements to Provide 
Additional Oversight of Cooperative Agreements: 

According to child labor office officials, to supplement federal 
government reporting requirements for grantees,[Footnote 24] in 2005 
they designed and began 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 grantees.[Footnote 25] ILO projects are 
audited by ILO's designated external auditor.[Footnote 26] During the 
period 2005-2013, 41 non-ILO projects were reviewed. 

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,[Footnote 27] (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 
assessment; 

* 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.[Footnote 28] 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. 

The Trade and Labor Office Has Not Yet Conducted an Attestation 
Engagement or Developed Guidance to Manage Such Engagements: 

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 mechanisms 
that enforce management's directives.[Footnote 29] In addition, these 
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[Footnote 30] 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. 

Guidance for Reporting Subgrantee Inventory of Equipment and Real 
Property Needs Improvement: 

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.[Footnote 31] 
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.[Footnote 32] 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.[Footnote 33] 
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. 

The Trade and Labor Office's Performance Monitoring Efforts Need 
Improvement: 

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.[Footnote 34] 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. 

While the Child Labor Office Has More Comprehensive Performance 
Monitoring Requirements than the Trade and Labor Office, Both Offices 
Complied with Monitoring Requirements: 

The Child Labor Office Has More Comprehensive Monitoring Requirements 
than the Trade and Labor Office, Which Lacks Common Indicators and 
Attestation Engagements: 

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. 

Figure 2: Child Labor and Trade and Labor Offices' Selected Tools to 
Monitor Grantees: 

[Refer to PDF for image: table] 

Monitoring: Progress reports; 
Child labor office: Status report-—may be requested for two quarters 
per year, if deemed necessary by Department of Labor; 
Trade and labor office: Status report—required two quarters per year 
(due January 30 and July 30). 

Monitoring: Progress reports; 
Child labor office: Technical Progress Report—required every 6 months; 
Trade and labor office: Technical Progress Report—required the other 
two quarters per year (due April 30 and October 30; more comprehensive 
than status reports). 

Monitoring: Monitoring and evaluation plans; 
Child labor office: Comprehensive Monitoring and Evaluation Plan—-for 
grants with direct services to beneficiaries and/or capacity-building; 
Trade and labor office: Not applicable. 

Monitoring: Monitoring and evaluation plans; 
Child labor office: Performance Monitoring Plan—-for non-direct 
services grants (e.g., for projects focused on policy, evaluation); 
Trade and labor office: Performance Monitoring Plan—-for all grants—-
trade and labor grants generally do not provide direct services to 
individual beneficiaries. 

Monitoring: Baseline data[A]; 
Child labor office: Baseline survey; 
Trade and labor office: Baseline survey. 

Monitoring: Indicators and targets[B]; 
Child labor office: Common education and livelihood indicators and 
targets that are used across projects and project-specific indicators 
and targets[B]; 
Trade and labor office: No common indicators[B]. 

Monitoring: Indicators and targets[B]; 
Child labor office: Project-specific indicators and targets; 
Trade and labor office: Project-specific indicators and targets. 

Monitoring: Evaluations; 
Child labor office: Midterm and final evaluations; 
Trade and labor office: Midterm and final evaluations. 

Monitoring: Attestation engagements[B]; 
Child labor office: Attestation engagements—for selected grants since 
2005[B]; 
Trade and labor office: No attestation engagements[B]. 

Source: GAO analysis based on Department of Labor documents and 
officials. GAO-14-832. 

[A] Baseline data measure the existing conditions and provide 
information on the characteristics of the target population at the 
start of a project, including their living and working conditions. 

[B]: Indicates key differences between the offices' monitoring 
requirements. 

[End of figure] 

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.[Footnote 35] 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.[Footnote 36] 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. 

The Majority of Grant Files Included Required Monitoring Elements: 

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.[Footnote 37] 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.[Footnote 38] 

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. 

Grantees from Both Offices Had Difficulty Meeting Annual Performance 
Targets: 

According to child labor and trade and labor offices' guidance, 
performance indicators and their associated targets are required for 
monitoring project performance.[Footnote 39] Officials from the child 
labor office said 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. 
[Footnote 40] 

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.[Footnote 41] We analyzed 7 projects (see figure 3). 

Figure 3: Number of Child Labor Office Projects in Our Sample That Met 
or Exceeded Fiscal Year 2013 Common Indicator Targets: 

[Refer to PDF for image: horizontal bar graph] 

Did not meet target for either indicator: 2 projects; 
Met/exceeded target for one indicator: 4 projects; 
Met/exceeded target for both indicators: 1 project. 

Source: GAO analysis of Bureau of International Labor Affairs data. 
GAO-14-832. 

[End of figure] 

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 figure 4). 

Figure 4: Number of Trade and Labor Office Projects in Our Sample That 
Met or Exceeded Targets for Various Percentages of Indicators: 

[Refer to PDF for image: horizontal bar graph] 

Project 1: 
Percentage of indicators with targets met or exceeded[A]: 95%; 
21 of 22 indicators. 

Project 2: 
Percentage of indicators with targets met or exceeded[A]: 83%; 
10 of 12 indicators. 

Project 3: 
Percentage of indicators with targets met or exceeded[A]: 65%; 
11 of 17 indicators. 

Project 4: 
Percentage of indicators with targets met or exceeded[A]: 60%; 
6 of 10 indicators. 

Project 5: 
Percentage of indicators with targets met or exceeded[A]: 59%; 
13 of 22 indicators. 

Project 6: 
Percentage of indicators with targets met or exceeded[A]: 14%; 
2 of 14 indicators. 

Source: GAO analysis of Bureau of International Labor Affairs data. 
GAO-14-832. 

[A] Only indicators with targets were included in this analysis. 

[End of figure] 

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. 

The Child Labor Office Uses Attestation Engagements and Both Offices 
Use Midterm Evaluations to Make Adjustments during the Remainder of 
the Project: 

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,[Footnote 42] five trade 
and labor project midterm evaluations,[Footnote 43] and seven child 
labor project attestation engagements to identify such improvements. 
[Footnote 44] 

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. 

Final Project Evaluations Have Informed Changes to Child Labor 
Projects, but Most Impact Evaluations Are Not Yet Complete: 

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. 

Final Project Evaluations Underline Positive Effects as well as Cross-
cutting Weaknesses: 

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.[Footnote 45] 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.[Footnote 46] 

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.[Footnote 47] 

* 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.[Footnote 48] 

* 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. 

ILAB Has Drawn Lessons Learned from Project Evaluations: 

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,[Footnote 49] 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. 

While ILAB Has Funded Impact Evaluations of Selected Components of 
Projects, Most Remain Incomplete, Making The Usefulness of Their 
Results Difficult to Determine: 

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.[Footnote 50] 
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.[Footnote 51] 

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.[Footnote 52] 

Conclusions: 

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. 

Recommendations for Executive Action: 

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. 

Agency Comments and Our Evaluation: 

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 [hyperlink, 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. 

Signed by: 

Thomas Melito, Director: 
International Affairs and Trade: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

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.[Footnote 53] 

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).[Footnote 54] 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[Footnote 55] 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. 

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. 

[End of section] 

Appendix II: Comments from the Department of Labor: 

U.S. Department of Labor: 
Deputy Undersecretary for International Affairs: 
Washington. D.C. 20210: 

September 10, 2014: 

Thomas Melito, Director: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Mr. Melito: 

Thank you for the opportunity to comment on the Government 
Accountability Office's (GAO) draft report, International Labor 
Grants: DOL's Use of Financial and Performance Monitoring Tools Needs 
To Be Strengthened. The purpose was to examine 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. ILAB appreciates
GAO's thorough and thoughtful review of our technical assistance 
programming, as we place a strong emphasis on financial accountability 
of federal funds and the effective monitoring and evaluation of 
projects. 

GAO has recommended that the Secretary of Labor, in concert with ILAB 
management, take four actions: 

1. Establish guidance specifying timeframes in which project managers 
must accept or reject quarterly financial reports and the criteria for 
accepting or rejecting the reports. 

ILAB emphasizes with its project managers the need for thorough, 
consistent, and timely review of quarterly financial reports and has 
already taken steps to implement this recommendation. The Office of 
Trade and Labor Affairs (OTLA) already had established a performance 
standard requiring project managers to accept or reject financial 
reports within 30 days after the reports are due and had reflected 
that standard in the OTLA operation manual. The same standard is now 
being incorporated into ILAB's internal FY 2015 Operating Plan and 
into the Office of Child Labor, Forced Labor and Human Trafficking's 
(OCFT) operation manual and project managers' performance standards. 
While both offices already provide informal guidance and standards for
accepting or rejecting financial reports, ILAB accepts GAO's 
recommendation and will translate existing guidance and standards into 
formal written criteria for acceptance or rejection that will be 
incorporated in OTLA and OCFT operation manuals. 

2. Revise ILAB policies to specify that subgrantee inventory of 
equipment and real property purchased with federal funds is included 
in inventory lists submitted by the grantee. 

As the report states, both OCFT and OTLA require grantees to report an 
inventory of all equipment and real property acquired with grant funds 
to DOL, as required by the relevant federal regulations. ILAB's 
cooperative agreements do not explicitly state that such inventory 
must also include equipment and real property purchased with federal
funds by sub grantees. ILAB accepts this recommendation and has 
already taken measures to revise the standard language in ILAB' s 
cooperative agreements and Management Procedures and Guidelines to 
specify that grantee reporting requirements related to inventory must 
include items purchased by subgrantees. 

3. Implement the trade and labor office's plan to conduct attestation 
engagements and develop guidance on the management of these 
engagements. 

ILAB considers attestation engagements an important tool for ensuring 
proper stewardship of federal funds and is proud of our efforts in 
this area. As stated in the report, ILAB initiated an attestation 
engagement program through OCFT in 2005 and, building on this good 
practice, OTLA has now initiated the planning process for its first
attestation engagement, including development of guidance for managing 
these engagements. As this demonstrates, ILAB agrees with this 
recommendation and looks forward to providing updates to GAO as the 
program is expanded. 

4. Ensure that the trade and labor office implements its plan to 
develop common indicators to track progress across projects. 

ILAB agrees that common indicators can be a useful measurement tool, 
and OTLA's technical assistance program has used various different 
common indicators over the years. As the scope and focus of OTLA 
projects have evolved, however, old indicators have become irrelevant 
and new indicators are needed to reflect the changes. 

Developing common indicators that are applicable across a range of 
projects, provide useful management and performance data, and are 
feasible to implement takes time, and there is often a delay between 
the launch of multiple OTLA projects with a similar focus and the 
development and adoption of a new set of appropriate common 
indicators. The OTLA has already developed six new common indicators 
for the technical assistance projects the office is presently funding, 
and they are included in ILAB's internal FY15 Operating Plan. We look 
forward to utilizing and also assessing the usefulness of these
new indicators. 

In closing, ILAB reiterates our appreciation for the time and effort 
that the GAO dedicated to reviewing our technical assistance 
programming, including field visits to several of ILAB's projects. 
ILAB appreciates the GAO's recognition in the report that ILAB project 
managers are seen by grantees as well-informed and knowledgeable about 
the issues facing their projects and that ILAB project managers 
communicate frequently with grantee staff. As this comment reflects, 
ILAB has a strong commitment to effective oversight of our technical 
assistance activities. We believe that our implementation of GAO's 
recommendations, which we have already begun, will further strengthen 
ILAB's existing efforts to ensure the financial accountability of and 
monitoring and evaluation of ILAB-funded projects. 

Sincerely, 

Signed by: 

Carol Pier: 
Deputy Undersecretary for International Affairs: 

[End of section] 

Appendix III: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Thomas Melito, (202) 512-9601, melitot@gao.gov: 

Staff Acknowledgments: 

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. 

[End of section] 

Footnotes: 

[1] The International Labour Organization (ILO) is a tripartite UN 
agency with government, employer, and worker representatives. ILO's 
mission includes promoting fundamental rights at work, creating 
opportunities for decent employment and income, and enhancing social 
protection. 

[2] On April 24, 2013, the Rana Plaza building collapsed in Dhaka, 
Bangladesh, killing over 1,100 factory workers and injuring many 
others. 

[3] GAO, International Labor Grants: Labor Should Improve Management 
of Key Award Documentation, [hyperlink, 
http://www.gao.gov/products/GAO-14-493] (Washington, D.C.: May 2014). 

[4] A nongeneralizable sample seeks to systematically identify cases 
that will be useful for answering researchable questions. These 
selections may be either a nonprobability sample or a probability 
sample; however, results from a nongeneralizable sample cannot be used 
to make inferences about a population--in our case, the general 
population of ILAB assistance grants. 

[5] Further Continuing Appropriations Act, 2013, Pub. L. No. 113-6, 
Div. F, § 1101. Pursuant to section 1101, fiscal year 2013 funds were 
made available to ILAB to the extent and in the manner that was 
provided by the prior year appropriations act: Consolidated 
Appropriations Act, 2012. Pub. L. No. 112-74, 125 Stat. 786, 1061. For 
fiscal year 2013, these funds were subject to a 0.189 percent across-
the-board rescission. Additionally, ILAB reported that the fiscal year 
2013 sequestration also affected ILAB's technical assistance funds. 

[6] In fiscal year 2013, the trade and labor office also obligated 
about $3.7 million from ILAB Salaries and Expenses--its operations 
funding account that can also be used for technical assistance--and 
about $3.4 million transferred from the State Department. 

[7] ILAB funded 74 grants from 2011 to 2013. The average funding 
amount for child labor grants from 2011 to 2013 was about $4.4 
million, and the largest grant was $15 million. The average funding 
amount for trade and labor grants from 2011 to 2013 was about $1.5 
million, and the largest grant was $10 million. 

[8] This includes about $8.7 million from ILAB Salaries and Expenses 
used for technical assistance and $21 million that the State 
Department transferred to ILAB to fund projects. 

[9] An ILO convention is a legally binding international treaty which 
may be ratified by member states, according to ILO. ILO's governing 
body has identified eight conventions as "fundamental", covering 
subjects that are considered as fundamental principles and rights at 
work, which includes Convention 182 on the worst forms of child labor. 
ILO Convention 182 has been ratified by 179 countries, including the 
United States. 

[10] For the purpose of this report, we refer to such types of work as 
hazardous work. 

[11] Examples of non-hazardous work could include performing household 
chores that do not expose children to dangerous activities, assisting 
parents in a family business outside of school hours, and working in 
non-hazardous activities after school or during vacations to earn 
extra income. 

[12] In an attestation engagement, a certified independent public 
accountant may assess a broad range of financial and performance 
subjects and report on the results. 

[13] For quarterly reports, DOL's "Financial Reporting" regulation 
requires grant recipients to submit to DOL financial reports no later 
than 30 days after the end of the quarter. 29 C.F.R. § 95.52 
(a)(1)(iv). 

[14] Cash balances are the amount of cash the grantee has drawn down 
from its project account in the Department of Health and Human 
Services payment management system in excess of the grantee's current 
cash expenditures. Grantees request cash advances using the Department 
of Health and Human Services payment management system to meet their 
immediate cash needs. 

[15] E-grants is DOL's grant management system which integrates four 
existing systems used in the grant process: (1) E-procurement system; 
(2) Grants.gov; (3) New Core Financial Management System; and (4) 
Department of Health and Human Services payment management system. 

[16] Of the 74 reports submitted to ILAB, we excluded 3 from our 
analysis of ILAB review and acceptance of the financial reports 
because we could not verify their acceptance dates in E-grants and 1 
was not accepted in E-grants. ILAB told us that it is researching 2 to 
determine the correct ILAB acceptance dates. In addition, 1 report has 
not been accepted because ILAB has outstanding questions with the 
grantee. 

[17] According to officials, ILAB considers the date of receipt of 
financial reports to be the due date for all reports in a given 
financial quarter, which would be 30 days after the end of the 
financial period in question. For example, this would mean July 30 for 
the financial quarter ending June 30. This would give project managers 
until August 29 to review the financial report, regardless of whether 
the grantee submitted the report prior to July 30. Against this 
broader application of the policy, we found that child labor project 
managers reviewed 18 of 43 financial reports (42 percent) within 30 
days of the grantee's submission deadline. Trade and labor project 
managers reviewed 11 of 28 financial reports (39 percent) within 30 
days of the grantee's submission deadline. 

[18] We were unable to determine whether any of the financial reports 
in our sample had been rejected. According to officials, rejecting a 
financial report from E-grants allows the grantee to make changes to 
the report. Once the grantee re-submits the report, E-grants does not 
allow a user to identify that it had been previously rejected. 

[19] GAO, Standards for Internal Control in the Federal Government, 
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1] 
(Washington, D.C.: Nov. 1999). Section 3512 (c) and (d) of Title 31 of 
the United States Code (commonly known as the Federal Managers' 
Financial Integrity Act (FMFIA)) requires the Comptroller General to 
issue standards for internal control in government. These standards, 
known as the Standards for Internal Control in the Federal Government 
(Green Book), provide the overall framework for establishing and 
maintaining an effective internal control system. 

[20] According to the template, these policies are established in 
Treasury Department Circular 1075 and 29 C.F.R. part 95. 

[21] For the purposes of this report, we use the term excess cash to 
refer to cash balances that are in excess of the grantee's current 
cash expenditures. 

[22] 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. 

[23] [hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]. 

[24] Prior to December 26, 2013, all nonfederal entities that expend 
$500,000 or more of federal awards in a year were required to obtain 
an annual audit in accordance with the Single Audit Act (single 
audit), as amended 31 U.S.C. Ch. 75. Subsequent to December 26, 2013, 
entities must expend $750,000 or more before a single audit is 
required. Single audits are focused on recipients' internal controls 
over financial reporting and compliance with laws and regulations 
governing U.S. federal awardees and provide key information about the 
federal grant's financial management and reporting. We reviewed 12 
grantees' single audits, of which 11 had clean opinions. We found one 
issue regarding the child labor office's compliance with procedures 
and another technical issue related to a trade and labor grant that is 
primarily a DOL Office of Inspector General responsibility. Further, 
we noted that ILAB grants are generally not considered major programs 
and are not the subject of a single audit for a particular recipient 
of federal funds. 

[25] The child labor office has a written methodology to select 
grantees for attestation engagements based on an assessment of the 
risk that the grantee may not be complying with regulations and 
cooperative agreement provisions, or not submitting reliable financial 
and performance reports. This methodology includes assigning weights 
to factors used to score grantee and project risk. The office did not 
use weighting for fiscal year 2014. According to child labor office 
officials, they did not use the weighting system because they 
determined that it did not add substantial value or affect results in 
a relevant manner, and that they could use a simpler approach without 
weighting the factors to produce results of equal value. They added 
that they review the risk analysis process each year and can make 
changes, as needed. 

[26] Currently, the external auditor is the Office of the Auditor 
General of Canada. During the period 2005-2013, 47 ILO projects were 
reviewed. 

[27] DOL's regulations for grants are found at 29 C.F.R. part 95. 

[28] The attestation engagement report stated that conditions were 
deemed significant if they were systemic in nature and likely to 
substantially diminish program success if left unresolved, or 
reflected substantial noncompliance with program regulations or 
guidelines requiring immediate management corrective action. 

[29] [hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]. 

[30] Task orders are issued under existing contracts. 

[31] 29 C.F.R. part 95. 

[32] The grant closeout process is what takes place when the federal 
grantor agency determines that all applicable administrative actions 
and all required work of the grant have been completed by the grantee 
and the grantor. 

[33] [hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]. 

[34] The child labor office has two common indicators with project-
level targets. For projects funded prior to fiscal year 2010, the 
common indicators were (1) the number of children withdrawn from child 
labor and (2) the number of children prevented from involvement with 
child labor. For projects funded in fiscal year 2010 or later, the 
common indicators are (1) the number of children engaged in or at high-
risk of entering child labor who were provided educational or 
vocational services and (2) the number of households receiving 
livelihood services. 

[35] According to the trade and labor office, previous common 
indicators include the number and percent of individuals whose 
economic situation has benefited from DOL project assistance and the 
number and percent of workplaces exposed to DOL project assistance 
that have implemented new measures to prevent workplace accidents and 
illnesses. 

[36] Government Performance and Results Act Modernization Act of 2010, 
Pub. L. No.111-352, 124 Stat. 3866 (2011). 

[37] We used the monitoring procedures and guidelines each office 
provides to grantees to identify these requirements. 

[38] There was no baseline survey or targets for a project in the 
Maldives because, according to officials, after the project document 
was completed, the Maldives experienced political unrest that 
interfered with implementation of the project and significantly 
delayed project activities. 

[39] According to ILAB, the child labor office and trade and labor 
office follow the DOL Performance Management Center's standard for 
meeting a target, which is that if a project has achieved 95 to 104 
percent of the target for an indicator, they consider the project to 
have met the target. 

[40] The child labor office also has a common indicator for country 
capacity--the number of countries with increased capacity to address 
child labor or forced labor. Projects provide a narrative report of 
project efforts and outcomes to achieve targets, for example, the 
adaptation of the country's legal framework to meet international 
labor standards. Child labor office officials said that they then 
assess the impact of these activities to determine whether the country 
counts as having increased capacity to address child labor. 

[41] Of the 12 active projects with common indicators in our analysis, 
we excluded 3 that did not have fiscal year 2013 targets. Of the 9 
active projects with fiscal year 2013 targets, we excluded 2 projects 
from our analysis because ILAB is working with the grantees to clarify 
their data. 

[42] Of the 8 completed child labor projects in our sample that were 
active between fiscal year 2006 and fiscal year 2013, 2 projects--in 
Pakistan and in Lusophone Africa--did not have a midterm evaluation. 
Officials said that the Pakistan project's midterm evaluation was 
canceled because of security concerns. The Lusophone Africa project 
was a relatively small grant that experienced significant delays. 
According to officials, after the Lusophone project document was 
finalized, they made a decision not to conduct an internal review, 
given the limited duration of the project and the fact that a final 
evaluation was set to occur at the end of the project. 

[43] For the trade and labor office, we reviewed midterm evaluations 
for four Better Work countries as well as an evaluation of the global 
Better Work program. Of the trade and labor office projects in our 
sample, there was no midterm evaluation for 2 projects: The Peru/Haiti 
project had not reached its midpoint at the time of our analysis, and 
there was no midterm completed for the Maldives project because it was 
a small project, and trade and labor office officials deemed the 
expense of an external evaluation would not be the best use of funds. 

[44] Of the 22 child labor projects in our sample, 4 projects had 
attestation engagements. We also reviewed the three most recently 
completed attestation engagements that were not part of our sample to 
obtain information from the more current engagements. 

[45] The 4 trade and labor office projects in our sample of 26 were 
still ongoing. 

[46] A DOL grant officer sent a formal letter informing the grantee of 
the rejection, as final evaluations are part of project deliverables, 
with potential monetary consequences. 

[47] Since 2010, the child labor office has been reporting on the 
number of beneficiary children who receive educational services rather 
than the number of children who are withdrawn and prevented from 
engaging in child labor. The number of children receiving educational 
services is an output indicator; the number of children who are 
withdrawn and prevented from engaging in child labor is an outcome 
indicator. Grantees report on the work status of beneficiary children 
separately to the child labor office. 

[48] Child labor officials said psychosocial services are more common 
in projects involving children in sexually exploitative labor. 

[49] Specifically, the conference report to the Consolidated 
Appropriations Act, 2010 directed that ILAB funds be administered in 
accordance with a Senate report that stated that funds may be used to 
support microcredit programs and other livelihood activities that 
contribute to a more comprehensive approach to addressing the root 
causes of labor exploitation, including child and forced labor (see 
H.R. conf. 111-366 and S. rep. 111-066). 

[50] These 7 impact evaluations are for different projects than the 
final evaluations we reviewed and discussed previously. 

[51] Child labor office officials told us they intend to elevate the 
issue, and the grant officer will send a formal letter to ILO 
regarding its commitments to DOL under the grant. During our audit 
work, ILAB provided us with 1 of the tracer studies, which we could 
not review because it is in Spanish. In August 2014, ILAB sent us 3 
more tracer studies (2 in English, 1 in Spanish) published in 2012. We 
could not review those because they arrived after we completed our 
audit work. 

[52] ILAB officials told us in the cases where ILAB is the only donor, 
there are ILAB funds being applied to the baseline studies and 
subsequent years of data collection. 

[53] GAO, Standards for Internal Control in the Federal Government, 
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1] 
(Washington, D.C.: Nov. 1,1999). 

[54] We excluded 3 trade and labor office projects from the analysis 
because 1 project had not finalized its performance monitoring plan, 1 
project did not have targets, and 1 project only had life-of-project 
targets. 

[55] 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. 

[End of section] 

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