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Highlights

This report, the third in response to a mandate under the American Recovery and Reinvestment Act of 2009 (Recovery Act), addresses the following objectives: (1) selected states' and localities' uses of Recovery Act funds, (2) the approaches taken by the selected states and localities to ensure accountability for Recovery Act funds, and (3) states' plans to evaluate the impact of Recovery Act funds. GAO's work for the report is focused on 16 states and certain localities in those jurisdictions as well as the District of Columbia (District)-- representing about 65 percent of the U.S. population and two-thirds of the intergovernmental federal assistance available. Under the Recovery Act, GAO collected and analyzed documents and interviewed state and local officials. GAO also analyzed federal agency guidance and spoke with Office of Management and Budget (OMB) officials and with program officials at the federal agencies overseeing Recovery Act programs.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Office of Management and Budget To leverage Single Audits as an effective oversight tool for Recovery Act programs, the Director of OMB should take steps to achieve sufficient participation and coverage in the Single Audit pilot program that provides for early written communication of internal control deficiencies to achieve the objective of more timely accountability over Recovery Act funds.
Closed - Implemented
OMB implemented its Single Audit Internal Control Project in October 2009. The project called for a minimum of 10 participants. OMB solicited the 50 states, the District of Columbia, Puerto Rico, and Guam, from which 16 states volunteered to participate. The following 16 states elected to participate: Alaska, California, Colorado, Florida, Georgia, Louisiana, Maine, Missouri, Nevada, North Carolina, Ohio, Oklahoma, South Dakota, Tennessee, Texas, and Virginia. The volunteer states were diverse in geographic characteristics and population and included states that use auditors within state government as well as external auditors to conduct Single Audits. In addition, the volunteer states included California and Texas, which are among the top three states with the highest levels of Recovery Act obligations from the federal government. Each state selected at least two Recovery Act programs from a list of 11 high-risk Recovery Act programs for internal control testing. OMB designed the project to be voluntary and OMB officials states that, overall, they were satisfied with the population and geographic diversity among the states that volunteered. Although the project's coverage could be more comprehensive to provide greater assurance over Recovery Act funding, the results of the project could provide meaningful insight for making improvements to the Single Audit process. See GAO-10-604, report p. 272.
Office of Management and Budget To reduce the impact of untimely Single Audit reporting, the Director of OMB should formally advise federal cognizant agencies to adopt a policy of no longer approving extensions of the due dates of single audit reporting package submissions beyond the nine month deadline.
Closed - Implemented
On March 22, 2010, OMB addressed this recommendation by issuing memorandum M-10-14, Updated Guidance on the American Recovery and Reinvestment Act. This guidance directed federal agencies to not grant any requests made to extend the Single Audit reporting deadlines for fiscal years 2009 to 2011. OMB further stated that to meet the criteria for a low risk auditee in the current year, the auditee must have submitted the prior 2 years' audit reports by the required due dates. OMB communicated this revised policy through the OMB website, the American Institute of Certified Public Accountants, and the National Association of State Auditors, Comptrollers and Treasurers. See GAO-10-604, pp. 273-274.
Office of Management and Budget To reduce the impact of untimely Single Audit reporting, the Director of OMB should widely communicate this revised policy to the state audit community and others who have responsibility for the conducting single audits and submitting the single audit reporting package.
Closed - Implemented
In February 2010, Education instructed states to submit to Education for review their plans and protocols for monitoring subrecipients of SFSF funds. Education also issued its plans and protocols for monitoring state implementation of the SFSF program. The plan includes on-site visits to about half the states and desk reviews of the other states to be conducted over the next year.
Department of Transportation The Secretary of Transportation should continue the Department's outreach to state DOTs and transit agencies to identify common problems in accurately fulfilling reporting requirements and provide additional guidance, as appropriate.
Closed - Implemented
In September 2009, in responding to our recommendation, DOT said that it had conducted outreach, including providing technical assistance, training, and guidance to recipients, and will continue to assess the need to provide additional information. For example, in February 2010, FTA continued three training Webinars to provide technical assistance in complying with reporting requirements under section 1201(c) of the Recovery Act. In addition, on February 1, 2010, FTA issued guidance to transit agencies instructing them to use the same methodology for calculating jobs retained through vehicles purchased under section 1201 as they had been for recipient reporting. This reversed previous guidance that had instructed transit agencies to use a different methodology for vehicle purchases under sections 1201 and recipient reporting. See GAO-10-604, pp. 268-269.
Department of Labor To better support state and local efforts to provide youth with employment and training in green jobs, the Secretary of Labor should provide additional guidance about the nature of these jobs and the strategies that could be used to prepare youth for careers in green industries.
Closed - Implemented
Labor agreed with our recommendation and has begun to take several actions to implement it. Labor's Bureau of Labor Statistics has developed a definition of green jobs which was finalized and published in the Federal Register on September 21, 2010. In addition, Labor continues to host a Green Jobs Community of Practice, an online virtual community available to all interested parties. As part of this effort, in December 2010, Labor hosted its first Recovery Act Grantee Technical Assistance Institute, which focused on critical success factors for achieving the goals of the grants and sustaining the impact into the future. The department also hosted a symposium on April 28-29, 2011, with the green jobs state Labor Market Information Improvement grantees. Symposium participants shared recent research findings, including efforts to measure green jobs, occupations, and training in their states. In addition, the department released a new career exploration tool called "mynextmove" (www.mynextmove.gov) in February 2011. This Web site includes the Occupational Information Network (O*NET) green leaf symbol to highlight green occupations. Furthermore, Labor's implementation study of the Recovery Act-funded green jobs training grants is still ongoing. The interim report is expected in late 2011.
Department of Labor To enhance the usefulness of data on work readiness outcomes, the Secretary of Labor should provide additional guidance on how to measure work readiness of youth, with a goal of improving the comparability and rigor of the measure.
Closed - Implemented
Labor agreed with our recommendation and has taken several actions to implement it. Labor's Bureau of Labor Statistics (BLS) has developed a definition of green jobs, which was finalized and published in the Federal Register on September 21, 2010. In addition, Labor continues to host a Green Jobs Community of Practice, an online virtual community available to all interested parties. The department also hosted a symposium on April 28 and 29, 2011, with the green jobs state Labor Market Information Improvement grantees. Symposium participants shared recent research findings, including efforts to measure green jobs, occupations, and training in their states. In addition, the department released a new career exploration tool called "mynextmove" (www.mynextmove.gov) in February 2011 that includes the Occupational Information Network (O*NET) green leaf symbol to highlight green occupations. Additional green references have recently been added and are noted in the latest update, The Greening of the World of Work: O*NET Project's Book of References. Furthermore, Labor is planning to release a Training and Employment Notice this fall that will provide a summary of research and resources that have been completed by BLS and others on green jobs definitions, labor market information and tools, and the status of key Labor initiatives focused on green jobs.
Department of Housing and Urban Development To enhance HUD's ability to prevent, detect, and correct noncompliance with the use of Recovery Act funds, the Secretary of the Department of Housing and Urban Development should expand the criteria for selecting housing agencies for on-site reviews to include housing agencies with open Single Audit findings that may affect the use of and reporting on Recovery Act funds.
Closed - Implemented
HUD implemented our recommendation. In a letter dated November 20, 2009 HUD told us it had expanded its criteria for selecting housing agencies for on-site reviews to include all housing agencies with open 2007 and 2008 single audit findings as of July 7, 2009, relevent to the administration of Recovery Act funds. HUD identified 27 such housing agencies and planned to complete these on-site reviews by February 15, 2010.
Office of Management and Budget To the extent that the Director of OMB has the authority to consider mechanisms to provide additional flexibilities to support state and local officials charged with carrying out Recovery Act responsibilities, it is important to expedite consideration of alternative administrative cost reimbursement proposals.
Closed - Implemented
In response to this recommendation, OMB issued a memorandum on October 13, 2009, to provide guidance to address states' questions regarding specific exceptions to OMB circular A-87, Cost Principles for State, Local and Indian Tribal Governments. In the memorandum, OMB provided clarifications for states regarding specific exceptions to OMB Circular A-87 that are necessary in order for the states to perform timely and adequate Recovery Act oversight, reporting, and auditing. We believe the October 2009 OMB guidance provides the additional clarification needed for states and localities to proceed with their plans to recoup administrative costs.
Department of Education The Secretary of Education should take further action such as collecting and reviewing documentation of state monitoring plans to ensure that states understand and fulfill their responsibility to monitor subrecipients of SFSF funds and consider providing training and technical assistance to states to help them develop and implement state monitoring plans for SFSF.
Closed - Implemented
In February 2010, Education instructed states to submit to Education for review their plans and protocols for monitoring subrecipients of SFSF funds. Education also issued its plans and protocols for monitoring state implementation of the SFSF program. The plan includes on-site visits to about half the states and desk reviews of the other states to be conducted over the next year. See GAO-10-604, report pp. 270-271.

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