State Department: Implementation of Grants Policies Needs Better Oversight
What GAO Found
The Department of State (State) has established policies and guidance that provide a supportive environment for managing grants and cooperative agreements (grants). In addition, State provides its grants officials mandatory training on these policies and guidance, and routinely identifies and shares best practices. State's policies are based on federal regulations, reflect internal control standards, and cover topics such as risk assessment and monitoring procedures. State's policies also delineate specific internal control activities that grants officials are required to both implement and document in the grant files as a way of promoting accountability (see fig.).
Key Internal Control Activities Required through a Grant's Life Cycle
GAO found that inconsistent implementation of policies and guidance weakens State's assurance that grant funds are used as intended.
- Inadequate risk analysis . In most of the files GAO reviewed, grants officials did not fully identify, assess, and mitigate risks, as required. For example, officials conducted a risk identification process for 45 of the 61 grants that GAO reviewed. While grants officials identified risk in 28 of those 45 grants, they mitigated risks in only 11.
- Poor documentation . Grants officials generally did not adhere to State policies and procedures relating to documenting internal control activities. For example, 32 of the 61 files reviewed did not contain the required monitoring plan. Considerable turnover among grants officials makes documenting internal control activities particularly important. State's periodic management reviews of selected bureaus' and overseas missions' grant operations have also found that key documentation was frequently missing or incomplete and made recommendations to address the problem. However, State has not consistently followed up to ensure the implementation of these recommendations, as internal control standards require.
State does not have processes for ensuring compliance with risk analysis and documentation requirements. Without the proper implementation of its internal control policies for grants management, State cannot be certain that its oversight is adequate or that it is using its limited oversight resources effectively.
Why GAO Did This Study
Grants are key tools that State uses to conduct foreign assistance. In fiscal year 2012, State obligated over $1.6 billion worldwide for around 14,000 grants to individuals and organizations for a variety of purposes, such as fostering cultural exchange and facilitating refugee resettlement. However, recent GAO and Inspectors General reports have identified challenges with State's management of these funds. This report examines (1) the policies and guidance that State has established to administer and oversee grants, and (2) the extent to which the implementation of those policies and guidance provides reasonable assurance that funds are being used as intended. GAO analyzed State's policies and guidance, and interviewed cognizant grants officials at 14 bureaus headquartered in Washington, D.C., and three overseas missions (Afghanistan, Cambodia, and Turkey). GAO also conducted file reviews for a sample of 61 grants totaling approximately $172 million. Selection criteria included total dollar value of grants in a country, geographic diversity, and balance among bureaus.
GAO recommends that the Secretary of State develop processes for ensuring that (1) bureaus and missions conduct appropriate risk assessments and (2) grants officials complete required documentation. GAO also recommends that the Secretary of State (3) follow up systematically on recommendations from State's internal reviews of its grants management. State concurred with GAO's recommendations.
Recommendations for Executive Action
|Department of State||To help ensure that State's grants officials fully implement grants management policies and internal controls that are in place, and that grant funds are used as intended, the Secretary of State should develop processes to help ensure that bureaus and missions conduct appropriate risk assessments.||
State concurred with the recommendation. In March 2015 and January 2016, State updated its policy on risk assessments to require that all bureaus, offices, and posts conduct risk assessments on all competitive and non-competitive foreign assistance awards. In addition, beginning in March 2015, State reported it had introduced new training which includes risk assessment, for Grants Officers and Grants Officer Representatives. As of June 2016, State reported it had completed eighteen sessions of the new training.
|Department of State||To help ensure that State's grants officials fully implement grants management policies and internal controls that are in place, and that grant funds are used as intended, the Secretary of State should develop processes to help ensure that grants officials complete required documentation for all grants. Such a process could include systematic inspections of grant files, with the results shared among the Office of the Procurement Executive, the appropriate bureaus and missions, and the grants officials themselves, so as to promote accountability.||
The Department of State (State) concurred with our recommendation. Beginning in December 2014, State distributed several communications to the federal assistance community on the required documentation for federal assistance agreements, and in January 2015, State expanded required grants management training as well. In Spring 2015, State implemented a grants file review as a component of the grants management review process. In addition, it created a detailed file review checklist to help with 100% of the reviews. State further clarified that the reviews are shared with the requesting post, within the Office of the Procurement Executive (A/OPE), and with the regional bureau. Finally, as of October 2016, State reported having conducted 3 reviews of domestic bureaus and 19 reviews of posts since State instituted the checklist in Spring 2015.
|Department of State||In addition, the Secretary of State should follow up systematically on recommendations from State's internal reviews of its grants management.||
The Department of State (State) concurred with our recommendation. State said in June 2015, it had followed up with three posts on recommendations from previous reviews, and it was utilizing Microsoft Outlook to track the status of recommendations from its internal reviews. In addition, in the Spring of 2015, State implemented a new electronic internal control checklist for conducting systematic inspection of files. According to State desk officers within the Office of the Procurement Executive (A/OPE) enter tasks in Outlook to ensure that bureaus and posts are in compliance with the reviews and that posts are following up on recommendations. Outlook notifies these officials when responses to recommendations are due for follow-up. The tracker is updated whenever warranted, such as by the establishment of a new follow-up action. State gave examples of actions taken by posts and bureaus, including the development of Standard Operating Procedures.