Administration of Department of Justice Grants Awarded to
Native American and Alaska Native Tribal Governments
Audit Report 05-18
March 2005
Office of the Inspector General
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The OIG has identified several issues in the COPS Office response to our draft report (see Appendix XX) that we believe should be addressed. As a result, we are providing the following comments on the COPS Office response to the draft report. In Appendix XX, pages 120 through 121, the COPS Office provided the following statements in response to recommendations:
To improve the rate of compliance with submission of programmatic progress reports for hiring grants, the COPS Office has put in place over the past few years a process for contacting grantees that are delinquent in submitting their reports. Grant managers follow up with grantees to ensure that required progress reports are submitted by sending a series of two delinquency letters to the agency. Agencies would be barred from receiving additional COPS funding if they did not resolve the delinquent progress report issue. COPS will also continue our procedure of contacting delinquent agencies at regular intervals until the information [progress report] has been received. This procedure has been very effective for COPS, producing a near 100% submission compliance rate for progress reports in previous years. The COPS Office ensures that grantees do not draw down grant funds if required progress reports are not filed pursuant to a detailed enforcement protocol for the failure to provide timely progress reports, dated November 22, 2000. The enforcement protocol has been systemically applied to progress reports for all hiring grants – which includes tribal hiring grants – since 2000. The protocol has proven overwhelmingly successful in obtaining progress reports for hiring grants and enforcing the grant requirement if a progress report is not filed. The OIG disagrees with the assertion that the COPS Office has been effective in obtaining progress reports for hiring grants and enforcing the grant requirement if a progress report is not filed. Based on our audit, we determined that 62 percent of the COPS Office grant files we reviewed were missing one or more progress reports, as shown in Table 6, page 23. Therefore, the COPS Office’s statements that their enforcement protocol for progress reports has proved to be "overwhelmingly successful" and that almost 100 percent of progress reports are submitted does not appear to be accurate. Additionally, we determined that progress reports had not been required for any grants awarded after FY 2001; as a result, progress reports were not required for an additional 24 percent of the COPS Office grant files we reviewed, as stated on page 23 of our report. It should also be noted that the COPS Office allowed grantees to draw down $484,975 during a period for which a current progress report had not been submitted, as stated on page 24 of our report. Therefore, it does not appear that the COPS Office is ensuring that grantees do not draw down funds when required progress reports are not filed. In Appendix XX, page 121, the COPS Office provided the following statement in response to recommendations:
Given the COPS Office’s success with the delinquent progress report protocol being applied to hiring grants, as a result of this audit, COPS will ensure that the procedures in the protocol are also applied to all other tribal grants, such as technology, equipment and training grants. In response to this statement, it should be noted that our audit revealed that 55 percent of the COPS Office grant files for hiring grants were missing one or more progress reports. We also found that one or more progress reports were not submitted in a timely manner for 76 percent of the COPS Office grant files reviewed, as shown in Table 6, page 23 of our report. Therefore, the COPS Office delinquent progress report protocol for hiring grants does not appear to be effective. As a result, applying this procedure to other tribal-specific grants would not ensure that progress reports are submitted timely and does not adequately address progress reports for hiring grants. In Appendix XX, page 122, the COPS Office provided the following statement in response to recommendation:
The COPS Office disagrees with the recommendation to require semi-annual progress reports for Equipment and Training grants. The COPS Office continues to improve our reporting process for the one-year TRGP ET grants while, at the same time, trying to lessen the grantee’s reporting burden. However, we believe requiring the TRGP ET grantees to submit a progress report twice per year would dramatically increase the reporting burden on the grantee. For example, a grantee with three TRGP ET grants would be required to submit six progress reports per year. We recognize that implementation delays are not unusual for equipment and training grants; therefore the increase in the number of progress reports would not supply COPS with enough substantive information on the grants to warrant the increased reporting. To ensure that reports are due within a reasonable period of time after the reporting period, the COPS Office will mail ET programmatic progress reports in conjunction with extension requests prior to the end of the grant period. The OIG disagrees with the assertion that requiring the grantees to submit a semi-annual progress report for the 1 year equipment and training grants would dramatically increase the reporting burden on the grantee. It should be noted that OJP and OVW already require semi-annual progress reports for their grants. Further, there is nothing that prohibits the COPS Office from requiring one consolidated semi-annual progress report for all equipment and training grants awarded to a single grantee. The OIG recognizes that any policy should balance accountability with flexibility; however, progress reports are an essential management tool that the COPS Office should use to ensure that grant programs are implemented and objectives are achieved. The OIG disagrees with the assertion that requiring progress reports be submitted semi-annually on 1-year equipment and training grants would not supply the COPS Office with enough substantive information on the grants to warrant the increased reporting. If progress reports are not required semi annually for the 1-year equipment and training grants, the 1 year grants could expire before the COPS Office received any information on grant activities and accomplishments necessary to determine whether grant programs were being implemented and objectives were being achieved. Finally, the OIG disagrees with the assertion that mailing progress reports in conjunction with grant extension is a proactive approach in helping the COPS Office monitor grant activities and accomplishments necessary to determine whether grant programs were being implemented and objectives were being achieved. By waiting until the original 1-year grant period has ended, the COPS Office cannot identify or resolve the barriers that impede the effective and timely implementation of its grant programs. In Appendix XX, page 122, the COPS Office provided the following statement in response to recommendations:
The COPS Office believes that we ensure financial reports are submitted by grantees in a timely manner. During FY 2003, the COPS Office closed a reportable condition on its financial statement audit for delinquent Financial Status Reports (SF 269A) and has maintained an average SF-269A compliance rate of 92 percent. Our Finance Office will continue to follow-up with grantees that are delinquent in submitting their SF-269As by initiating phone calls and/or writing letters to ensure financial reporting compliance. In addition, we will review and update our delinquent SF-269A policy as necessary. The OIG disagrees with the COPS Office assertion that it is ensuring financial reports are submitted by grantees in a timely manner. Based on our audit, we found that the COPS Office grants files reviewed were missing one or more financial reports and almost all grants had one or more reports that were not submitted in a timely manner. Specifically, as shown in Table 4, page 20 of our report, we found that:
On page 20 of our report, we noted that COPS Office officials stated that if financial reports are not received, COPS Office officials make telephone contact with grantees to request the delinquent reports. We also noted that the COPS Office started sending "dunning letters" to follow up with grantees that are delinquent in June 2003. However, we found that the telephone contacts and “dunning letters” generally were not documented in the case files reviewed. Therefore, based on the findings detailed above, the COPS Office response does not adequately address how it will ensure that required financial reports are submitted in a timely manner. In Appendix XX, page 122, the COPS Office provided the following statement in response to recommendations:
Grantees are required to submit SF-269As on a quarterly basis. The COPS Office monitors drawdowns through the continuous review and analysis of these reports and, based on their responses, grantees are contacted if they require any technical assistance. The OIG disagrees with the COPS Office assertion that it is monitoring drawdowns through the continuous review and analysis of financial reports. Based on our audit, we found that the COPS Office was not monitoring the utilization of grant funds. Specifically, we found that:
Based on the findings detailed above, the COPS Office is not monitoring the utilization of grant funds and is not following up with grantees that have not drawn down any grant funds. Therefore, the COPS Office response does not adequately address how it will ensure that grant drawdowns are monitored to determine if grant funds are being utilized in a timely manner. Further, the response does not address how the COPS Office will follow up with grantees that have not drawn down any grant funds. In Appendix XX, page 122, the COPS Office also provided the following statement in response to recommendations:
The COPS Office created a policy to waive the submission of SF 269As in September 2003 based on specific criteria. This policy seeks to identify grantees that have had awards for at least six months and have not yet submitted their SF-269As. A questionnaire is faxed to these grantees requesting the status of their grant implementation and whether the grantees wish to withdraw from the program. If grantees have not implemented their programs, they are not required to report. However, if grantees state that the program has been implemented; SF 269As are requested by the COPS Office. If no reply to the fax is received, a follow-up phone call is placed to request the documentation from the grantee. The OIG disagrees with the COPS Office assertion that its policy is sufficient to follow up with grantees that have not drawn down any grant funds. Under the proposed COPS Office policy, follow up with grantees would occur only for those grantees that did not submit a financial report. Our review of 41 COPS Office grants revealed that the financial reports for 6 grantees (15 percent) indicated the grantee did not expend any grant funds. Additionally, the financial reports for 7 grantees (17 percent) indicated the grantee expended less than 4 percent of the total grant award.1 In both instances, since a financial report was submitted the follow up policy would not apply. Although the OIG agrees that follow up with grantees who do not submit a financial report is important, the COPS Office policy fails to address how they will follow up with grantees that have submitted financial reports with zero or minimal expenditures. In Appendix XX, page 123, the COPS Office provided the following statement in response to recommendation:
The COPS Office ensures that grant funds are deobligated and follows the proper procedures to close grants due to lack of implementation, as appropriate. The OIG disagrees with the COPS Office assertion that it is ensuring that grant funds are deobligated and the grants are closed if grantees are unable or unwilling to implement grant programs in a timely manner. Based on our audit, we found that the COPS Office was not ensuring that grant funds are deobligated and the grants are closed if grantees are unable or unwilling to implement grant programs in a timely manner. Specifically, we found that:
Based on the findings detailed above, the COPS Office response does not adequately address how they will ensure that grant funds are deobligated and the grants are closed if grantees are unable or unwilling to implement grant programs in a timely manner. In Appendix XX, page 124, the COPS Office provided the following statement in response to recommendation:
The COPS Finance Office performs an excess of reported cumulated grant expenditures project annually to identify grantees that have drawn down unreported funds. We found that grantees do not have excess cash but rather a reporting issue due to a timing difference. The SF-269A is due 45 days after the end of the quarter. For example, a grantee that reports on September 30 is not required to report expenditures for October, November, and December until February 15. When comparing the disbursements for the 3rd quarter of FY 2004 to the reported expenditures for the 4th quarter of FY 2004 for all active grants, 76% of grantees were in compliance with respect to this issue. The COPS Finance Office will continue to perform an excess of reported cumulative grant expenditures project on a yearly basis. The OIG disagrees with the COPS Office assertion that it is ensuring that grantees are not allowed to draw down grant funds in excess of reported cumulative grant expenditures. As stated on page 34 of our report, financial guidelines require that grantee drawdowns should be based on immediate disbursement requirements. Grantees are required to time the drawdown requests to ensure that federal cash on hand is the minimum needed for grant disbursements to be made immediately or within a few days. During our audit, we found that grantees were allowed to draw down funds totaling $1.28 million in excess of reported cumulative grant expenditures. Our audit took into account any timing differences noted by the COPS Office by eliminating all grants which had not expired. Based on our audit, we identified and took exception to 18 expired COPS Office grants for which drawdowns exceeded reported cumulative grant expenditures by $713,567. Based on the findings detailed above, in our judgment the COPS Office response does not adequately address how it will ensure that grantees are not allowed to draw down grant funds in excess of reported cumulative grant expenditures. In Appendix XX, page 124, the COPS Office provided the following statement in response to recommendation:
The COPS Office has found that $542,552 of the $713,567 in questioned costs related to expenditures and payments that occurred during the grant funding period. Several agencies, that still have open compliance issues, account for the balance of $171,015 of the questioned costs. The COPS Office will continue to review and determine the best remedies to the respective compliance issues and associated questioned costs. The OIG does not disagree with the COPS Office’s statement that excess drawdowns occurred during the grant funding period. However, we questioned these amounts because the grants had expired and drawdowns exceeded reported expenditures. In Appendix XX, page 125, the COPS Office provided the following statement in response to recommendation:
The balance of $200,380 was originally tied to eight grants, all of which have been corrected. Four grants were deobligated and four grants extended. The OIG disagrees with the action taken to extend the four grants previously identified by the COPS Office as closed. According to 28 CFR 66.50, a federal agency may close out an award when it determines that all applicable administrative actions and all required work under the grant have been satisfactorily completed. According to the COPS Office’s own Grant Closeout Notification Toolkit, a grantee may have excess funds remaining in its grant account that are not necessary to complete the project, which should be deobligated at closeout. In Appendix XX, page 125, the COPS Office provided the following statements in response to recommendation:
Prior to end of the grant period, the COPS Office contacts all active grantees, asking if they to plan expend remaining funds and if they need more time to do so. If the grantee does not respond that it needs more time expend remaining funds then the grant is allowed to expire. If the grantee requests additional time to continue expending the funds, the COPS Office evaluates their responses, . . . Based on the evaluation of these factors, the grantee is notified whether its extension request is granted and, if so, a new grant expiration date is established. If the extension request is denied, the grant is allowed to expire and proceeds to the grant closeout process. We believe that this procedure should satisfy the OIG’s recommendation that COPS follow up on any grants before they expire to determine if the grantee plan to expend remaining funds prior to the grant end date. The OIG disagrees with the COPS Office assertion that its procedure satisfies our recommendation that the COPS Office follow up on any grants before they expire to determine if the grantee plans to expend remaining funds prior to the grant end date. As stated on page 43 of our report, we identified $6,487,356 in remaining funds related to expired grants; therefore, the COPS Office procedures do not appear to be effective. In Appendix XX, page 126, the COPS Office provided the following statement in response to recommendations:
The COPS Office ensures that funds remaining on expired grants are deobligated, but to do so within 90 days is not an absolute rule, as the OIG suggests. Rather, the Uniform Administrative Requirements allow for the agency to reconcile accounts after 90 days. Specifically, 28 CFR 66.23 (b) states that ‘a grantee must liquidate all obligations incurred under the award not later than 90 days after the end of the funding period. . .’ but there is an exception where ‘the federal agency may extend the deadline at the request of the grantee.’ Second, 28 CFR 66.50 (b) states that ‘within 90 days after the expiration of termination of the grant, the grantee must submit all financial, performance, and other reports required as a condition of the grant. . .’, but also provides the exception that ‘upon request by the grantee, federal agencies may extend this timeframe.’ It is then 90 days after the receipt of such reports that the ‘federal agency will make upward or downward adjustments to the allowable costs.’ (See 28 CFR 66.50(c)) As a result, based on the Department of Justice regulations, the COPS Office may extend the 90-day time period in order to make adjustment to and reconcile grant accounts. Accordingly, the COPS Office will ensure that funds remaining on expired grants are deobligated but must, and will, do so consistently with, and not contradictory to, Department regulations that allow for extensions of the time limit to draw down funds. The OIG disagrees with the COPS Office assertion that it ensures that funds remaining on expired grants are deobligated. Based on our audit, we identified $6,487,356 in remaining funds related to 217 expired grants. Although the COPS Office may extend the 90 day liquidation period, the extension must be at the request of the grantee. We found that extensions had not been granted in any of the grants reviewed. We also found no evidence that grantees had requested an extension of the 90-day liquidation period. It should also be noted that 8 of these grants had been expired for more than 3 years. Our recommendation does not include a timeframe for how quickly the COPS Office should deobligate funds remaining on grants expired more than 90 days only that these funds should be deobligated. In our judgment, the COPS Office response does not adequately address how it will ensure that remaining grant funds are deobligated in a timely manner. Additionally, the COPS Office response does not adequately address the $3,077,157 in questioned costs related to drawdowns occurring more than 90 days past the grant end date. We found no evidence that the grantees requested extensions of the 90-day liquidation period for these grants and no extensions were provided. The COPS Office response also does not adequately address the $6,487,356 in funds to better use related to remaining funds for grants that are more than 90 days past the grant end date. Again, we found no evidence that the grantees requested extensions of the 90-day liquidation period for these grants and no extensions were provided. Footnotes
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