Federal Reports

This report is a review of the Denali Commission’s compliance with the Digital Accountability and Transparency Act of 2014 (DATA Act). SB & Company (SBC), an independent public accounting firm, planned and performed the examination to obtain reasonable assurance about• Completeness, timeliness, quality, and accuracy of fiscal year (FY) 2019, first quarter financial and award data submitted for publication on USASpending.gov, and• The Denali Commission’s implementation and use of the Government-wide financial data standards established by the Office of Management and Budget and the U.S. Department of the Treasury. In SBC’s opinion, the Denali Commission’s DATA Act submission to Treasury’s DATA Act Broker for the first quarter of FY 2019 was complete and submitted timely. While the data submitted was accurate, the Commission did not consistently report grant information on File D2. As a result, SBC determined that the quality of the Commission’s data is considered “Lower” because of the missing financial assistance award information in file D2.

FSA consistently administered its heightened cash monitoring payment methods for schools that FSA placed on heightened cash monitoring for the top five reasons, and the documentation generally supported FSA’s placement of the schools on heightened cash monitoring. In our review of supporting documentation for 43 of the 809 schools on a heightened cash monitoring payment method for the top five reasons, we generally found that (1) the reason for a school’s placement was consistent with applicable regulations and FSA’s “Method of Payment Procedures” and (2) the documentation consistently supported the level of heightened cash monitoring.However, FSA did not have adequate internal controls to reasonably ensure it consistently placed schools on a heightened cash monitoring payment status when they submitted late annual financial statements or had composite scores that fell below the minimum financial responsibility score. As a result, School Participation Divisions (School Divisions) did not consistently or timely cite and place schools on provisional and heightened cash monitoring for submitting financial statements after the due dates.Also, FSA did not have control activities to track a school’s method of payment status from the School Division’s recommendation for heightened cash monitoring placement until the placement was made. We determined that 99 percent of the schools (653 of 659) with composite scores below the minimum financial responsibility score either were properly placed on stop payment or required by FSA to participate under alternative standards and requirements. However, one of FSA’s eight School Divisions did not take the required actions for 6 (5 percent) of 113 schools with composite scores that fell below the minimum score for financial responsibility. Further, FSA did not retain all required documentation for administering its heightened cash monitoring payment methods for some of the 43 schools we sampled. While the documentation generally supported FSA’s placement of schools on heightened cash monitoring, we found that FSA did not retain all required documentation for 9 schools (21 percent). For the 25 schools we sampled, FSA did not retain at least one required document for 12 schools (48 percent) removed from a heightened cash monitoring payment method.Overall, FSA’s use of heightened cash monitoring was an effective oversight tool. Our review of FSA’s “Method of Payment Procedures” found that the processes, as designed, provided reasonable assurance that a school (1) placed on a heightened cash monitoring payment method implemented the required corrective actions before FSA returned the school to the advance payment method and (2) placed on heightened cash monitoring 2 submitted the required student payment documentation to FSA before being reimbursed by the Department.

Colorado’s Department of Public Safety, Division of Homeland Security and Emergency Management (Colorado) did not effectively oversee its subrecipient, Frasier Meadows, to ensure it was aware of and followed Federal procurement regulations and Federal Emergency Management Agency (FEMA) guidelines. In addition, FEMA should have ensured Colorado delivered assistance to Frasier Meadows consistent with the FEMA-State Agreement and the State Administrative Plan. We recommended the Regional Administrator, FEMA Region VIII, disallow $5.57 million for contracts and direct Colorado to work with Frasier Meadows officials to ensure they implement their updated Federal procurement policies and procedures in the event of a future disaster. FEMA officials agreed with both recommendations. Prior to final issuance of this report, FEMA took action to resolve and close both recommendations. No further action is required.

The VA Office of Inspector General (OIG) reviewed whether Regional Procurement Office (RPO) East followed the Federal Acquisition Regulation (FAR) and the Veterans Health Administration (VHA) procurement manual when closing out contracts. Contract closeouts provide the last opportunity to ensure taxpayers’ and veterans’ interests are protected. If proper procedures are not followed, financial and legal risks increase, and excess funds may not be made available for other—perhaps better—uses. The review team examined a random sample of 40 closed contracts worth $500,000 or more from fiscal year 2018 to determine whether closeout procedures were followed. The team also reviewed an open obligations report to identify contracts with remaining excess funds. The OIG found contracting officers did not consistently close out contracts on time and did not fully document contract closeout requirements. The review team identified about $6.8 million in unreleased excess funds that could have been put to better use. Contracting officers said a heavy workload affected their ability to comply with closeout requirements. The OIG determined that contracting officers did not give contract closeouts as much attention as awarding contracts. Incorrect internal training for contracting officers and unclear standard operating procedures also contributed to noncompliance with closeout requirements. The OIG’s review of closed contracts revealed ineffective oversight of closeout processes as well. The OIG recommended VHA Procurement’s executive director establish effective and consistent quality assurance reviews for contracts to ensure closeout meets FAR and VHA procurement manual requirements, and that all contracting officers are retrained on procedures. The OIG also recommended the executive director ensure closeout is fully documented for the 40 OIG-sampled contracts.