Federal Reports

Audit objectives were to determine whether program funds were managed

Audit objective were to determine whether program funds were managed in accordance with the ARC and Federal grant requirements

Audit of Corporation for National and Community Service Grants to the Mayor’s Fund to Advance New York City The Mayor's Fund to Advance New York City (Mayor's Fund) served as the intermediary (i.e., the prime grantee) for a Social Innovation Fund (SIF) grant from CNCS totaling approximately $28.5 million for the period from August 1, 2010 to July 31, 2015. The Mayor's Fund divided its responsibilities among itself, the Center for Economic Opportunity (CEO) and MDRC, a non-profit, nonpartisan social and education policy research firm. Ultimately, the Mayor's Fund subawarded $25.8 million in SIF funds to 19 subgrantees.CNCS-OIG questioned more than $4.6 million based upon an audit of the costs incurred by the Mayor's Fundand three of its subgrantees: the Children's Aid Society, the Henry Street Project, and Madison Strategies Group (Madison), for the period from July 1, 2012,to June 30, 2015. The majority of these question costs flow from two findings: (1) MDRC's failure to conduct criminal history checks for its 165 staff members who were paid with SIF funds; and (2) a decision by the Mayor's Fund to award a subgrant to Madison, an unqualified organization with a substantial conflict of interest.CNCS was apparently unaware of either of these problems, which we detail in this report.

A limited scope performance audit (LSPA) of the California Arts Council (CAC) was conducted for the period of July 1, 2014 through June 30, 2017. LSPAs involve a limited review of financial and non-financial information of award recipients to ensure validity and accuracy of reported information, and compliance with federal requirements. Our limited scope audit concluded that CAC generally complied with the financial management system and recordkeeping requirements established by OMB and NEA. However, we also determined the following:The CAC overstated grant expenditures reported on NEA Grant No. 14-6100-2036 FFR submitted to NEA. Additionally, the CAC did not adhere to Federal requirements when reporting costs to NEA Grant No. 14-6100-2036. This resulted in unsupported costs included on the FFR. CAC did not submit final reports for NEA Grant Nos. 15-6100-200 5 and 16-6100-2046. CAC did not have policies and procedures in place to ensure that contractors or recipients were not debarred or suspended from receiving Federal assistance prior to the award or payment of Federal funds. CAC did not have written policies and procedures in place for the management of Federal awards. CAC did not have a Section 504 Self-Evaluation on file as required by NEA General Terms.

The VA Office of Inspector General (OIG) conducted this review to determine whether opportunities continued to exist for Veterans Benefits Administration (VBA) staff to improve the timeliness of appeals processing. The review focused on 210 appeals in seven phases where VBA was required to take action after receipt of a notice of disagreement, substantive appeal, or decision from the Board of Veterans’ Appeals (Board). The OIG found VBA staff did not always timely process the appeals workload. Generally, periods of inactivity occurred because: (1) VBA senior leadership prioritized the rating claims backlog over other workload and did not dedicate sufficient resources to timely address appeals; (2) VBA had an ineffective procedure for notifying VA Regional Offices when they were required to process Board grants; (3) some appeals were prematurely closed because VBA staff failed to update, or incorrectly updated, the electronic system and relied on an automated function to close some appeals; and, (4) VBA staff failed to follow the Board’s remand instructions due to inattention to detail and ineffective oversight. In some cases, delays caused by VBA resulted in appellants waiting years to receive favorable decisions and compensation. The OIG estimated that VBA staff issued favorable decisions in 29 percent of appeal stages completed during the first quarter of fiscal year 2016, resulting in additional compensation averaging approximately $32,800 through January 2016 and $650 in recurring additional monthly payments as of February 2016. Delaying decisions also resulted in some appellants paying more of their benefits to accredited attorneys and agents, and some appellants died before receiving final decisions on their appeals. Furthermore, processing errors resulted in loss of control of some appeals, misrepresented VA’s reported statistics, and caused unnecessary delays. The OIG made four recommendations and the Executive in Charge concurred with each one.

In July 2015, the VA Office of Inspector General (OIG) received allegations stating that an unauthorized Microsoft Access database was operating at the VA Long Beach Healthcare System (LBHCS). The allegations stated that the unauthorized database hosted Sensitive Personal Information (SPI) and all of the Veterans Health Administration’s 24 Spinal Cord Injury (SCI) Centers had access to the database through a SharePoint intranet portal. The anonymous complainants also stated that unsecured veteran SPI was stored on a server outside of VA’s protected network environment. The OIG substantiated the allegation that an unauthorized Microsoft Access database was created by LBHCS SCI employees to capture patient demographics and to provide a repository for all SCI Centers to track patient data. Consistent with the allegation, the OIG team found multiple instances of databases that hosted SPI in violation of VA policy. It also substantiated that veteran SPI was hosted on an external server at the University of Southern California without a formal Data Use Agreement authorizing the activity. In addition, the OIG team noted this server could be accessed from the internet using default logon credentials. The OIG recommended the Under Secretary for Health ensure that the Spinal Cord Injury and Disorders program staff comply with VA’s Privacy Program and information security requirements for all veteran sensitive data collected. In addition, the OIG recommended the Executive Director for the National Spinal Cord Injury Program Office discontinue storing SPI in unauthorized Microsoft Access databases. The OIG also recommended the Acting Assistant Secretary for Information Technology ensure that Field Security Services and VA’s Privacy Service implement improved procedures to identify unauthorized uses of SPI and take appropriate corrective actions. The Executive in Charge, Office of the Under Secretary for Health, and the Executive in Charge for the Office of Information and Technology concurred with the recommendations.

The Tennessee Valley Authority (TVA) purchased two new fixed-wing aircraft (FWA) through sole source contracts in May 2015 for $17.7 million. We audited TVA’s FWA to determine (1) whether TVA’s decision to purchase these aircraft was reasonable compared to aircraft used by other utilities, (2) how the cost and use of the aircraft compared to that of other utilities and industry standards, and (3) whether the use of the aircraft is consistent with applicable federal laws and regulations. We determined the number of FWA in TVA’s fleet is generally comparable to the number of FWA maintained by eight of its peers. However, we determined (1) TVA’s stated justifications for sole sourcing the purchase of the aircraft were not supported and did not include any analyses of historical usage to determine TVA’s FWA needs, and (2) the purchase of a jet instead of a second turboprop has not been cost effective. Additionally, (1) TVA may not have complied with Title 31, United States Code, Section 1344(a)(1), Passenger Carrier Use, and (2) TVA did not comply with various federal regulations and TVA policies and procedures regarding use of the aircraft. Failure to follow the federal laws and regulations (1) prevents TVA from being able to accurately determine the need for owning aircraft, (2) prevents TVA from ensuring travel costs are managed effectively, and (3) may cause reputational risks for TVA with regard to misuse (or perceived misuse) of the aircraft. We made ten recommendations to TVA management to improve (1) controls around the purchase of any future aircraft, (2) use of the FWA, and (3) compliance with all applicable laws and regulations.

The objective of our audit was to evaluate the effectiveness of the U.S. Postal Service’s maintenance optimization initiative in the Northeast Area. Headquarters management established and tracked maintenance optimization planned savings at the national level only and not at the seven Postal Service areas. To determine area performance, we obtained FY 2017 actual versus plan workhours for LDCs 37 and 38, respectively.