Sneak Preview: OIG Finds Numerous Grant Closeout Risks at DoD
(The following was excerpted from an article in the Single Audit Information Service.) The Department of Defense (DoD) Office of Inspector General (OIG) recently identified several concerns with the department’s grant closeout process and its compliance with the Grant Oversight and New Efficiency (GONE) Act (Pub. L. 114-117). Due to these concerns, OIG plans to further assess DOD closeout procedures in future audits.
The GONE Act was enacted to encourage federal agencies to identify and close out expired grants. In response, a 2016 Office of Management and Budget (OMB) memorandum required federal agencies to report open federal grant and cooperative agreement awards with periods of performance that had expired before Oct. 1, 2015, and identify the challenges in closing out these awards. The GONE Act also required OIGs of federal awarding agencies with more than $500 million in annual grant funding to conduct a risk assessment to determine whether an audit of the agency’s grant closeout process is warranted.
OIG complied with the GONE Act’s risk assessment requirement by reviewing, from June 2019 to December 2019, DoD financial reports from federal fiscal year (FY) 2017 and FY 2018 and a sample of 59 grant files of DoD recipients. OIG found that according to the FY 2017 financial reports, more than 5,000 grants and cooperative agreements issued by DoD’s awarding offices had an expired period of performance greater than two years and had yet to be closed out. In FY 2018, DoD financial reports showed that the agency had closed out 54% of the grants reported open in FY 2017, but more than 2,300 grants and cooperative agreements had yet to be closed out as of Sept. 30, 2018.
During the risk assessment, OIG found numerous data errors in DoD’s annual financial reports. Because DoD does not have a single system to award and maintain information on grants and cooperative agreements, GONE Act reporting required manual compilation from multiple systems, which resulted in errors related to the quantity and dollar values of open grants reported in FY 2017 and FY 2018 DoD grant financial reports. Due to these data errors, agency officials over-reported the total quantity of open grants by one and underreported the undisbursed balance by about $192,000 for FY 2017, according to OIG. For FY 2018, DoD officials underreported the total quantity of open grants by 16 and underreported the disbursed balance by $128 million.
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