The Department of Justice’s Grant Closeout Process
Audit Report 07-05
Office of the Inspector General
A strategic objective of the Department of Justice (DOJ) is to improve the crime fighting and criminal justice administration capabilities of state, local, and tribal governments.9 This objective is incorporated in the DOJ Strategic Plan, which includes the goals, objectives, and strategies for achieving its mission. DOJ’s strategies for achieving this objective include:
providing resources to state, local, and tribal jurisdictions to enhance law enforcement efforts;
providing direct technical support to state, local, and tribal law enforcement;
facilitating the prosecution and adjudication of federal, state, local, and tribal laws;
enhancing the human and technological capability of state, local, and tribal jurisdictions to share information and resources to combat crime; and
providing funding, information, training, and technical assistance to state, local, and tribal governments to prevent juvenile delinquency and improve the juvenile justice system.
While the federal government continues to play an important role in crime-fighting, much of the responsibility for crime control and prevention rests with state, local, and tribal governments. DOJ seeks to provide leadership and support to these agencies to develop their capacity to prevent and control crime and administer justice fairly and effectively through various grant, training, technical assistance, and research programs.
Within DOJ, the Office of Community Oriented Policing Services (COPS), Office of Justice Programs (OJP), and Office on Violence Against Women (OVW) are the primary agencies responsible for providing grant funding through an extensive, varied portfolio of criminal and juvenile justice grant programs, training, and technical assistance. In addition to awarding grants, COPS, OJP, and OVW are also responsible for managing and administering the programmatic and financial aspects of the grant once it has been accepted. From October 1, 1999, through March 31, 2006, DOJ awarded 49,151 grants with funds totaling $23.65 billion. The details of the grants awarded related to COPS, OJP, and OVW is shown in Table 1.10
|TABLE 1. DOJ GRANTS AWARDED (Dollars in Billions)|
|DOJ AWARDING AGENCY||NO. OF GRANTS||GRANT FUNDING AWARDED|
|Source: COPS, OJP, and OVW lists of grants awarded|
Grant monitoring is a critical management tool to determine whether grantees have implemented the program, achieved the objectives, and properly expended funds. An important aspect of grant monitoring and administration is timely and proper grant closeout because it is the final point of accountability for the grantee. Timely grant closeout is an essential program and financial management practice to identify grantees that have failed to comply with all grant requirements, as well as any excess and unallowable costs charged to the grant, and unused funds that should be deobligated. Therefore, timely grant closeout is necessary to determine whether grant programs are effectively meeting the criminal justice needs of state, local, and tribal governments.
Federal Regulations Regarding Grant Closeout
According to federal regulations, official closeout of a grant should occur when the awarding agency determines that the grantee has completed all applicable administrative actions and work required under the grant.11 Grants should be closed out when the grant has expired (reached the end date) and all open administrative, compliance, legal, and audit issues have been resolved. A federal awarding agency may choose to close a grant administratively if the grantee fails to provide the required documents, is no longer a valid operating entity, is non-responsive, or fails to cooperate. During the period covered by our audit, OJP and OVW policy required grants to be programmatically closed within 6 months after the grant end date. COPS did not have a specific timeframe in which expired grants should be closed.12 However, in our judgment 6 months after the grant end date is a reasonable timeframe for closing out expired grants; therefore, we used the 6-month timeframe in analyzing all grants, including COPS grants.
Additionally, federal regulations require that:
Grantees submit, within 90 calendar days after the date of completion of the grant, all financial, performance, and other reports as required by the terms and conditions of the grant.13
Grantees liquidate all obligations incurred under the grant and request the final reimbursement (draw down) not later than 90 calendar days after the funding period or the date of completion, as specified in the terms and conditions of the grant, unless the federal awarding agency authorizes an extension.
The awarding agency will, within 90 days after the receipt of the final financial report and draw down, make upward and downward adjustments to the allowable costs.
The federal awarding agencies make prompt payments to a grant recipient for allowable reimbursable costs under the grant being closed out.
The grant recipient promptly refund any balances of unobligated cash that the federal awarding agency has advanced or paid and that is not authorized to be retained by the recipient for use in other projects.14
Financial records, supporting documents, statistical records, and all other records pertinent to a grant must be retained for a period of 3 years from the date of submission of the final financial report.15
DOJ Top Management Challenges
For the past 6 years, grant management has been identified by the Office of the Inspector General (OIG) as one of DOJ’s top 10 management and performance challenges.16 Specifically, the OIG has reported that grant management continues to be a challenge for the following reasons:
OIG reviews continue to find that many grantees do not submit financial and progress reports;
Numerous deficiencies continue to be found in monitoring of grantee activities;
Audits found that grant funds were not regularly awarded in a timely manner and grantees were slow to spend available monies; and
More than 375 OIG audits of grants have resulted in significant dollar‑related findings.
Prior Reviews Regarding Grant Closeout
In March 2005, the OIG issued an audit report on the Administration of Department of Justice Grants Awarded to Native American and Alaska Native Tribal Governments, Report No. 05‑18, that included an evaluation of the effectiveness of the COPS, OJP, and OVW closeout processes for tribal‑specific grant programs. This audit revealed that:
Only 21 percent of the closed grants were closed in a timely manner, within 6 months after the grant end date;
Despite the fact that financial guidelines require that grant funds must be drawn down within 90 days after the end of the grant period, grantees were allowed to draw down grant funds more than 90 days after the grant end date; and
Unused grant funds for expired grants, which should have reverted back to the granting agency pursuant to financial guidelines, had not been deobligated.
The OIG has issued several other reviews of COPS and OJP’s grant management that include concerns related to grant closeout that are also identified in this audit. Specifically:
U.S. Department of Justice Annual Financial Statement, Fiscal Year 2005, Audit Report No. 06-17, March 2006, found that OJP program managers were not consistently closing out grants in accordance with existing policy or adequately documenting a justification for the delay. The report also found insufficient communication between the OJP program offices and the OJP Office of the Comptroller (OC) to ensure that once grants are closed remaining funds are deobligated in a timely manner. In addition, the OC did not adequately work with grantees to ensure that all financial criteria were met; as a result, the OC was not able to deobligate all remaining funds as required.17
Office of Justice Programs Technical Assistance and Training Program, Audit Report No. 04-40, September 2004, found that OJP grant managers did not ensure that required financial and progress reports were submitted timely and accurately, and other monitoring and closeout requirements were not being adhered to.
Streamlining of Administrative Activities and Federal Financial Assistance Functions in the Office of Justice Programs and the Office of Community Oriented Policing Services, Audit Report No. 03-27, August 2003, found that OJP did not maintain in its Grant Management System information related to grant monitoring and closeout after the grant was awarded.
Management and Administration of the Community Policing Services Grant Program, Audit Report No. 99-21, July 1999, found that COPS had not deobligated remaining funds for 127 of 500 expired grants totaling over $15 million. Moreover, the remaining funds for 373 grants that were deobligated were not done so in a timely manner.
Further, the OIG has also conducted audits of individual grants awarded to state, local, and tribal governments that identified weaknesses related to the grant closeout processes followed by COPS and OJP that were similar to those concerns reported in this audit. Specifically, the OIG conducted 22 COPS audits of grants totaling $102.49 million and 12 OJP audits of grants totaling $24.44 million. Based on the results of the individual grant audits, we identified:
two audits with drawdowns after the expiration of the grant totaling over $307,912; and
27 audits with funds remaining after the grant had expired totaling $6.24 million.
Finally, the Government Accountability Office (GAO) has also conducted reviews of OJP’s grant management that included activities related to grant closeout, which addressed concerns similar to those identified in our audit. Specifically:
GAO Report No. GAO‑02-25, Justice Discretionary Grants: Byrne Program and Violence Against Women Office Grant Monitoring Should Be Better Documented, November 2001, found that grant files did not contain required closeout materials.
GAO Report No. GAO-02-65, Juvenile Justice: Better Documentation of Discretionary Grant Monitoring is Needed, October 2001, found that various closeout materials were missing from the grant files.
In sum, prior audit reports identified significant and continuing concerns related to grant closeout within DOJ.
Based on the frequency and magnitude of the findings related to grant closeout in the previous reports, and the fact that for the past 6 years grant management has been identified by the OIG as one of DOJ’s top 10 management and performance challenges, we conducted an audit of the COPS, OJP, and OVW closeout processes to determine whether their grant closeout policies and procedures are adequate to ensure that:
Expired grants are closed in a timely manner;
Grant funds are drawn down in accordance with federal regulations, DOJ policy, and the terms and conditions of the grant; and
Unused grant funds are deobligated prior to closeout.
Department of Justice Strategic Plan, Fiscal Years 2003 - 2008.
This information is to provide a perspective on the number of grants and amount of grant funding awarded by DOJ and is not our audit universe, which is discussed later in the report.
Policy and regulations concerning the grant closeout process are contained in the following citations: (1) Code of Federal Regulations (C.F.R.), Title 28; (2) OMB Circulars A‑102, A-110, and A-123; and (3) the COPS, OJP, and OVW policies and procedures.
On March 31, 2005, COPS issued a memorandum entitled Expired Grant Policy and Procedures. The purpose of this memorandum was to set forth policy, provide procedural guidance, and delineate responsibilities across the agency for addressing COPS grants prior to and following expiration. However, this policy did not express a specific timeframe in which expired grants should be closed.
According to 28 C.F.R. §66.50 and 28 C.F.R. §70.71, the federal awarding agency may approve extensions when requested by the recipient.
OMB Circular A-129 governs unreturned amounts that become delinquent debts.
According to 28 C.F.R. §66. 42 and 28 C.F.R. §70. 53, the following are exceptions to the record retention and access requirements: (1) if any litigation, claim, or audit is started before the expiration of the 3-year period, the records must be retained until all litigation, claims, or audit findings involving the records have been resolved and final action taken; (2) records for real property and equipment acquired with federal funds must be retained for 3 years after final disposition; (3) when records are transferred to or maintained by the Department, the 3-year retention requirement is not applicable to the recipient; (4) if the indirect cost proposal was submitted for negotiation then the 3-year retention period for its supporting records starts on the date of the submission; (5) if the indirect cost proposal was not submitted for negotiation then the 3-year retention period for the proposal, plan, or other computation and its supporting records starts at the end of the fiscal year (or other accounting period) covered by the proposal.
Since 1998, the OIG has created a list of the top management challenges facing DOJ. Initially, the report was created in response to congressional requests. By statute this list is now required to be included in DOJ ’s annual Performance and Accountability Report.
These findings were also identified in U.S. Department of Justice Annual Financial Statement, Fiscal Year 2003 as Restated, Audit Report No. 05‑36, September 2005; and U.S. Department of Justice Annual Financial Statement, Fiscal Year 2004 as Restated, Audit Report No. 05‑38, September 2005.
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