Fish and Wildlife Service: Options to Improve the Use of Federal Aid
Programs' Administrative Funds (Testimony, 09/29/1999,
GAO/T-RCED-99-285).

Pursuant to a congressional request, GAO discussed the Fish and Wildlife
Service's (FWS) management and oversight of the administrative funds
associated with the Wildlife Restoration Program and the Sport Fish
Restoration Program, focusing on: (1) recapping the results of GAO's
July 20, 1999, testimony on the management and oversight of the Federal
Aid Program; (2) options to improve the program's use of administrative
funds; and (3) providing additional information related to the use of
administrative funds identified in GAO's July 1999 testimony.

GAO noted that: (1) in GAO's July 20, 1999, testimony, GAO identified
numerous problems with the way administrative funds are used and
managed; (2) GAO believes that these problems have led to a culture of
permissive spending within the Office of Federal Aid; (3) the problems
GAO identified included: (a) controls over expenditures, revenues, and
grants were inadequate; (b) millions of dollars in program funds could
not be tracked; (c) basic principles and procedures for managing travel
funds were not followed; (d) basic internal control standards or Office
of Management and Budget guidance for maintaining complete and accurate
grants files was not followed; (e) regional offices used administrative
funds inconsistently and for purposes that were not clearly justified;
(f) charges for Service-wide overhead may not be accurate; (g) routine
audits to determine whether administrative funds were being used for
authorized purposes were not conducted; and (h) the process for
resolving audit findings involving states' use of program funds was
questionable; (4) there are at least three primary options to consider
for controlling the use of administrative funds: (a) the Office of
Federal Aid could be given additional time to correct the problems
identified in GAO's testimony; (b) legislative limits could be placed on
how FWS spends administrative funds; and (c) require FWS to use
appropriated funds to administer the Wildlife and Sport Fish Restoration
programs and devote all excise tax revenues to state and other qualified
government recipients' grants; (5) GAO is hopeful but not confident that
FWS will be committed to implementing the planned changes and that the
changes will result in lasting improvement; (6) GAO's lack of confidence
is due to the Office of Federal Aid's poor track record in dealing with
the identified problems; and (7) the options presented are intended to
provide additional controls and accountability over the funds used to
administer the Wildlife and Sport Fish Restoration programs, and to
assist the House Committee on Resources in its decisions about the
future of the Office of Federal Aid's administration of the programs.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-RCED-99-285
     TITLE:  Fish and Wildlife Service: Options to Improve the Use of
	     Federal Aid Programs' Administrative Funds
      DATE:  09/29/1999
   SUBJECT:  Internal controls
	     Accountability
	     Funds management
	     Wildlife conservation
IDENTIFIER:  FWS Wildlife Restoration Program
	     FWS Sport Fish Program

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Cover
================================================================ COVER

Before the Committee on Resources,
House of Representatives

For Release
on Delivery
Expected at
11 a.m.  EDT
Wednesday
September 29, 1999

FISH AND WILDLIFE SERVICE -
OPTIONS TO IMPROVE THE USE OF
FEDERAL AID PROGRAMS'
ADMINISTRATIVE FUNDS

Statement of Barry T.  Hill, Associate Director,
Energy, Resources, and Science Issues,
Resources, Community, and Economic
Development Division

GAO/T-RCED-99-285

GAO/RCED-99-285T

(141381)

Abbreviations
=============================================================== ABBREV

  FACA -
  DCAA -
  OMB -
  GAS -

============================================================ Chapter 0

Mr.  Chairman and Members of the Committee: 

We are pleased to be here today to discuss the Fish and Wildlife
Service's (Service) management and oversight of the administrative
funds associated with the Wildlife Restoration Program and, to a
lesser extent, with the Sport Fish Restoration Program.  The Wildlife
Restoration Program was begun in 1938 following the passage of the
Federal Aid in Wildlife Restoration Act, often called the
Pittman-Robertson Act.  The purpose of the act is to restore,
conserve, manage, and enhance the nation's wildlife resources and to
provide for public use and benefits from these resources.  The
Service, an agency of the Department of the Interior, administers the
program.  The Service's Office of Federal Aid (Office) provides
overall support and direction for implementing the Wildlife
Restoration Program as well as a sister program, the Sport Fish
Restoration Program.  This sister program provides funds to restore
and manage the nation's sport fishery resources and to provide public
use and benefits from these resources.  The programs received a total
of about $550 million in fiscal year 1998ï¿½$170 million for Wildlife
and $380 million for Sport Fish. 

Funds provided for these programs are derived from federal excise
taxes from the sale of firearms, ammunition, archery equipment,
fishing equipment, and other items.  The core mission of these
programs is to distribute funds to states and other qualified
government recipients for the purposes of wildlife and sport fish
restoration.  A portion of the funds can be used by the Office for
the programs' administration and implementationï¿½up to 8 percent for
wildlife and up to 6 percent for sport fish.  Of the roughly $550
million these programs received in fiscal year 1998, about $31
million was used for administration and implementationï¿½$13.5 million
for Wildlife and $17.4 million for Sport Fish. 

Our testimony today responds to your request that we (1) recap the
results of our July 20, 1999, testimony to you on the management and
oversight of the Federal Aid program,\1 (2) provide options to
improve the program's use of administrative funds, and (3) provide
additional information related to the use of administrative funds
identified in our July 1999 testimony. 

--------------------
\1 Fish and Wildlife Service:  Management and Oversight of the
Federal Aid Program Needs Attention (GAO/T-RCED-99-259, July 20,
1999). 

   SUMMARY OF OUR JULY 1999
   TESTIMONY RESULTS
---------------------------------------------------------- Chapter 0:1

In our July 20, 1999, testimony, we identified numerous problems with
the way administrative funds are used and managed.  We believe that
these problems have led to a culture of permissive spending within
the Office of Federal Aid.  The problems we identified included the
following: 

  -- controls over expenditures, revenues, and grants were
     inadequate;

  -- millions of dollars in program funds could not be tracked;

  -- basic principles and procedures for managing travel funds were
     not followed;

  -- basic internal control standards or Office of Management and
     Budget guidance for maintaining complete and accurate grants
     files was not followed;

  -- regional offices used administrative funds inconsistently and
     for purposes that were not clearly justified;

  -- charges for Service-wide overhead may not be accurate;

  -- routine audits to determine whether administrative funds were
     being used for authorized purposes were not conducted; and

  -- the process for resolving audit findings involving states' use
     of program funds was questionable. 

It is important to point out that many of the problems we identified
in our July 1999 testimony before this Committee were the same as
those we identified 6 years ago.  In 1993, we reviewed the use of
administrative funds for the Sport Fish Restoration Program.\2 As
part of our recent work for this Committee, we found that the Service
had not been entirely responsive to our earlier recommendations to
correct the management problems we identified in our previous review. 

--------------------
\2 Fisheries Management:  Administration of the Sport Fish
Restoration Program (GAO/RCED-94-4, Nov.  8, 1993). 

   OPTIONS TO IMPROVE THE USE OF
   ADMINISTRATIVE FUNDS
---------------------------------------------------------- Chapter 0:2

In light of the broad scope of the management problems that we
identified in our July 1999 testimony, we believe that there are at
least three primary options to consider for controlling the use of
administrative funds.  First, the Office of Federal Aid could be
given additional time to correct the problems we identified in our
work.  In August 1999, the Service said that it had taken or was
taking a number of corrective actions including continuing with its
reconciliation efforts to track the use of administrative funds,
requiring supervisory review and approval of travel vouchers, and
evaluating how to establish a procedure for performing routine audits
of administrative funds.  This option would probably have the least
impact on the Office's current operations, but it would require
follow-up at some point to verify that the promised corrective
actions have been taken.  With this approach, we would be concerned
about the Service's commitment to taking the needed corrective
actions, given that it has not been fully responsive to prior
recommendations we have made. 

Second, legislative limits could be placed on how the Service spends
administrative funds.  For example, the spending of administrative
funds could be limited to functions necessary for the Office of
Federal Aid to carry out its most basic responsibilities; namely, to
(1) administer the formula for getting grant funds to the states and
other qualified government recipients, (2) review specific project
proposals from these entities, and (3) audit these entities' use of
the grant funds for compliance with existing legislation and program
goals.  By placing more restrictions on the use of the administrative
funds this option would likely result in less money being spent
administering the program and would make more funds available for
distribution to the states and other qualified government recipients. 

A third option would be to require the Service to use appropriated
funds to administer the Wildlife and Sport Fish Restoration programs
and devote all excise tax revenues to state and other qualified
government recipients' grants.  This option would require the Service
to annually justify to the Congress the amount of funds it needs for
administering the program.  Hence, how the funds are being used and
the direction that the program is taking would be more visible to the
Congress.  Also, the Wildlife and Sport Fish Restoration programs
would be competing against other programs within the Department of
the Interior for appropriated funds.  As in the second option, this
option could potentially remove much of the organization's
flexibility for determining where to use the funds for administrative
purposes. 

   ADDITIONAL INFORMATION ON THE
   USE OF ADMINISTRATIVE FUNDS
---------------------------------------------------------- Chapter 0:3

Subsequent to the July 20, 1999, hearing, the Committee asked us to
respond to a number of questions about the use of administrative
funds raised by our testimony.  Appendix I of my statement today
provides our responses to these questions.  For the most part, our
responses elaborate on points made earlier.  However, they also
include substantial additional information, such as our views on
actions the Fish and Wildlife Service is planning to take to correct
the problems we have identified.  In this regard, we are hopeful but
not confident that the agency will be committed to implementing the
planned changes and that the changes will result in lasting
improvement.  Our lack of confidence is due to the Office of Federal
Aid's poor track record in dealing with the identified problems.  For
example, in response to our past recommendation that all
administrative costs be thoroughly documented, the Service stated
that it had a system that allows it to maintain a comprehensive file
for documenting all direct charges against the Sport Fish Restoration
Program.  Nearly 6 years later, we found that, in many instances, we
could not track and verify the status of a grant, the amounts
authorized for payment, or when the expenditures were made. 

-------------------------------------------------------- Chapter 0:3.1

In closing, Mr.  Chairman, I would like to reiterate that the
administrative funds associated with the Wildlife and Sport Fish
Restoration programs are used for various purposes.  Collectively,
the problems we identified suggest a lack of attention to detail that
erodes the Office of Federal Aid's ability to effectively manage and
oversee the administrative aspects of the programs and has created a
culture of permissive spending that raises questions about the
Office's approach to managing its administrative funds.  This
situation is particularly important not only for the restoration
programs as they exist today but also because the amount of funding
provided for these programs could significantly increase.  Bills have
been introduced in the Congress that, among other things, would
provide additional funding that could eventually range from $350
million to $459 million per year, including funds for program
administration.  We have presented some options that would affect the
amount of funds for administering the Wildlife and Sport Fish
Restoration programs.  The options we have presented today are
intended to provide additional controls and accountability over the
funds used to administer the Wildlife and Sport Fish Restoration
programs, and to assist the Committee in its decisions about the
future of the Office of Federal Aid's administration of these
programs. 

This concludes my prepared statement.  I would be happy to respond to
any questions that you and Members of the Committee may have. 

   CONTACT AND ACKNOWLEDGMENTS
---------------------------------------------------------- Chapter 0:4

For further information, please contact Barry T.  Hill at
202-512-3841.  Individuals making key contributions to this testimony
are Lew Adams, Margie Armen, Cliff Fowler, and Roy Judy. 

FISH AND WILDLIFE SERVICE: 
ADDITIONAL INFORMATION RELATED TO
THE USES OF ADMINISTRATIVE FUNDS
IDENTIFIED IN OUR JULY 1999
TESTIMONY
=========================================================== Appendix I

Federal Aid administrative funds are used for several purposes within
the Fish and Wildlife Service (Service).  Examples include the uses
made by the Administrative Grant Program, the Director's Conservation
Fund, the Office of Federal Aid, and regional offices for such
purposes as salaries, travel, grants, and contracts.  The Service
also uses the Office of Federal Aid's administrative funds to pay for
general administrative support services such as telephone usage,
equipment servicing and space rental, and a contractor to audit the
use of program funds provided to the states and other qualified
government recipients.  This appendix provides our responses to the
additional questions you asked about these and other topics. 

Question 1.  What is the Administrative Grant Program, how have the
program's funds been used, and what problems does GAO have with the
administration of this program? 

Response 1.  The Administrative Grant Program is operated by the
Office of Federal Aid.  The program uses some of the administrative
funds to support national fish and wildlife projects that provide
collective benefits to at least 50 percent of the states.  The
Service annually publishes a notice in the Federal Register,
announcing the procedures for submitting project proposals,
deadlines, and the amount of money that is available for
administrative grants.  The applicants submit their proposals to the
Office of Federal Aid (Office), which reviews each grant against
established criteria to determine eligibility.  To determine
eligibility for an administrative grant, the Office makes an
assessment of the benefits to be derived from the proposed project,
the importance of providing the grant, the problems that need to be
addressed, the number of states that are affected, and the approach
that will be taken to accomplish the objectives of the grant.  In
fiscal year 1998, the Office made about $4 million in administrative
funds available for administrative grants.  The Office awarded 18
grants ranging from about $18,500 to $684,000 for such activities as
developing and publishing a fish hatchery publication and a wildlife
law news quarterly, developing a national hunter retention outreach
program, and improving public knowledge of hunting and related animal
use programs in the United States.  Since fiscal year 1994, the
Office has funded 83 grants totaling about $19.5 million. 

In reviewing administrative grant files, we found that the Office was
not following standard management practices to ensure that grant
funds were properly applied and accounted for.  Specifically, we
found that basic internal controls and documentation standards were
not being used and that the agency was not following the Office of
Management and Budget's (OMB) requirements for grant management.  We
reviewed the grant files for fiscal years 1993 through 1998 and found
them to be incomplete, out of date, and disorganized.  To illustrate,
the files did not contain required key financial documents, status
reports, or other supporting documentation.  As a result, in many
instances, we could not track and verify the status of a grant, the
amounts authorized for payment, or the time periods in which these
expenditures were made. 

We also found instances in which Office of Federal Aid officials
authorized questionable payments to grantees without thoroughly
reviewing the submitted documentation.  For example, we found that
the Office paid grantees for alcoholic beverages and excessive meal
charges that should have been questioned, and for work that was
neither related to the grant nor ever performed.  We are concerned
that the problem of authorizing questionable payments may be
widespread because the officials responsible for grant management
said that they did not review the details supporting requests for
payment.  Internal controls for this aspect of the Office's
operations appeared to be nonexistent at the time of our review. 

After our July 1999 testimony on this issue, the Service issued a
notice in the Federal Register on July 26, 1999, terminating the
Administrative Grant Program for new administrative grants effective
in fiscal year 2000.  In an August 10, 1999, letter to us, the
then-Acting Director of the Service stated that the decision to
terminate the program was due in part to budgetary constraints and in
recognition of concerns received in response to a September 1998
Federal Register notice regarding the management of these grants. 

Question 2.  What is the Director's Conservation Fund, how has it
been used, and what problems does GAO have with the administration of
this fund? 

Response 2.  The Director's Conservation Fund was established in 1994
and was terminated in March 1999.  The Director's Conservation Fund
was set up for use by the Director of the Service to make
discretionary grants.  From fiscal years 1994 through 1998, the
Director used about $3.8 million in administrative funds for 53
grants.  The grant funds have been used to support the Service's own
activities such as conducting regional workshops, human resource
projects, and specific research projects on subjects such as mourning
dove productivity in the Central Valley of California.  These funds
have also been granted to private organizations such as the
FishAmerica Foundation\3

for such activities as a challenge cost-share program to enhance
sport fisheries and their habitats and to a state game and fish
commission for a symposium on North America's hunting heritage. 

We found that the Office had not followed OMB's guidance that
requires agencies awarding grants to notify the public of intended
funding priorities for discretionary grant programs.  Moreover, the
procedures used for approving grants under the Director's
Conservation Fund were more open to subjective judgment and much less
rigorous than the procedures used for approving administrative
grants.  Under the Director's Conservation Fund, there were no
specific criteria that a grantee needed to meet to obtain approval. 
The potential grantee essentially had to identify only the title,
purpose, and estimated cost of the project.  As we indicated in our
response to question 1, the criteria for eligibility and approval
under the Administrative Grant Program were much more delineated.  To
illustrate, we found three grants, totaling $280,000, that were
rejected under the Administrative Grant Program but subsequently
funded by the Director's Conservation Fund.  We found a fourth grant
for $75,000 that met the eligibility requirements for an
administrative grant but fell below the cutoff point for funding. 
This grant was also funded under the Director's Conservation Fund. 
Finally, we found in a limited review of grants awarded during fiscal
years 1994 through 1998, that the Office had not exercised adequate
controls over these grants.  Specifically, the Office had not
followed internal control documentation standards and OMB guidance. 
As with the administrative grant files, the files for this program
were incomplete, out of date, and disorganized and did not contain
required financial forms and supporting documentation. 

In its August 10, 1999, letter to us, the Service stated that it had
terminated the Director's Conservation Fund.  According to agency
officials, the Director made this decision in March 1999, shortly
after we initiated our audit. 

Question 3.  Does existing legislation authorize a national grant
program as exercised in the Administrative Grant Program and the
Director's Conservation Fund? 

Response 3.  Program funds for the Federal Aid in Wildlife and Sport
Fish Restoration Acts are derived from federal excise taxes on
selected items used in hunting and fishing.  The bulk of the program
funds are available for making grants to states to conduct fish and
wildlife management and restoration programs and projects.  However,
the legislation expressly reserves a percentage of the program funds
to be made available for expenditure on ï¿½administration and
executionï¿½ of the programs.  This portion of the program funds is
often referred to as ï¿½administrative funds.ï¿½ The two authorizing
statutes also specifically provide for some additional particular
activities to be conducted with administrative funds, and they set a
maximum amount that can be devoted annually to program
ï¿½administration and executionï¿½ (up to 8 percent of Wildlife
Restoration funds and up to 6 percent of Sport Fish Restoration
funds). 

While program administration is a relatively well-understood concept,
neither statute specifies what might constitute program ï¿½execution.ï¿½
In our view, the most logical interpretation of that language is that
authority to use funds for program execution encompasses carrying out
activities that further program goals but do not involve making
grants to states.  The Department of the Interior's Solicitor has
issued several opinions that bear on the interpretation of program
execution with administrative funds.  In 1949, the Solicitor advised
that administrative funds could be used directly by the Department to
import bird eggs for the purposes of introducing a new species of
game birds into this country.  In 1955 and again in 1985, the
Solicitor advised that administrative funds could be used to conduct
surveys that reported on matters other than the consumptive use of
wildlife.  In 1986, the Solicitor determined that administrative
funds could be used to carry out a national education program and to
do so by means of grants to ï¿½public or private agencies and
organizations.ï¿½

The existing legislation does not specifically direct that either the
Administrative Grant Program or the Director's Conservation Fund be
established.  However, the authority to use funds for program
execution is sufficiently broad that these types of programs are not
precluded. 

Question 4.  On August 10, 1999, the Fish and Wildlife Service
provided you with a letter enumerating a number of actions it was
taking to address the concerns raised in your testimony.  In light of
your work in 1993 and 1999, what confidence do you have that the
Service will actually follow through on its commitments and implement
the kind of corrective actions it mentions in its letter? 

Response 4.  We are hopeful but not confident that these actions will
result in lasting change.  Our lack of confidence is due to the
Office's (1) record in dealing with identified problems and (2)
reinstatement or resurrection of programs under different names that
had been terminated in response to prior recommendations. 

In 1993, we reported on a number of problems with the use of
administrative funds for the Sport Fish Restoration Program and made
recommendations to the agency on how to correct them.  In 1994, the
Department of the Interior notified the Congress that it and the
Service confirmed their agreement with each of the recommendations in
our report and identified actions taken in response to the
recommendations.  However, our work in 1999 on the Wildlife
Restoration Program shows that the assurances given to both the
Congress and to us in 1993 and 1994 led to little actual change.  For
example, in response to our recommendation that all administrative
costs be thoroughly documented, the Service stated that it had a
system allowing it to maintain a comprehensive file for documenting
all direct charges against the Sport Fish Restoration and other
Office of Federal Aid programs.  Nearly 6 years later, we found that,
in many instances, we could not track and verify the status of a
grant, the amounts authorized for payment, or the time periods in
which the expenditures were made.  Furthermore, the Office has not
effectively used the agency's accounting system's capability to
identify costs at the project level, thus making it impossible to
identify all project-specific costs.  Finally, the Acting Director's
testimony submitted to your Committee for the July 20, 1999, hearing
stated that an internal review the Service initiated 4 years ago
raised some of the same concerns that we identified about program
administration.  The Acting Director stated that efforts have been
under way to address these issues ï¿½but are obviously not completed.ï¿½

The Office of Federal Aid responded to issues raised as a result of
our 1999 work in part by reaffirming existing policy and by
terminating programs.  Reaffirming existing policies is just the
first step.  Management must ensure that these policies are
implemented.  Our concern is that this additional step either will
not be taken or that its effectiveness will gradually degrade because
of a lack of management attention, allowing a similar situation to
exist in the future.  While terminating the Administrative Grant
Program and the Director's Conservation Fund provided a quick
response, no statutory or other limitation exists to prevent the
programs' reinstatement or resurrection under different names.  This
latter point is of concern because the Office of Federal Aid
responded to our previous report by changing its criteria for
approving ï¿½special investigationsï¿½ (the term the Office used for its
projects) but then rescinded those changes.  Hence, rather than
limiting grants to a maximum of (1) $200,000 per year for each
grantee and (2) 3 years or less duration, the Office resumed having
no limits at all.  Also, rather than calling the projects special
investigations, the Office renamed them ï¿½administrative grantsï¿½ or
included them under the Director's Conservation Fund.  We are
concerned that this type of response could recur and, as a result,
the agency will again face the same management problems that we
reported on in our July 20, 1999, testimony. 

Question 5.  You have talked about problems in Federal Aid's
management of travel funds.  Could you please elaborate on the
problems you have identified, including providing specific examples
of travel abuses? 

Response 5.  We found that the Office did not routinely follow basic
principles and procedures for managing its travel funds.  As we
stated in our July 20, 1999, testimony, the Service's policy is that
staff working for the Officeï¿½like all Service employeesï¿½must receive
specific approval from the Director of the Service before attending
certain national conferences.  However, we found nine instances in
which this policy was violated by Office staff who attended
conferences in 1998 and 1999.  In addition, we found that the head of
the Office filed almost $68,000 in travel vouchers for 71 trips taken
from October 1995 through June 1999 but was inconsistent in obtaining
approvals for his travel vouchers.  He had a supervisor approve his
travel vouchers for 25 trips taken from October 1995 through February
1997.  For travel taken from late February 1997 through May 1999, he
had subordinates approve 38 of his travel vouchers amounting to over
$39,000 in travel expenses.  This practice is not permitted under the
Service's travel policy. 

When we questioned the practice of having a subordinate approve a
supervisor's travel voucher, we were told that the Service's existing
policy allowed subordinates to sign travel vouchers, and we were
provided with a copy of a 1991 policy.  However, the 1991 policy
pertained to situations in which an office was isolated or
geographically removed, making it difficult to obtain proper
supervisory approval.  Regardless, the policy had been superceded in
1992 by a policy specifically requiring supervisory approval for
travel vouchers.  In addition, a statement printed on the back of the
travel authorizations specifies that a supervisor is responsible for
approving a travel voucher. 

After we provided our testimony to the Committee on this issue in
July 1999, the Service concurred with the problems we identified.  In
its August 10, 1999, letter to us, the Service said that it has
suspended the use of open travel authorizations for the Office's
entire staff and has reapprised all Service staff of its travel rules
and regulations.  In addition, the head of the Office was directed to
submit all future travel vouchers to his supervisor, the Assistant
Director for External Affairs, for appropriate review. 

Question 6.  Have you identified any additional issues with the use
of General Administrative Service (GAS) funds by the Fish and
Wildlife Service? 

Response 6.  In addition to the issues we addressed in our July 20,
1999, testimony, we have identified two other issues that indicate
that GAS assessments were either too high in the past or could be
lowered in the future.  The first issue relates to the potential
impact on the GAS assessment from projects and initiatives funded
under the Servicewide Administrative Support account managed by the
Fish and Wildlife Service, which pays for overhead and support
expenses such as rental payments, telephone service, postage, and
training.  This account is funded from three sources:  (1)
appropriated funds, (2) reimbursable agreements, and (3) GAS.  The
GAS portion is made up of assessments made to the Sport Fish and
Wildlife Restoration programs and nine other programs. 

From fiscal year 1990 through fiscal year 1998, the Servicewide
Administrative Support account funded over $10 million in projects
and initiatives by the Fish and Wildlife Service Director's Office,
some of which are questionable as central administrative support for
the Service.  Examples of the questionable Director's Office projects
and initiatives funded under the Servicewide Administrative Support
account include $400,000 for Atlantic salmon work, $200,000 for wolf
monitoring and reintroduction, and $100,000 for rhinoceros
conservation studies.  These projects and initiatives were in
addition to projects funded by the Director's Conservation Fund. 

Service officials said that none of these projects and initiatives
was funded with the GAS component of the Servicewide Administrative
Support account.  Regardless of which component paid for these
expenses, if these projects had not been funded, the GAS contribution
to the account could potentially be reduced.  In July 1999, the
Service advised us that Servicewide Administrative Support funds
would no longer be used to fund the Director's Office projects and
initiatives. 

The second issue relates to the unobligated balance in the
Servicewide Administrative Support account at the end of the fiscal
year.  On the basis of data we obtained, this account had unobligated
balances at the end of fiscal years 1990 through 1998.  These
balances ranged from as high as about $7.4 million in fiscal year
1990 to as low as about $100,000 in fiscal year 1998.  Service
officials informed us that these unobligated balances relate to the
appropriated fund component of the Servicewide Administrative Support
account.  In total, from fiscal year 1990 through fiscal year 1995,
over $12 million in unobligated balances expired and were not
available for use in the following fiscal year.  Hence, for those
years, the GAS component of the account could have been reduced.  To
illustrate, in fiscal year 1990, the Service's total GAS assessment
was about $5.5 million, of which almost $5.2 million came from the
Sport Fish and Wildlife Restoration programs.  In that same year,
about $7.4 million in unobligated funds in the Servicewide
Administrative Support account expired.  If the Service had spent all
of its appropriated fund component in the Servicewide Administrative
Support account, it would have needed less from the GAS component. 
That should then have translated into a reduced GAS assessment and
the potential for additional program funds to go to the states and
other qualified government recipients.  Beginning in fiscal year
1996, Interior's appropriations acts have stipulated that
appropriated funds can be obligated over 2 years instead of just 1. 
And as a result, it is unlikely that any unobligated balances will
expire. 

Question 7.  The Administrative Grant Program was carried out in
close cooperation with the Grants-in-Aid Committee of the
International Association of Fish and Wildlife Agencies, raising
questions about the Committee's role.  If the now terminated
Administrative Grant Program was to be reconstituted, should Federal
Aid officials reshape the Committee's involvement in the grant
approval process? 

Response 7.  As it was previously conducted, the Administrative Grant
Program relied heavily on an outside group, the Grants-in-Aid
Committee of the International Association of Fish and Wildlife
Agencies, to recommend both the direction of the program and the
award of administrative grant funds.  (See our response to question
1.) Because the Committee's role was so central to the functioning of
the Administrative Grant Program, officials of the Office of Federal
Aid and others questioned whether the Committee should have operated
within the framework of the Federal Advisory Committee Act (FACA). 
That act requires, among other things, that a notice of meetings be
published in advance in the Federal Register and that papers,
records, and minutes of meetings be available to the public. 

The International Association of Fish and Wildlife Agencies is
composed of delegates from the 50 state fish and game authorities,
foreign governments, private organizations, and officials from the
Office of Federal Aid.  With about 50 members, the Grants-in-Aid
Committee included state and private delegates as well as key staff
from the Office of Federal Aid.  The Committee played an integral
part in managing the Administrative Grant Program, setting the focus
areas each year for which grant proposals would be solicited.  It
also evaluated and ranked eligible grant proposals, including
proposals from its parent organization, the International Association
of Fish and Wildlife Agencies.  Finally, it recommended those grants
it believed the Office of Federal Aid should fund and the amount of
funding for each grant.  The Committee's grant recommendations were
typically adopted and implemented by the Office. 

The Grants-in-Aid Committee was not chartered as a Federal Advisory
Committee.  As a result, it performed the functions described above
independently and outside the public view.  FACA requires, among
other things, that advisory committees be chartered and reviewed
every 2 years by the agency head, that committee membership be
representative and balanced, and that committee proceedings and
records be open to the public. 

Officials of the Department of the Interior have questioned the
Grants-in-Aid Committee's status.  For example, in a November 1991
memo, the Chief of the Federal Aid Office stated that he believed
that the grant review process used the Committee in an advisory
capacity and that the Committee would need to comply with FACA.  This
opinion was shared by the Chief's supervisor who informed the
Director of the Service in a January 1992 memo, ï¿½The use of the
Grants-In-Aid Committee has not been approved under the Federal
Advisory Committee Act and also raises an appearance of a conflict of
interest.ï¿½ He went on to state that it would be in the best interest
of the Service to discontinue this practice to avoid any further
questions or criticism of the Service.  Although this concern was
raised informally to the Department of the Interior's Office of the
Solicitor, a written opinion was not requested, because, according to
Service and Office of Federal Aid officials, the informal advice they
obtained was that there was no violation of FACA. 

We did not make a determination about whether the Committee should
have been subject to FACA's requirements.  The applicability of the
act to the Committee's activities was outside the scope of our audit
work.  Because the Administrative Grant Program has recently been
terminated, questions about its former procedures are at this point
academic.  Nevertheless, the Committee guided the disbursement of
about $4 million in Federal Aid funds to administrative grantees each
year.  It functioned as a virtual partner in managing the
Administrative Grant Program, and because it was never brought under
FACA, it operated largely without supervision and behind closed
doors.  If the Administrative Grant Program were to be reconstituted,
the role of any outside group in setting grant program parameters and
in evaluating and ranking potential grantees should be tailored
appropriately.  If the role is not substantially more limited than
what had previously existed, there should be a formal determination
that the group is functioning consistent with FACA. 

Question 8.  Are the regional offices in the Fish and Wildlife
Service using Federal Aid funds to pay for regional activities in a
consistent manner? 

Response 8.  As we discussed in our July 20, 1999, testimony, we
found that the Service had no consistent practices for making
regional office assessments.  These assessments are charges that the
regions make against the administrative funds for salaries, travel
expenses, support costs, and other administrative activities.  Each
of the regions uses a different approach for making the assessments. 

In its August 10, 1999, letter to us, the Service said that it has
sought to establish a workable degree of consistency to the regional
use of administrative funds.  It said that as part of its annual
budget guidance, it has told its regions that no assessments may be
levied against any program, budget activity, subactivity, or project
funded by the Federal Aid in Wildlife Restoration Act unless advance
notice of such assessments and their bases are presented to the
Committee on Appropriations and are approved by the Committee. 
Subsequently, Service and Office of Federal Aid officials told us
that they provided this guidance since 1997.  The Service also said
that not all of its regions have followed this guidance.  To ensure
adherence to this stated policy, the Service said that it would
identify and adopt specific steps to help provide consistency and
uniformity.  It also plans to seek guidance in this area from a
State/Federal Aid Review Team that has been formed to evaluate the
administration of the Federal Aid program.  The Service, however,
failed to identify the specific steps it plans to take or the
schedule for completing them.  Service and Office of Federal Aid
officials told us that they are currently developing a plan that
identifies the steps needed and their completion dates. 

Question 9.  You emphasized the absence of routine audits of Federal
Aid's use of administrative funds.  However, many, perhaps even most,
federal programs are not routinely audited.  Why do you think routine
audits are so important in the case of the Federal Aid program? 

Response 9.  We think routine audits of the administrative funds are
needed for several reasons.  First, unlike most other federal
programs, Federal Aid receives dedicated tax revenues each year to
administer its programs.  As a result, program officials do not have
to publicly justify the programs' spending levels before the Congress
each year.  Second, although Federal Aid provides bi-annual reports
on its programs to the public, it does not fully disclose all of its
spending, as our work has shown.  For example, the spending
associated with the use of administrative funds by the Director's
Conservation Fund and the Service's regional offices is not discussed
in these reports.  Third, only three audits of the administrative
funds have been performed over the past 20 years, each of which has
identified some significant management problems.  Since the program
funding does not have to be appropriated and no routine audits are
performed, the Federal Aid program has had very little oversight. 

Routine audits will provide independent scrutiny of how these funds
are spent.  Given the problems we identified in the Federal Aid
program in 1993 and the problems we again found in 1999, we believe
that routine audits of the use of administrative funds are essential. 
Service and Office of Federal Aid officials told us that they have a
proposal from an independent firm to perform an audit of the
administrative funds covering fiscal years 1999 and 2000. 

Question 10.  Do you think it is appropriate for Fish and Wildlife
Service's regional Federal Aid officials to be responsible for
resolving the audit findings of the Defense Contract Audit Agency's
(DCAA) state audits? 

Response 10.  The Office of Federal Aid initiated a national audit
program in fiscal year 1996 to routinely audit how states and other
qualified government recipients are using the grant funds provided
under the Sport Fish and Wildlife Restoration programs.  Under the
audit program, each recipient of grant funds will be audited every 5
years under a contract with the DCAA.  Resolution of the audit
findings is the responsibility of the Service's regional Federal Aid
office covering the entity being audited. 

In our opinion, having the Service's regional Federal Aid offices
perform audit resolution is problematic because it places them in a
situation of performing dual and somewhat conflicting roles and
responsibilities.  One of the primary missions of the regional
offices is to work closely with the states in advocating and
encouraging their participation in the Federal Aid program to enhance
the states' wildlife and fishery resources.  To have these same
offices policing the program by charging them with resolving audit
findings could make it more difficult to maintain independence and
comply with existing internal control standards governing the
separation of duties.\4 According to these standards, key duties and
responsibilities in authorizing, processing, recording, and reviewing
transactions should be separated among individuals.  Furthermore, the
deterrent for the states to spend funds inappropriately could be
jeopardized if the audit resolution process is not independent of an
organization that has a significant role in encouraging the use of
grant funds.  DCAA officials, who perform the audits of the states,
also raised this concern to us.  According to these officials, the
Service and the states have a partnership, and it may be difficult
for a regional Federal Aid office to hold states responsible for
making the repayments indicated by audit findings.  Therefore,
assigning the responsibility for audit resolution to a Department of
the Interior organization other than the Service's regions would seem
more appropriate. 

Question 11.  In addition to grants made via the Director's
Conservation Fund and the Administrative Grant Program, during your
work did you find evidence of other grants? 

Response 11.  We found that the Office of Federal Aid's headquarters
made grants in addition to those made from the Director's
Conservation Fund and the Administrative Grant Program.  We
identified 18 other grants amounting to about $2.6 million that were
awarded from fiscal year 1994 through fiscal year 1998.  The grants
ranged from $5,000 awarded to a high school for student training in
aquatic environment and fisheries management to $400,000 each to
three marine fisheries commissions.  For example, the Gulf States
Marine Fisheries Commission received its $400,000 in fiscal year 1994
to develop a work plan for the sport fish restoration administrative
program.  Other examples of these grants include $25,000 to a state
game commission to conduct a symposium on North America's hunting
heritage, $60,000 to a university to publish and distribute a fish
and wildlife laws newsletter, and about $93,000 to a management firm
to produce a handbook for fish and wildlife managers and
administrators. 

It should be noted that the Federal Aid reports made available to the
public do not divulge the existence of these grants, why they were
made, or what the funds were used for, even though the reports
explicitly state that their intent is to provide a complete
accounting of where the Federal Aid funds are spent.  For example,
the message from the Office Chief appearing in a 1997 program update
states, ï¿½This Program Update is intended to remove the mystery of
where the money comes from and where it goes, to inform the reader
about current Federal Aid issues and opportunities, and to build
knowledge of and credibility for the Sport Fish and Wildlife
Restoration grant programs and the U.S.  Fish and Wildlife Service.ï¿½
Similarly, in a program update for 1999, the Office Chief stated that
ï¿½it is in the conservation community's best interestï¿½ that the Office
provides as much information as can be absorbed. 

--------------------
\3 The FishAmerica Foundation is a nonprofit organization that
supports projects designed to enhance fish populations through
habitat enhancement and water quality improvement. 

\4 Standards for Internal Controls in the Federal Government, U.S. 
General Accounting Office, 1983. 

*** End of document. ***