[Survey Report on Federal Grant Program Travel Activities, Department of Education, Government of Guam]
[From the U.S. Government Printing Office, www.gpo.gov]

Report No. 99-i-255

Title: Survey Report on Federal Grant Program Travel Activities,
       Department of Education, Government of Guam

Date:  February 25, 1999



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U.S. Department of the Interior
Office of Inspector General




SURVEY REPORT


FEDERAL GRANT PROGRAM TRAVEL ACTIVITIES,
DEPARTMENT OF EDUCATION, GOVERNMENT OF GUAM


REPORT NO. 99-I-255

FEBRUARY 1999






MEMORANDUM


             TO:  The Secretary

           FROM:  Eljay B. Bowron
                  Inspector General

SUBJECT SUMMARY:  Final Survey  Report - "Federal Grant Program
                  Travel Activities, Department of Education,
                  Government of Guam" (No. 99-i-255)

Attached for your information is a copy of the subject final
survey report.   The objective of our review was to determine
whether the Department of Education complied with Federal and
local laws and regulations and grant agreements applicable to
travel expenditures charged to Federal grants.

We found that the Department did not ensure that (1) travel
vouchers were filed in a timely manner and that travel advances
were used for authorized purposes, (2) claims for Federal
reimbursement of grant-related travel expenditures were submitted
timely, (3) documents were retained which identified those travel
expenditures submitted for Federal reimbursement, (4) travel
expenditures were appropriately charged to Federal grants, and
(5) competitive procedures were used to obtain airline services.
These deficiencies occurred because Department officials did not
provide adequate oversight of its employees and provide them
adequate training.  As a result, the Department (1) was owed
$4,055 for outstanding travel advances, (2) may lose $4,855 in
Federal reimbursements, (3) did not have adequate support for at
least $34,054 in claims for Federal reimbursement, (4) incurred
questionable travel costs of $4,915, and (5) had little assurance
that it obtained the best prices for airfares.

We made seven recommendations to the Guam Board of Education to
correct the deficiencies cited.  In its response to the draft
report, the Board expressed general concurrence with the
recommendations.  However, we requested that the Board provide
target dates and titles of the officials responsible for
implementing each recommendation.

If you have any questions concerning this matter, please contact
me at (202) 208-5745 or Mr. Robert J. Williams, Assistant
Inspector General for Audits, at (202) 208-4252.


Attachment






SURVEY REPORT                          N-IN-GUA-004-97-C


Ms. Gloria Nelson
Chairperson
Interim Board of Education
Post Office Box DE
Hagatna, Guam  96932


Subject:  Survey Report on Federal Grant Program
          Travel Activities, Department of Education,
          Government of Guam (No. 99-i-255)


Dear Ms. Nelson:

This report presents the results of our review of the Department
of Education's Federal grant program travel activities.  The
objective of our review was to determine whether the Department
of Education complied with Federal and local laws and regulations
and grant agreements applicable to travel expenditures charged to
Federal grants.

BACKGROUND

The original (1950) version of the Organic Act of Guam (Title 48,
Section 1421g(b), of the U.S. Code Annotated) stated, "The
Governor [of Guam] shall provide an adequate public educational
system of Guam, and to that end shall establish, maintain, and
operate public schools according to the laws of Guam."  On
November 19, 1993, Guam Public Law 22-42 was enacted to repeal
and enact a new version of Title 17, Section 3101, of the Guam
Code Annotated, which established the Department of Education
within the Government of Guam. Section 3102  of the new version
of Title 17 states, "The Department [of Education] shall be
administered through the Territorial Board of Education . . .
which shall be the governing and policy-making body of the
Department."  Further, Section 3102(a) states that the
Territorial Board will hire a Director and Deputy Director of
Education.

On February 27, 1998, Guam Public Law 24-142 was enacted to
divide the Board of Education into four elected District Boards
of Education, each with a District Superintendent.  In addition,
a restructured Department of Education, with the Director
appointed by the Governor, was created to provide guidance to and
coordinate the activities of the districts and to "serve as the
state educational agency for purposes of Federal statutes,
policies, grants, programs and regulations."  This law also
provided for the existing school board to serve on an interim
basis for a 1-year transition period and for the election, in
November 1998, of the members of the four new District Boards of
Education.

During fiscal year 1997, the Department of Education had total
revenues of $168.8 million ($152.6 million from local sources and
$16.2 million from Federal sources) and total expenditures of
$167.2 million ($150.6 million from local funds and $16.6
million[1] from Federal funds).  During the same fiscal year, the
Department had 3,793 employees and administered 36 schools that
had a total enrollment of 32,923 students.

On March 30, 1993, the Department of Education adopted the
Financial Management System Policies and Procedures Manual, which
includes procedures for processing all Departmental travel
transactions.  In addition, the Policies and Procedures Manual
directs Department personnel to follow the travel policies
included in the Government of Guam's Travel and Transportation
Manual.  However, on March 6, 1997, the Director of the
Department of Education issued a directive stating that effective
for fiscal year 1997, he (rather than the Executive Branch's
Bureau of Budget and Management Research) would approve all
off-island travel authorizations.

According to Departmental records, the Department, during fiscal
years 1996, 1997, and 1998 (through March 31), received
appropriations totaling $1.9 million and expended $685,696 for
travel funded by Federal grants, including $37,465 for local
mileage.  The travel funds were received from five different
Federal agencies for the Department's 11 separate Federal grant
programs, which are controlled through a total of 57 separate
accounts as follows:

Number of   Number of Grant Accounts
Federal Agency
Federal Programs With Federally Funded Travel

Education*                    5                 38
Health and Human Services     2                 10
Agriculture                   2                  7
Labor                         1                  1
Defense**                     1                  1

Total                         11                 57
__________
*Travel paid from Federal funds under the Department of
Education's Extended Day program was not included in these totals
because that program will be audited separately.

**Travel paid from Federal funds under the Department of
Education's contracts with the U.S. Department of Defense also
was not included in these totals because that program will be
audited separately.  However, we did review travel for the U.S.
Department of Defense's Junior Reserve Officer Training Corps
program.

During fiscal years 1996, 1997, and 1998 (through March 31), the
Department issued 201 travel authorizations for Federally funded
travel and issued 182 travel purchase orders, totaling $730,750,
to 587 travelers and vendors.[2]

SCOPE OF SURVEY

The scope of the survey included Federally funded travel
(excluding travel funded by the Department of Education's
Extended Day program and the Department's contracts with the U.S.
Department of Defense, both of which will be audited separately)
incurred for off-island travel and local mileage reimbursement
claims during fiscal years 1996, 1997, and 1998 (through March
31).  We visited the offices of the Department of Education, the
Department of Administration, and the Bureau of Budget and
Management Research to interview officials and review records
pertaining to Federally funded travel activities.  In addition,
we interviewed program officials from the U.S. Departments of
Agriculture, Education, Labor, and Health and Human Services to
obtain program information.

Our review was made, as applicable, in accordance with the
"Government Auditing Standards," issued by the Comptroller
General of the United States.  Accordingly, we included such
tests of records and other auditing procedures that were
considered necessary under the circumstances.

As part of the survey, we evaluated the system of internal
controls related to the operational and financial management of
Federally funded travel.  Based on our limited review,  we
determined that, in general, the Department had adequately
managed the processing of travel authorizations and local mileage
reimbursement claims.  However, we identified internal control
weaknesses in the areas of clearing outstanding travel advances
and processing and closing travel purchase orders, which are
discussed in the Results of Survey section of this report.  Our
recommendations, if implemented, should improve the internal
controls in these areas.

PRIOR AUDIT COVERAGE

During the past 5 years, the U.S. General Accounting Office has
not issued any audit reports on travel costs charged to Federal
grants by the Guam Department of Education.  However, the Office
of Inspector General's November 1993 audit report "Travel
Practices, Government of Guam" (No. 94-I-106) discussed travel
management by 19 different Executive, Legislative, and Judicial
entities within the Government of Guam.  At the time that the
audit was performed, the Department of Administration processed
travel authorizations for the Department of Education.  However,
on March 30, 1993, the Department of Education assumed the
responsibility for processing its own travel authorizations and
vouchers and, on March 6, 1997, assumed responsibility for
budgetary control over travel funds.  The prior audit did not
include any findings specifically related to the Department of
Education's processing of travel authorizations and vouchers.

An independent public accounting firm issued single audit reports
on the Government of Guam, including the Department of Education,
for fiscal years 1995 and 1996.  However, the reports did not
include findings related to the Department's travel operations.
Although the Department's single audit for fiscal year 1997
(which began in July 1998) will again be conducted as part of the
Government of Guam's single audit, the Department will be audited
as an independent component unit instead of a line agency within
the Executive Branch.

RESULTS OF SURVEY

The Department of Education needed to improve its control over
Federally funded travel.  Specifically, we found that the
Department did not ensure that (1) travel vouchers were filed in
a timely manner and that travel advances were used for authorized
purposes, (2) claims for Federal reimbursement of grant-related
travel expenditures were submitted timely, (3) documents were
retained which identified those travel expenditures submitted for
Federal reimbursement, (4) travel expenditures were appropriately
charged to Federal grants, and (5) competitive procedures were
used to obtain airline services.  Procedures pertaining to travel
expenditures on Federal grants are contained in the Department's
Financial Management System Policies and Procedures Manual and
the Common Rules for Federal grant administration issued by the
U.S. Office of Management and Budget.  However, deficiencies
occurred because Department officials did not provide adequate
oversight of its employees and provide them adequate training.
As a result, the Department (1) was owed $4,055[3] for
outstanding travel advances, (2) may lose $4,855[4] in Federal
reimbursements, (3) did not have adequate support for at least
$34,054 in claims for Federal reimbursement, (4) incurred
questionable travel costs of $4,915, and (5) had little assurance
that it obtained the best prices for airfares.

Travel Advances

Paragraph 1.2 of the Financial Management System Policies and
Procedures Manual section entitled "Travel Authorization
Processing" states, "The traveler must submit the Travel Voucher
form, Travel Itinerary form, and supporting receipts to
Accounting within 15 days of completing travel."  Further,
subparagraphs 1.2.10 and 1.2.11 require the Department's travel
accounting technician to review the file of open travel
authorizations for any claims or travel advances outstanding for
more than 15 days, to send Uncleared Travel Advances Memoranda to
the travelers, and to "take necessary action as indicated in the
[Government of Guam's] Travel and Transportation Manual."
Section 1712.02 of the Travel and Transportation Manual states
that "advances not fully recovered by deductions from
reimbursement vouchers or voluntary refunds by the traveler
within fifteen (15) days following arrival on Guam [will be
recovered] by set off of salary due, retirement credit, or
otherwise, from the person to whom advanced . . . or by such
other legal method of recovery as may be necessary."

We reviewed the processing of 16 travel purchase orders, totaling
$334,484, and identified 3 travel purchase orders, totaling
$4,055, that were open for periods of 7 to 30 months longer than
the time by which the travelers were required to file travel
vouchers and supporting documents.  This condition occurred
because Departmental personnel did not comply with existing
procedures to obtain outstanding travel vouchers from travelers
and did not comply with Departmental procedures in closing
purchase orders.  As a result, the travelers did not account for
travel advances totaling $4,055, and the Department also did not
have the use of $2,355[5] because Federal reimbursement could not
be requested until one of the three travel purchase orders were
closed.

The accounting technician assigned to close travel purchase
orders stated that although he had sent only two Uncleared Travel
Advances Memoranda to travelers who had outstanding travel
vouchers during the period of January 1997 to March 1998,  he
usually called travelers requesting that they file the delinquent
vouchers.  He also stated that during this period,  the
Department, to the best of his knowledge, did not offset or
attempt to offset outstanding amounts against the salaries of
travelers who had not filed travel vouchers.  Further, the
accounting technician said that he had not been provided training
in closing travel purchase orders or the effects of not closing
travel purchase orders in a timely manner.  Also, the accounting
technician stated that his backlog of open travel purchase orders
(on July 24, 1998, we counted 53 open travel purchase orders)
existed because of his "other job responsibilities" and because
other staff did not provide information necessary to close out
the travel purchase orders.  The accounting supervisor stated
that the accounting technician had not informed her of the
problems related to closing travel purchase orders but that if
she had been aware of the problems she could have assigned
someone to assist him.  In our opinion, Departmental officials
should have monitored the travel administration process more
closely to ensure compliance with existing policies and
procedures.

Claims for Federal Reimbursement

Paragraph 1.2 of the Financial Management System Policies and
Procedures Manual section entitled "Cash Disbursement - Follow
Up" states that the Assistant Financial Affairs Administrator is
to "ensure that the Federal Government is billed in a timely
manner to reimburse the government [of Guam] for expenditures
related to Federal Programs."  In addition, Paragraph 2.6 of the
Manual section entitled "Travel Authorization Processing" states
that the travel accounting technician is to "prepare a journal
voucher to reclassify cleared advances from the Travel Advances
account to the appropriate expenditure account."  Further,
Paragraph 2.9 of that section of the Manual states that, at the
end of each month, the travel accounting technician is to "review
the travel advances in the Open Purchase Orders Report."  The
section further states, "If all travel advances and invoices have
been recorded against the Purchase Order, request Supply
Management to close the Purchase Order."  Departmental accounting
personnel stated that at the end of each month they prepared
requests (based on that month's recorded travel expenditures) for
the Department of Administration to obtain reimbursement from the
appropriate Federal grantors.

Of the 16 travel purchase orders reviewed, we found that 6 travel
purchase orders were related to the Junior Reserve Officer
Training Corps and were not eligible for Federal reimbursement.
Therefore, we excluded these travel purchase orders from our
tests for Federal reimbursement purposes.  Of the remaining 10
travel purchase orders, we identified 3 purchase orders, with
travel advances totaling $4,855, for which Departmental personnel
had not prepared or recorded closing journal vouchers for periods
of 1 to 7 months after having received all necessary supporting
documents.  For example, all documents necessary to close a
travel purchase order for $4,561 were filed by March 6, 1998.
However, 4 months later, Departmental personnel had not requested
Federal reimbursement for $3,125 of the $4,561 (a request for
$1,436 appears to have been made).  The accounting technician
could not provide us with an explanation as to why he had not
prepared and processed the required closing journal vouchers for
two of the travel purchase orders, but he said that for the third
travel purchase order, he had not closed all fiscal year 1998
transactions.  As a result, reimbursement for $4,855 in Federally
funded travel had not been requested.

Retention of Records

Subsection REC 3 of the Financial Management System Policies and
Procedures Manual section entitled "Record Keeping, Computer
Center Operations, Report Frequency" states, "To ensure [the
Department of Education] is in accordance with the [U.S. Office
of Management and Budget] Common Rule, Section 42, Retention and
access requirements for records, all financial and programmatic
records, supporting documents, statistical records, and other
records of grantees or subgrantees must be maintained for a
period of no less than three (3) years after finalization of the
year end audit."  Under the claim process established with the
Department of Administration, the Department of Education
prepared and sent Request for Reimbursement on Federal Grants
Expenditures claim forms to the Department of Administration,
which requested the drawdowns of grant funds from the appropriate
Federal agency.

Of the 10 travel purchase orders reviewed for Federal
reimbursement purposes, we identified 8 travel purchase orders
that had expenditures totaling about $34,054.[6]  However,
because of missing accounting documents, we could not determine
whether the travel expenditures had been forwarded to the
Department of Administration for Federal reimbursement.  The
accounting technician stated that she routinely discarded (within
3 weeks after preparation) the listings of the specific travel
expenditures included on reimbursement claims transmitted to the
Department of Administration for submission to the Federal
grantor agencies because of insufficient filing space to retain
the documents and also that she did not believe that it was
important to retain these listings.  Therefore, we were unable to
confirm the exact amount of travel expenditures that was included
in the Department of Education's overall reimbursement claims,
and the Department of Education did not have records to support
the expenditures claimed.  We believe that records of the travel
expenditures claimed should be retained for the 3-year period
specified in Department of Education and Federal record retention
requirements to support whether the expenditures claimed were
allowable.

According to the Department of Education's comptroller, the
problems identified in his department's process for accounting
for and filing claims for Federal reimbursement occurred, in
part, because of the shortage of qualified accountants.  He
stated that, as of July 24, 1998, he was the only employee (of 60
employees in the Department's Business Office) who had a degree
in accounting.  We believe that the Department should ensure that
its accounting personnel have the level of formal and on-the-job
training required to satisfactorily perform their accounting
duties.

Based on our review, we classified as unsupported $34,054 of the
$38,909 (the balance of $4,855 was questioned in the section of
this report "Claims for Federal  Reimbursement") in travel
expenditures apparently claimed for reimbursement during fiscal
years 1996, 1997, and 1998 (through March 31).

Travel Expenses

Attachment B, Section 41, of U.S. Office of Management and the
Budget Circular A-87, "Cost Principles for State, Local and
Indian Tribal Governments," states that "travel costs for
officials covered by Section 23 [such as members of councils and
school boards], when specifically related to Federal awards, are
allowable with prior approval of a grantor agency."  In addition,
Board Policy No. 363, "Field Trips and Excursions," requires that
the adults accompanying students on off-island field trips be
employees of the Department of Education.  Finally, Title 5,
Section 23104(d), of the Guam Code Annotated  states, "If the
employee received an excessive advance allowance, he shall
reimburse the Government the excessive amount ."

We reviewed 16 travel purchase orders, totaling $334,484, for
compliance with Federal and local travel regulations and
policies.  The 16 travel purchase orders reviewed consisted of 10
purchase orders, totaling $45,000, funded by Federal grants and 6
purchase orders, totaling $289,484, funded by local funds.  We
identified unallowable or uncollected travel expenditures and
advances in 3 of the 16 travel purchase orders reviewed as
follows:

-  A member of the interim Board of Education traveled to
Virginia to attend an education conference, and the Department
charged the $3,737 cost of the trip to a Federal grant program.
The accounting technician who processed this travel authorization
stated that, at the time, she was not aware that the travel costs
of Board of Education members could not be charged to Federal
grants without the grantor's prior approval.

-  The Department paid $1,078 from local funds for travel by a
chaperon on a student field trip who was not an employee of the
Department of Education.  The accounting technician said that she
did not question the travel because the traveler had been
approved by the requesting division.  The division's approving
official stated that he was aware of the requirement that all
travelers should be Department employees but that he approved the
travel because both the individual and her spouse (who was a
Department employee) were selected for the trip by an official
who was senior to the approving official.

-  A chaperon on another student field trip had not returned $100
in local funds received in advance per diem for a student who
decided not to participate.  The accounting supervisor stated
that she did not question the use of the funds because the funds
were used for other expenses during the field trip.

In each instance, as of the time of our review, the Department
had not taken actions to recover the funds.

Purchase of Airline Services

The Department of Education did not ensure that airline tickets
were acquired in a competitive manner.  Section 3-11.3.1 of the
Department of Education Procurement Regulations states, "Insofar
as it is practical for small purchases of supplies or services
between $500 and $15,000, no less than three (3) businesses shall
be solicited to submit written quotations or oral quotations that
are recorded and placed in the procurement file." In addition,
Section 36(12)(c)(4)(d) of the Common Rules for the
administration of Federal grants (as issued in accordance with
U.S. Office of Management and Budget Circular A-102, "Grants and
Cooperative Agreements With State and Local Governments") states,
"If small purchase procedures are used for procuring services,
supplies, or other property that do not cost more than $100,000,
price or rate quotations shall be obtained from an adequate
number of qualified sources."

During the period of October 1, 1995, to March 31, 1998, four
Department divisions purchased airline tickets costing a total of
$192,904 without documenting whether more than one quotation was
obtained.  However, we could not determine whether this practice
resulted in unnecessary additional airfare costs because the two
primary airlines serving Guam did not retain historical airfare
information, which prevented a comparison of actual airfares with
potentially available airfares.

Agencies within the U.S. Government issue competitive contracts
for travel services to be provided to offices in a specified
geographical area, and the winning bidder guarantees the best and
lowest rates and provides all travel services needed by the
offices.  We believe that the Department of Education could issue
a similar contract, which should help ensure that the most cost
effective rates would be obtained for Departmental travelers.
Therefore, in our opinion, the Department should pursue the
option of competitively contracting for travel services and, if
not, require quotations from the two primary airlines for all
Federally funded air travel to help ensure that it obtains the
most economical prices for airline tickets.

Recommendations

We recommend that the Board of Education instruct the Director of
the Department of Education to:

1.  Develop and implement procedures to require that Departmental
accounting and supervisory personnel monitor the filing of travel
vouchers to ensure that all travel vouchers are filed in a timely
manner.

2.  Establish time frames for closing travel purchase orders and
implement procedures to require that Departmental supervisory
personnel ensure that accounting personnel comply with the
established time frames.

3.  Require that all supporting documents for travel
reimbursement claims be retained for the time periods provided in
the Government of Guam's records retention policies and
applicable Federal grant management regulations.

4.  Provide training to ensure that Departmental accounting
personnel responsible for processing travel transactions and
documents related to Federal grants are knowledgeable of the
applicable travel policies and regulations and ensure that
accounting and supervisory personnel are accountable for
enforcing the travel policies and regulations.

5.  Advise the applicable Federal agencies of the questioned
costs and either resolve the questioned costs or arrange for
repayment.

6.  Take appropriate action to recover the travel costs of $1,078
related to the nonemployee chaperon and the $100 in advance per
diem related to the student who did not participate in a planned
field trip.

7.  Enter into a competitively awarded contract for all
Departmental travel services or implement procedures to ensure
that competitive airfare quotations are obtained and documented
for all Federally funded travel from at least the two primary air
carriers.


**FOOTNOTES**

[1]:Expenditures from Federal funds exceeded revenues from
Federal sources because the Department had carryover funds from
fiscal year 1996 that were available for use during fiscal year
1997.

[2]:Paragraph 1.10 of the Financial Management System Policies
and Procedures Manual section entitled "Travel Authorization
Processing" provides that, after travel authorizations are
approved, the Division of Supply Management is responsible for
issuing travel purchase orders for each approved travel
authorization to control the funding certification and payment
process.  Each travel purchase order designates one traveler or
vendor (for airline tickets or training) as the responsible party
and can include per diem, airfare, household shipment charges,
and other travel costs.

[3]:Outstanding travel advances totaled $7,792.  However, we
reduced this amount to $4,055 to avoid duplicate counting of the
remaining $3,737, which is included in "Travel Expenses" in this
report.

[4]:Unreimbursed travel costs totaled $7,121.  However, we
reduced this amount to $4,855 to avoid duplicate counting of the
remaining $2,266, which is included in "Travel Expenses" in this
report.

[5]:Of the three travel purchase orders totaling $4,055, two in
the amount of $1,700 each were from local funds related to the
Junior Reserve Officer Training Corps program and therefore were
not eligible for Federal reimbursement.

[6]:The Department's records identified reimbursement claims by
program and Federal grants but not by category of expenditures.
Therefore, we could not specifically distinguish travel-related
claims from personnel and other categories of expenditures.  In
addition, the Department could not locate summary claim totals
for fiscal year 1996 but did provide claim totals for fiscal
years 1997 and 1998 (through March 31).
Guam Board of Education Response and Office of Inspector General
Reply

In the January 27, 1999, response (Appendix 3) to the draft
report from the Chairperson, Interim Board of Education, the
Board concurred with Recommendations 1, 2, 4, 6, and 7 and
partially concurred with Recommendation 5.  Although the Board
did not specifically refer to Recommendation 3, we considered the
Board's response to Recommendation 2 to also be applicable to
Recommendation 3.  Based on the response, we requested additional
information for all of the recommendations (see Appendix 4).

Recommendation 5.  Partial concurrence indicated.

Board of Education Response.  The Board stated that the Board
member's travel "was justified and reimbursable, [because] the
individual is a member of the Goals 2000 commission appointed by
the Governor."  The Board further stated that the Department of
Education is pursuing reimbursement from the Goals 2000 program
but  that "[s]hould Goals 2000 deem this travel non-reimbursable,
the Department will charge all costs associated with this travel
against the Board's FY [fiscal year] `99 budget."

In the January 8, 1998, preliminary response, included with the
January 27 response (page 6 of Appendix 3), the Director of
Education further stated that the Interim Board member "was
authorized to travel to Virginia"  to attend an education
conference and that the Department requested supporting
documentation from the Federal Program Administrator to show such
authorization.

Office of Inspector General Reply.  Office of Management and
Budget Circular A-87, "Cost Principles for State, Local and
Indian Tribal Governments," Attachment B, Section 41, states that
"travel costs for officials covered by Section 23 (such as
councils, school boards, etc.), when specifically related to
Federal awards, are allowable with prior approval of a grantor
agency."  However, during our review of travel records, we found
no documentation that such prior approval had been granted, nor
did the response contain such documentation.  Further, during the
audit, the accounting technician who had processed the travel
authorization had contacted, at the auditor's request, the
Federal Program Administrator for information regarding this
issue.  However, the information was not provided to the
technician.

The Inspector General Act, Public Law 95-452, Section 5(a)(3), as
amended, requires semiannual reporting to the U.S. Congress on
all audit reports issued, the monetary impact of audit findings
(Appendix 1), actions taken to implement audit recommendations,
and identification of each significant recommendation on which
corrective action has not been taken.

In view of the above, please provide a response, as required by
Public Law 97-357, to this report by March 26, 1999.  The
response should be addressed to our Pacific Office, 415 Chalan
San Antonio, Baltej Pavilion - Suite 306, Tamuning, Guam 96911.
The response should provide the information requested in Appendix
4.

We appreciate the assistance of the management and staff of the
Department of Education in the conduct of our survey.

Sincerely,



Eljay B. Bowron
Inspector General

cc:Governor of Guam
Director, Department of  Education



CLASSIFICATION OF MONETARY AMOUNTS                     APPENDIX 1

Questioned Costs
Unsupported   Cost
Finding Area                              Costs     Exceptions

Travel Advances                       $4,055*
Claims for Federal Reimbursement       4,855**
Retention of Records                  34,054**
Travel Expenses                       $4,915***
                                      __________
Totals                               $42,964       $4,915


*Amount consists of $2,355 of Federal funds and $1,700 of local
funds.

**Amount represents Federal funds.

***Amount consists of $3,737 of Federal funds and $1,178 of local
funds.
                                                       APPENDIX 2


FEDERAL PROGRAM TRAVEL AND QUESTIONED COSTS
FOR OCTOBER 1, 1996, TO MARCH 31, 1998


Federally      Total                 Questioned Costs
Grantor AgencyTotal     Reimbursed  Questioned    Unsupported
Cost
and  Grant          Travel CostsTravel Costs*Travel Costs
Costs      Exceptions

Education:
Consolidated Grant $103,035   $103,035            0             0
0

Grants to States for the
Education of Children
With Disabilities 116,814      116,814      $28,076       $28,076
0

Infants and Toddlers
With Disabilities  25,229       25,229       10,748        10,748
0

Goals 2000          8,948        8,948        3,737             0
$3,737

Guam Bilingual
Education           3,404        3,404            0             0
0

Health and Human
Services:
Headstart          30,054       30,054            0             0
0

HIV/AIDS            3,156        3,156            0             0
0

Agriculture:
State Administrative
Expense            36,443       36,443            0             0
0

Nutrition Education
and Training Program 14,587     14,587            0             0
0

Labor:
School-To-Work**   45,521            0        2,440         2,440
0

Defense:
Junior Reserve Officer
Training Corps***   298,505            0      2,878         1,700
1,178

     Total         $685,696     $341,670      $47,879    $42,964
     $4,915

_________________________
*We could not determine the exact amount of Federally reimbursed
travel costs because of deficiencies in the Department of
Education's accounting and record keeping for travel
transactions.

**As of July 24, 1998, the Government of Guam had not requested
that the U.S. Department of Labor reimburse the Department of
Education for these travel costs.

***As noted in the report, travel costs for the Junior Reserve
Office Training Corps program were paid from local funds and were
not eligible for Federal reimbursement.
APPENDIX 3
Page 1 of 7


GUAM BOARD OF EDUCATION RESPONSE

APPENDIX 4


STATUS OF SURVEY REPORT RECOMMENDATIONS


---------------------------------------------------
Finding/Recommendation

Reference            Status     Action Required

1, 2, 3, 4, 5,   ManagementProvide the target date
   6, and 7      concurs; and title of the
                 additionalofficial responsible for
                 informationtaking corrective action
                 needed.  for each recommendation.
---------------------------------------------------
---------------------------------------------------






ILLEGAL OR WASTEFUL ACTIVITIES SHOULD BE REPORTED

TO THE OFFICE OF INSPECTOR GENERAL BY:

Sending written documents to:



Within the Continental United States

U.S. Department of the Interior
Office of Inspector General
1849 C Street,N.W.
Mail Stop 5341
Washington, D.C. 20240

Calling:

Our 24 hour
Telephone HOTLINE
1-800-424-5081 or
(202) 208-5300

TDD for hearing impaired
(202) 208-2420 or
1-800-354-0996



Outside the Continental United States


Caribbean Region

U.S. Department of the Interior
Office of Inspector General
Eastern Division- Investigations
1550 Wilson Boulevard
Suite 410
Arlington, Virginia 22209

Calling:
(703) 235-9221


North Pacific Region

U.S. Department of the Interior
Office of Inspector General
North Pacific Region
238 Archbishop F.C. F'lores Street
Suite 807, PDN Building
Agana, Guam 96910


Calling:
(700) 550-7428 or
COMM 9-011-671-472-7279