United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 2001-07-24 monographic deposited born digital 13 p. GA 1.13:GAO-01-997T https://www.govinfo.gov/app/details/GAOREPORTS-GAO-01-997T P0b002ee18038ba9f f:d01997t DGPO 2010-08-12 2011-03-28 GAOREPORTS-GAO-01-997T machine generated eng fdlp REPORT GAOREPORTS-GAO-01-997T GAO-01-997T Auditing procedures Educational grants Erroneous payments Fraud Internal controls Program abuses Student loans Financial management systems Credit sales Auditing standards Dept. of Education Grant Administration and Payment System Testimony A01443 Internal control and financial management weaknesses at the Department of Education are not new. GAO and Education's Office of Inspector General have provided many reports and testimonies over the last several years on the financial management challenges faced by Education and the need to eliminate internal control weaknesses to reduce the potential for fraud, waste, and mismanagement at the Department. In an April 2001 assessment of the internal control over Education's payment processes and the associated risks for improper payments, GAO reported four broad categories of internal control weaknesses: poor segregation of duties, lack of supervisory review, inadequate audit trails, and inadequate computer systems' applications controls. In this testimony, GAO discusses how these weaknesses make Education susceptible to improper payments in each of the three following disbursement areas: grant and loan payments, third party drafts, and government purchase card purchases. GAO found that Education's student aid application processing system for grants and loans lacks an automated edit check that would identify potentially improper payments stemming from students that were much older than expected, a single social security number associated with two or more dates of birth, grants to recipients in excess of statutory limits, and searches for invalid social security numbers. GAO also found problems with Education's third party draft system. Specifically, Education (1) circumvented a system's application control designed to avoid duplicate payments by adding a suffix to the invoice/voucher number when the system indicates that an invoice/voucher number has already been used, (2) allowed 21 of the 49 Education employees who could issue third party drafts to do so without involving anyone else, and (3) lacked adequate audit trails, such as a trigger log, to identify changes made to the list of approved vendors. GAO also found problems with Education's internal controls over government purchase cards. Specifically, Education (1) did not use management reports available from Bank of America, Education's contractor for government purchase cards, to monitor purchases (2) had serious deficiencies in its process for reviewing and approving purchase card transactions, and (3) allowed employees to execute transactions beyond the scope of their authority. https://www.govinfo.gov/content/pkg/GAOREPORTS-GAO-01-997T/html/GAOREPORTS-GAO-01-997T.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-GAO-01-997T/pdf/GAOREPORTS-GAO-01-997T.pdf GAO-01-997T https://www.govinfo.gov/app/details/GAOREPORTS-GAO-01-997T Testimony GAO-01-997T; Financial Management: Poor Internal Control Exposes Department of Education to Improper Payments; Auditing procedures Educational grants Erroneous payments Fraud Internal controls Program abuses Student loans Financial management systems Credit sales Auditing standards Dept. of Education Grant Administration and Payment System