Summary: The National Institutes of Health (NIH) has developed policies and procedures for assessing scientific progress and ensuring the effective financial management of its extramural grant programs, but its system of internal controls could be strengthened. The flexibility that NIH's institutes and grantees have in implementing its policies and procedures for administering grants tends toward a lack of important information on scientific progress and inventions developed in a grant's last year as well as on unobligated funds that could be recovered for rebudgeting within the federal government. GAO identified areas where controls over financial management in the oversight and the monitoring of grantees could be strengthened. For example, NIH does not always receive and use the single audit reports the Office of Management and Budget requires, a key tool for financial management oversight. Other areas in internal controls that could be strengthened include the discrepancies GAO found between grant award amounts reported in key NIH systems, which increase the risk of inaccuracies and improper authorization of grant funds. In its fiscal year 1999 audit report on internal controls, the independent public accountant responsible for the financial audit of NIH identified a material weakness in the analysis and the development of financial statements that included a weakness related to the financial management of grants. Regarding NIH's use of fiscal year 1999 appropriations, NIH allocated about the same percentage of funds to extramural research as it did in fiscal year 1998. Appropriations allocated for extramural research grants accounted for about $1.4 billion of the nearly $2 billion increase in NIH's appropriations, or about 70 percent.
