Summary: Financial management system deficiencies, inadequate systems of funds control, and manual internal control weaknesses increase the risk of waste, fraud, and abuse in the grantback program. Using the pooling method, grant recipients with multiple awards were not required to match drawdowns to specific awards; consequently, drawdown allocations between Education and the recipients did not match. Education used the grantback account to clear unreconciled differences in various grant appropriation fund balances and to adjust appropriation fund balances to ensure that they did not become negative. Since 1995, independent financial statement auditors have reported weaknesses in Education's information systems controls; this increases the risk of unauthorized access and makes Education's sensitive grant and loan data vulnerable to inadvertent or deliberate misuse. Although the grantback account was established for grantback activity, Education also used it as a suspense account for activity related to grant reconciliation efforts. The portion of the grantback account related to actual grantback activity averaged less than five percent of the total account balance in every year starting in fiscal year 1993. Education did not maintain adequate detailed records for certain grantback account activity by applicable fiscal year and appropriation.
