In calendar year 2006 about $1 billion in undisbursed funding remained in expired grant accounts in the Department of Health and Human Services’ payment management system, the largest civilian payment system for grants, GAO has said in calling for greater attention to resolve the matter.
PMS makes payments for about 70 percent of grants for 12 federal entities and in 2006 Congress determined there was a need for increased accountability and transparency for unspent funds.
GAO found that the amount of undisbursed funding represented, on average, about 26 percent of the original funding made available, and that the expired but still open accounts were associated with thousands of grantees and over 325 federal programs.
Past audits of federal agencies by GAO and inspectors general and annual performance reports by at least eight federal agencies in 2006 and 2007 suggested that grant management challenges including grant closeouts and un-disbursed balances are a long-standing problem.
Audits generally attributed the problems to inadequacies in awarding agencies’ grant management processes, including closeouts as a low management priority, inconsistent closeout procedures, poorly timed communications with grantees, or insufficient compliance or enforcement.
However, when federal agencies, such as the Departments of Health and Human Services and Justice, and the EPA, took corrective actions, there were improvements in grant closeouts and resolution of undisbursed funding, according to GAO-08-432.
Those agencies generally focused on making grant closeouts a higher agency management priority, as noted in their recent performance reports, and on improving overall closeout processing, GAO said.
