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U.S. Department of Education

Office of Inspector General

Semiannual Reportto Congress

No. 34

October 1, 1996 – March 31, 1997

April 30, 1997 Honorable Richard W. RileySecretary of EducationWashington, DC 20202 Dear Mr. Secretary: I am pleased to submit this semiannual report on the activities of the Department's Office of Inspector General (OIG) for the six-month period ending March 31, 1997. Submission of this report is in accordance with section 5 of the Inspector General Act of 1978 (Public Law 95-452, as amended). The act requires that you transmit this report, along with anycomments you may wish to make, to the appropriate congressional committees and subcommittees.This period, the OIG continued to fulfill its statutory mandate through a carefully designed program of audits and reviewsintended to help Education Department (ED) managers administer their programs and carry out their oversight responsibilities more efficiently, nore effectively and more economically. Our efforts have produced reports and prosecutive actions that have brought important issues to the attention of ED managers and recommended ways to resolvethem or to prevent their recurrence. I look forward to continuing to work with you and Department managers as we seek to ensure the efficiency, effectivenessand integrity of Education Department programs and operations.Sincerely,Thomas R. Bloom

Inspector General's

Message to Congress

The Office of Inspector General (OIG) has continued to meet the challenge to remain effective by finding more innovativeways to deploy our resources and conduct our audit, investigation and management review efforts. One key shift inemphasis and approach has been to focus our efforts on program and operations issues and systemic problems that arelarger in scope than the traditional single-entity focus. This front-end work will lead to more effective programs with built-in controls and self-enforcing mechanisms to prevent fraud, waste and abuse by all participants, rather than rely on "after-the-fact" detection at those few participants we have the opportunity to review.These carefully focused, yet at the same time more broadly encompassing efforts have already begun to bear fruit. Auditsissued during the reporting period have, for example, identified problems in controls over the student eligibility process,and recommended improvements which we believe could greatly reduce Pell Grant overawards; and found that accreditingagencies could strengthen their role as gatekeepers of the student financial assistance programs if their on-site monitoringof member institutions was improved. In the investigative arena, we are focusing about eighty-five percent of our effortson complex investigations of institutions, including postsecondary schools, lenders, guaranty agencies and servicers. Suchefforts are more complex and more high-profile than investigations of individual student recipients. They also tend to gen-erate more publicity, which in turn helps deter fraud. Through management reviews, we are focusing on identifyingadministrative operations' work processes in need of improvement and generating possible solutions. In the continuing pursuit of programmatic and operational economy, efficiency and effectiveness, the OIG is but one link,if a critical one, in a chain that includes Education Department (ED) managers, the Congress, and participants in ED programs. We look forward to continuing to work with the Congress and the Department to foster ever greater financialand systemic improvements in federally funded education programs.Thomas R. Bloom

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