Report: State Department Failing to Monitor Overseas Grants

Officials not identifying or mitigating risks

John Kerry

John Kerry / AP


The State Department is failing to properly manage and oversee the distribution of international grants worth millions of dollars, according to the Government Accountability Office (GAO).

In a report released on Monday, the GAO found many grants are missing required documentation, are not monitored, and lack proper risk assessments, including whether an organization receiving taxpayer dollars is tied to terrorists.

"In most of the files GAO reviewed, grants officials did not fully identify, assess, and mitigate risks, as required," the report said.

"State’s policies require grants officials to carry out a comprehensive review of potential recipients to identify risks," the GAO added.

Risks involved when issuing grants include rampant corruption in a foreign country, and concerns of whether an organization is connected to terrorism.

"Risk factors could include a lack of stable financial infrastructure or experience in managing a U.S. government grant, past performance problems, an unusual or difficult environment, responsibility for a large amount of funds, and concern the organization might be involved in terrorist activities," the report said.

The GAO reviewed 61 grants, ranging in amounts from $25,000 to $28 million. The majority of grants reviewed went to Afghanistan, Cambodia, and Turkey, while 13 were managed in Washington, D.C. In all, the grants totaled $172 million.

Half of the grants reviewed (32) did not have a monitoring plan, which is required by the State Department to ensure that the grant recipient is complying with its agreement and meeting goals.

"Grants officials generally did not adhere to State policies and procedures relating to documenting internal control activities," the GAO said.

"Regardless of whether grants had monitoring plans, we found that only 16 of the 61 files contained evidence that the grants officials had completed the required review of all the recipient’s financial and programmatic reports to monitor for key information—including verifying timely progress toward the goals, as well as identifying and addressing any delays or inappropriate expenditures," the report said.

In addition, the GAO found that only 45 of the 61 grants had "at least partially undertaken a risk identification process."

Of the 45 grants that had identified some issues, 33 were "missing key elements of a risk identification process, such as a review of the recipient’s financial systems and internal controls."

"Only 12 of the 61 grant files we reviewed included a risk-level determination," the GAO said. Only five grants, or 11 percent, had completely filled out a required checklist, which grant officials use to keep track of a project’s progress.

Grant officials blamed their lack of oversight on a variety of reasons, including busy work schedules.

Officials interviewed "cited a variety of reasons for not conducting the required risk analysis and documentation, including a misunderstanding of State policies and guidance, a heavy workload, and a lack of staff expertise," the GAO said.

Other grant officers said they did not analyze risks because they "knew intuitively that the risk level was low."

The report also found that key documentation was "frequently missing," and that the State Department "does not have processes for ensuring compliance with risk analysis and documentation requirements."

"Without the proper implementation of its internal control policies for grants management, State cannot be certain that its oversight is adequate or that it is using its limited oversight resources effectively," the report said.

The State Department issued over $1.6 billion worth of grants in 2012.

Elizabeth Harrington   Email Elizabeth | Full Bio | RSS
Elizabeth Harrington is a senior writer for the Washington Free Beacon. Elizabeth graduated from Temple University in 2010. Prior to joining the Free Beacon, she worked as a staff writer for Her email address is Her Twitter handle is @LizWFB.

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