Report Contents
What OIG Audited
Federal law authorizes Federal employees to receive cost-of-living allowances to cover certain costs incurred when stationed in foreign areas. Accordingly, the Department of State (Department) may grant a Special Needs Education Allowance (SNEA) to employees serving in foreign areas for their children who would fall under the Individuals with Disabilities Education Improvement Act or Section 504 of the Rehabilitation Act of 1973.
The Office of Inspector General (OIG) conducted this audit to determine whether the Department established and applied selected internal controls from the Government Accountability Office’s Standards for Internal Control in the Federal Government to effectually administer SNEA in accordance with Department requirements. OIG assessed three internal control components and seven associated principles involving control activities, information and communication, and monitoring.
What OIG Recommends
OIG made 15 recommendations that are intended to improve the Department’s internal controls for SNEA administration. On the basis of management’s response to a draft of this report, OIG considers all 15 recommendations resolved, pending further action. A synopsis of management’s response to the recommendations offered and OIG’s reply follow each recommendation in the Audit Results section of this report. Management’s responses to a draft of this report are reprinted in their entirety in Appendices D through G.
What OIG Found
Since 2015, the Department has taken steps to reform SNEA. Most recently, in November 2018, the Deputy Under Secretary for Management created the “M Family Special Needs Committee,” which included representatives from several Department bureaus and the Office of the Legal Advisor. The Committee developed a plan of action for SNEA reform that included 12 specific issues with 15 associated “remedies.” The remedies addressed internal controls weaknesses and, when implemented, would help the Department achieve SNEA’s desired results. OIG found that, as of December 2019, 10 (67 percent) of 15 remedies had been fully implemented and 5 remedies that involve 2 distinct internal control components, namely control activities and information and communication, require additional attention. These control components have not been fully addressed because of SNEA’s complex nature and the extensive coordination needed among Department bureaus to implement the associated internal controls. Specifically, the Department has not published policies and procedures in the Foreign Affairs Manual regarding medical clearances related to SNEA and the appeals process when an allowance application is denied, nor has it implemented a centralized voucher process or communicated SNEA-related accounting procedures to appropriate officials. To meet the Committee’s goal of enhancing support for employees who have children with special needs, the remaining five remedies must be addressed.
In addition, OIG found that the Department has not established a process to evaluate the effectiveness of SNEA reform remedies once implemented. According to the Standards for Internal Control in the Federal Government, internal control is a dynamic process that must be adapted continually to the risks and changes an entity faces. The monitoring control component is essential to maintain alignment with changing objectives, environments, laws, resources, and risks. Although the Committee identified 15 SNEA reform remedies, it did not include a monitoring plan among the remedies. Without such a plan, deficiencies with the administration of SNEA could go unnoticed and uncorrected.
Report Terms
Report Recommendations
OIG recommends that the Under Secretary for Management designate the “M Family Special Needs Committee” as a permanent coordinating body to complete implementation of the Special Needs Education Allowance reform remedies and to identify and execute additional internal controls that are necessary to effectually administer the Special Needs Education Allowance. The Foreign Affairs Manual should be updated to reflect the formal establishment of the committee, its membership, and responsibility for Special Needs Education Allowance administration.
OIG recommends that the Under Secretary for Management develop and publish specific guidance in the Foreign Affairs Manual to clarify guidance on obtaining a medical clearance based on educational needs, as it relates to the Special Needs Education Allowance. At a minimum, the guidance should describe the process to obtain medical clearances for children with special needs.
OIG recommends that the Under Secretary for Management develop and incorporate specific guidance in the Foreign Affairs Manual for the Special Needs Education Allowance eligibility determination process. At a minimum, the guidance should describe the process to determine eligibility for the allowance and a process to appeal an ineligible determination.
OIG recommends that the Under Secretary for Management incorporate in the Foreign Affairs Manual the guidance outlined in the Department of State Standardized Regulations concerning the allowability of special needs children to reside at post when not in school.
OIG recommends that the Under Secretary for Management update guidance in the Foreign Affairs Manual, 3 FAM 3284, “Required Documentation,” to include specific, detailed, required contents of an Individual Learning Plan for children with special needs that mirror the requirements prescribed by the Individuals with Disabilities Education Improvement Act for an individualized education program.
OIG recommends that the Under Secretary for Management update guidance in the Foreign Affairs Manual, 3 FAM 3285, “Department of State Policy,” to establish parameters and guidance for decision makers regarding the term “as flexibly as possible” used in reference to authorizing the Special Needs Education Allowance so that it complies with the requirements of the Department of State Standardized Regulations.
OIG recommends that the Bureau of the Comptroller and Global Financial Services, in coordination with the Bureau of Medical Services, develop and implement a centralized review and payment process for Special Needs Education Allowance reimbursement claims. At a minimum, the process should require review of appropriate documentation to validate that a Special Needs Education Allowance expenditure claim was appropriate and in compliance with Department policy.
OIG recommends that the Bureau of the Comptroller and Global Financial Services incorporate in the Foreign Affairs Manual or the Foreign Affairs Handbook required use of a Special Needs Education Allowance project code or a budget object code to record expenditures in the Department’s financial management system.
OIG recommends that the Bureau of the Comptroller and Global Financial Services establish and disseminate instructions to posts on the proper use of the Special Needs Education Allowance project code or budget object code (referenced in Recommendation 8) to accurately track expenditures in the Department’s financial management system.
OIG recommends that the Under Secretary for Management (a) direct the “M Family Special Needs Committee” (as designated in Recommendation 1) to develop and implement monitoring activities for administering the Special Needs Education Allowance that, at a minimum and in accordance with the Standards for Internal Control in the Federal Government, include establishing a baseline, monitoring internal controls, and evaluating the results and (b) incorporate the responsibilities for monitoring the Special Needs Education Allowance in the Foreign Affairs Manual.
OIG recommends that the Under Secretary for Management (a) direct the “M Family Special Needs Committee” (as designated in Recommendation 1) to develop and implement a process to identify, evaluate, and remediate deficiencies identified with the Special Needs Education Allowance, that at a minimum and in accordance with the Standards for Internal Control in the Federal Government, include the reporting of issues, evaluations of issues, and corrective action documentation and (b) incorporate the responsibilities for the processes in the Foreign Affairs Manual.
OIG recommends that the Bureau of Medical Services develop and implement internal policies and procedures to guide and document the processes followed to review and authorize Special Needs Education Allowance applications.
OIG recommends that the Bureau of Medical Services develop and implement internal policies and procedures to guide the effective use of eMED to document the Special Needs Education Allowance application status. The policies and procedures should ensure accurate, real-time data are available to appropriate Department of State officials.
OIG recommends that the Bureau of Administration, Deputy Assistant Secretary for Operations, Office of Allowances, develop and implement internal controls to ensure the Special Needs Education Allowance rates are reviewed annually, as required by Office of Allowances standard operating procedures.
OIG recommends that the Bureau of Administration, Deputy Assistant Secretary for Operations, Office of Allowances, update its methodology for calculating the Special Needs Education Allowance school at post and school away from post rates to require the use of actual Special Needs Education Allowance expenditures as the basis for the establishing rates.