We conducted two audits of the Morris K. Udall and Stewart L. Udall Foundation (Foundation) to determine whether it complied with education-related legislative spending requirements and program objectives; had controls in place for awarding scholarships, internships, and fellowships; and allocated shared costs between its two program areas, Education and Environmental Conflict Resolution, on a consistent basis and in accordance with its approved methodology.
Overall, we found problems with the Foundation’s compliance with legislative spending requirements and program objectives; its policies for awarding scholarships, internships, and fellowships; and how it allocates costs between its two program areas, Education and Environmental Conflict Resolution.
We found that the Foundation was not separately tracking its spending for scholarships, internships, and fellowships and did not meet its legislative spending requirements in the years we reviewed. Although the Office of Management and Budget deferred to the Foundation’s method, we questioned the Foundation’s use of two different base amounts to calculate its spending requirements for scholarships, internships, and fellowships; administration and salaries; and the Udall Center. Using different base amounts gives the appearance that the Foundation is using the amount that allows it to spend more on administration and less on scholarships. We noted discrepancies in the numbers provided to us and to the Foundation’s Board of Trustees.
In addition, the Foundation has not formalized its policies and procedures for awarding scholarships, internships, and fellowships, but it had a number of other controls in place. Further, we found that the Foundation made several errors in calculating shared costs between the Education Program and the Environment Conflict Resolution Program, and its methodology for calculating shared costs was cumbersome.
We provided eight recommendations to help the Foundation correct the issues identified during our review. If implemented, our recommendations will help ensure the Foundation meets its legislative requirements, calculates its spending requirements in a consistent manner, reduces the risk of fraud, better ensures continuity of operations, and appropriately allocates shared costs.