UNITED STATES DEPARTMENT OF EDUCATION

OFFICE OF THE CHIEF FINANCIAL AND CHIEF INFORMATION OFFICER

February 26, 1998

Dear Harvey:

Enclosed is the Agreement, resolving 119 findings, covering audit years 1990 through 1996. We greatly appreciated your cooperation in this matter. We believe our efforts to resolve these findings pursuant to the U.S. Department of Education's (Department's) Cooperative Audit Resolution and Oversight Initiative (CAROI) has served as an example of how States and the Department can work together to resolve the most complicated and complex audit issues.

To initiate this process, representatives of the Commonwealth of Pennsylvania (PA) and the Department held a meeting in Harrisburg, Pennsylvania, on July 9, 1997, to discuss how to resolve the large volume of long-term, recurring outstanding audit issues. As a result of this meeting, the parties formed three project teams, composed of both PA and Department officials, to review the audit findings in these audits and to arrive at joint determinations. In addition, the parties formed a CAROI Committee, involving key officials of both parties, to oversee the process.

To expedite the resolution of the open findings, PA officials were very cooperative in supplying additional information. The project teams and their respective leaders carefully reviewed the information and participated in meetings and conference calls to discuss the information. Through this process, the parties communicated closely, considered each other's concerns, clarified issues, and put into place a joint process that ultimately resolved the issues and improved audit resolution and program performance for the future.

The attached Agreement is a testament to the hard work and dedication of all the people who participated on behalf of PA and the Department to solve these long-standing issues. This was an extraordinary accomplishment and shows how team cooperation can serve to resolve complex audit matters that have existed over a period of several years.

One important part of the CAROI process is that it provides PA and Department officials with an opportunity to anticipate problems that may arise related to the audit process and take steps to avoid them. The Department hopes that the cooperative process that was undertaken as part of CAROI will continue and that PA officials will feel free to contact the Department if they have any concern or question about any particular requirement or future audit finding.

In fact, as mentioned in the PDL dated January 23, 1998, after resolving the vocational education Single Audit findings, the PA and Department CAROI team members agreed to have additional discussions and information exchanges regarding the manner in which the PA Department of Education applies its approved indirect cost rate outside of this CAROI effort. It is this type of cooperation and communication that we hope will continue in the future.

We look forward to working with you in the future.

Sincerely yours,

Attachment

Agreement with Attachments

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