The popular D.C. tuition assistance program that helps city students pay for college can’t explain how millions of taxpayer dollars have been spent since 2004, according to an unreleased audit that describes weak financial controls and management problems at the city agency that administers the program.

The federally funded D.C. Tuition Assistance Grant (TAG) program is unique to the District and has become key to how thousands of families budget for college, providing as much as $10,000 a year to students who attend schools outside of the city. But the audit, obtained by The Washington Post, shows that the District’s oversight of TAG money has been riddled with shortcomings, leaving uncertainty about how much money the program should have in its accounts.

TAG was conceived as a way to defray the cost of college for D.C. residents, who don’t have access to a strong in-state university system. Available to all D.C. students from families who have household incomes below $1 million a year, it provides as much as $50,000 over the course of college for students to attend eligible schools: public universities outside the city, private schools in the D.C. region and historically black colleges.

The program has served as a powerful incentive to stay in the city for many families who might otherwise have moved to the suburbs, and more than 5,000 students a year take advantage of the tuition assistance. Since TAG’s inception in 2000, more than $317 million has gone to help more than 20,000 students pay for college.

Congress has allocated between $17 million and $35 million a year for the program and at least $30 million annually since 2006. But according to the audit, TAG officials could not document or explain nearly $10 million in expenses since 2004.

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Audit: Review of payments, policies and procedures for the DC TAG Program Read it.

Jesus Aguirre, head of the Office of the State Superintendent of Education (OSSE), the city agency that manages the tuition assistance program, said the audit document — dated Sept. 30, 2013 — is a draft, though it is not marked as one. Aguirre said it has not been made public because it is a draft. The OSSE commissioned the audit in the wake of concerns that there would not be enough money to meet the needs of a growing number of eligible students.

But Aguirre said that he and his office take the concerns seriously and that his agency is working with the city’s chief financial officer to study the findings and determine how much money should be in the TAG accounts.

“Obviously, that raises questions and concerns,” Aguirre said. “We’re trying to get to the bottom of it.”

Most of the uncertainty stems from two charges to TAG for which no explanation could be found, according to the audit by F.S. Taylor and Associates, a District-based CPA firm. More than $5 million in TAG funds was used for unknown purposes in fiscal 2004, the audit says, and $4 million in TAG funds was used to pay for “administrative contracts” in fiscal 2008, exceeding the program’s cap on allowable administrative costs.

“We were not provided adequate supporting documentation or explanation of the purpose” for the payment, the audit says, referring to the $4 million in 2008. “We were unable to make a determination that the adjustment was a valid, DCTAG-related transaction.”

The auditors also found that, between fiscal 2009 and 2012, more than $462,000 in TAG funds appears to have been used to support two other programs, the D.C. Adoption Scholarship and one other. Auditors referred that matter to OSSE to determine whether the money should be restored to TAG.

Beyond the millions of TAG dollars that couldn’t be accounted for, the audit found a number of systemic weaknesses in the OSSE’s management of the program.

When students withdraw from college, for example, the OSSE sometimes receives refund checks for unspent TAG dollars. But the agency has no mechanism to determine if the program is owed a refund or to request reimbursement, according to the audit. That means the program could be paying tuition to colleges for students who are no longer attending.

“DC TAG is usually first aware of the need for a refund when the refund is received by DC TAG,” according to the audit, which recommended strengthening procedures for learning when refunds are due. “In addition we recommend that procedures be developed to address why payments are made to [colleges] for students who are not enrolled.”

Agency staff decide whether students receiving TAG funds are D.C. residents and eligible for the money, but there is no routine quality-control mechanism to review those decisions, auditors found. And there is no regular reconciliation between the software the OSSE uses to track TAG money and the citywide finance system that records expenditures, leading to large discrepancies and confusion about how much money is available for students.

The OSSE is revamping its software to correct that problem, Aguirre said. But he declined to discuss the other findings and recommendations in detail, calling them “premature” because they are a draft. A representative of the audit firm also said the audit is a draft and declined to comment further.

Aguirre, who took over leadership of the OSSE in October, did not provide a timeline for when the audit and the OSSE’s responses will be finalized and made public, but he said he and his team will take whatever steps are necessary to strengthen the program.

“I want parents to know that we see this, and the mayor sees this, as an in­cred­ibly important program for the families of the District,” Aguirre said. “We’re doing everything we can to ensure that it’s strong, viable and fiscally stable.”

Emily Durso, who served as interim head of the OSSE from June to Sept. 30 last year — and who previously led the office’s postsecondary education division, which oversees TAG — now works for D.C. Public Schools and did not respond to a request for comment last week.

Some of the audit’s findings, including the failure to regularly reconcile TAG records with expenditures, echo concerns that the Government Accountability Office raised nine years ago in a report to Congress.

But management of TAG appears to have improved in some respects. The GAO, for example, found that 35 percent of TAG recipients did not have documents on file to substantiate their eligibility, but the auditors questioned the eligibility of only one student out of the 125 whose files they reviewed last year.

Money in the tuition assistance fund that is left unspent at the end of each fiscal year is carried over to the next fiscal year, so uncertainty about expenditures in one year can cascade into the future. City officials have estimated the carry-over from 2012 to 2013 to have been as little as $2.6 million and as high as $22 million, according to the audit. The auditors wrote that the carry-over should have been somewhere between $4 million and $14 million.

“I don’t know how real any of those numbers are,” Aguirre said. “Honestly, I don’t know which end of the spectrum we’re going to land on.”

The auditors urged the OSSE and the city’s chief financial officer to settle on an amount “as soon as possible to allow appropriate decision-making, accountability and management of DCTAG operations.”

Del. Eleanor Holmes Norton (D-D.C.), who has been a strong advocate for TAG in Congress, said she plans to ask the new D.C. chief financial officer to personally oversee a review of the internal controls at the program and to make any necessary changes.

“The draft report raises concerns about the sufficiency of internal controls at the D.C. TAG program,” Norton said Friday. “While the report is troubling, the auditors may have discovered unexpected carry-over funds, which, if accurate, should allow more D.C. students to access D.C. TAG.”

David A. Catania (I-At Large), chairman of the D.C. Council Education Committee, who is scheduled to have an annual oversight hearing Monday to examine the OSSE’s performance during the past year, declined to comment.

TAG has never turned down an eligible student for lack of funds, but there have been questions about the program’s stability, and not only because congressional appropriations are subject to politics and can be hard to predict. Last spring, the OSSE — faced with rising demand for TAG and with the across-the-board federal budget cuts known as the sequester — urged families to complete TAG applications two months earlier than usual, warning that they might risk missing out on the money.

The move led to a panic among parents and students. It also spurred the OSSE to commission the audit, according to Aguirre, who took the agency’s helm months later.

Diana Rojas, the mother of a junior at the School Without Walls, said TAG has been an important incentive to stay in the city even as many families have moved to the suburbs. She said she is “really counting on D.C. TAG to make college an affordable possibility.”

The OSSE is responsible for a grab bag of citywide education initiatives, including monitoring special education compliance, providing transportation for public school students with disabilities and funneling federal funds to schools. It has been plagued by high leadership turnover and management problems since its creation in 2007. But some of the questions about TAG money date to pre-OSSE days, when the State Education Office ran the program and tuition assistance dollars were included in accounts used for charter school funds.