JEFFERSON CITY, Mo. -- The Department of Higher Education failed to verify the eligibility of students receiving grants and scholarships, according to a state audit released Thursday.

The audit also found that students sometimes get scholarship checks before the department knows whether it has the money to pay for them.

Other problems abound in the department, State Auditor Claire McCaskill's office said, including questionable food expenses and purchases and a lack of policies governing the use of state cellular phones and vehicles.

For the two years ending June 30, 2001, the department awarded approximately $83.5 million in student financial assistance to college students, with all but $1.3 million coming from state funding.

Although schools must provide information fora student's loan eligibility, the audit said the department "does not periodically test these determinations and related documentation to review the procedures used by the colleges and universities to make the determinations."

Meanwhile, at the end of the fiscal year on June 30, 2001, the department has underestimated what some scholarships would cost and had to take $70,000 from the following year's budget to pay for them.

"We're developing a plan to verify the information that we get from the schools to help determine eligibility," said Joe Martin, the state's associate higher education commissioner.

The audit found that timely tracking and follow-up action on some outstanding loans never took place and that the computer programs that track amounts of loan repayments, loans forgiven, and loan balances wasn't working.