AUDIT  GUIDE     001B76100
             FOR
        EPA GRANTS
    (OTHER THAN CONSTRUCTION GRANTS)

ENVIRONMENTAL PROTECTION AGENCY
       WASHINGTON, D.C. 20460
          FEBRUARY 1976

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                     TABLE OF CONTENTS


Chapter
1  INTRODUCTION                                                      1.1
   1.1  Purpose of Audit Guide                                             1.1
   1.2  Program Background                                              1.1
   1.3  Authority for Audit                                                1.1
   1.4  Audit Standards                                                   1.2
   1.5  Audit Objectives                                                   l.;2
   1.6  Matters Requiring Immediate Attention                              1.2
   1.7  Quality Control
2  PRELIMINARY PROCEDURES                                         2.1

   2.1  Preliminary Planning                                              2.1"
   2.2  Preparing for the Audit                                             2.1
   2.3  Entrance Conference                                               2.2
   2.4  Initial Field Audit Procedures                                       2.2
3  AUDIT OF  COSTS                                                     3.1

   3.1  Basic Guidelines                                                   3.1
   3.2  Approach to Costs                                                 3.1
   3.3  Payroll Fringe Benefits                                             3.4
   3.4  Subagreements                                                    3.6
   3.5  Equipment, Supplies, and Material                                   3.7
   3.6  Travel                                                            3.8
   3.7  Other Direct Costs                                                 3.8
   3.8  Indirect Costs                                                     3.9'

4  AUDIT OF  OTHER MATTERS                                          4.1

   4.1  Program Accomplishment                                          4.1
   4.2  Cash                                                            4.1
  .4.3  Unpaid Obligations and Encumbrances                              4.2
   4.4  Grant Related Income                                              4.2
   4.5  Property Management                                              4.3
   4.6  Financial and Progress Reports                                     4.4
   4.7  Programs Requiring Special Compliance Coverage                     4.4
   4.8  Matching Share                                                   4.5
   4.9  Computation of Federal Share                                       4.6

5  EXIT CONFERENCE                                                  5.1
6  AUDIT REPORT                                                      6.1
   6.1  Introduction                                                      6.1
   6.2  Content and Format of Auditor's Report                              6.1
   6.3  Presenting the Findings                                            6.1
   6.4  Auditor's Report on Subagreement Costs                              6.1

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APPENDIX
A EPA FINANCIAL ASSISTANCE PROGRAMS                      A.I
B EPA AREA AUDIT OFFICES AND COGNIZANT GEOGRAPHIC AREAS    B.I
C SURVEY OF GRANTEE'S MANAGEMENT SYSTEMS                C.I
D REFERENCES                                            D.I
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This document is not a replacement to the Acts, the regulations, the guidelines, or the
official EPA policy statements. It is a supplement to these documents, providing basic
audit guidance and showing example audit reports. Any clarifications and the specific
conditions of each audit should be discussed with the appropriate EPA audit Manager.
                                      in

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                 CHAPTER 1:  INTRODUCTION


1.1  PURPOSE OF AUDIT GUIDE

  This guide is intended to assist the Environmental Protection Agency (EPA) auditors,
independent public accounts, and auditors of public agencies to understand the special
requirements for audit coverage of EPA grants, other than construction grants. The audit
steps in this guide are intended to provide general insight into the nature and scope of the
audit contemplated. This guide is not intended to be a complete manual of procedures, nor
is it intended to supplant the auditor's judgement of the work required to meet the audit
objectives outlined in this audit guide. The audit procedures contained in this guide may
not cover all circumstances or conditions encountered in auditing a particular grant, and
similarly not all of the audit procedures will apply to each grant audited. Auditors must
use their professional judgement to tailor the procedures to meet conditions at the audit
site so that the audit objectives  set forth in.the guide may be achieved.

1.2  PROGRAM BACKGROUND

  EPA was established  under Presidential Reorganization Plan No. 3 of 1970. By this
Plan, the environmental functions and responsibilities of five different Federal agencies
were transferred to EPA. The responsibilities transferred included research, standard-
setting, monitoring and enforcement related to all six environmental hazards: air and
water pollution, solid waste disposal, radiation, pesticides and noise.

  In each of these areas, EPA finances a variety of financial assistance programs.
Through grants, EPA provides assistance for:

• Research Projects.  EPA sponsors research into all types of environmental problems
  and  their correction.

• 'Demonstration Projects. EPA  sponsors demonstrations of new and improved methods
  of handling environmental problems.

• Program Assistance. EPA provides a portion of the costs of governmental agencies'
  operations of environmental programs. Such assistance is available under the EPA's
  air, water and pesticides  programs.

• Planning Projects.  EPA grants provided a portion of the costs of preparing a water
  pollution control plan at the basin or regional level. In addition EPA provides financial
  assistance for solid waste planning.

• Training Projects. Through grants, EPA provides a portion of the costs of training
  personnel^for environmental careers.
  More complete information on each of the financial assistance programs for which EPA
makes grants is contained in Appendix A of this guide.
1.3  AUTHORITY FOR AUDIT

  Each of the Public Laws authorizing EPA to make grants provides that EPA shall have
the authority to  audit and examine the  books  and records of the parties receiving such
financial assistance. Paragraph  30.820 of EPA's Final Grant Regulations (May 8,1975)
provides that each grant will be subjected to final audit.

  The EPA Office of Audit is responsible for all audits of EPA grant programs. The Area
Audit Manager (see Appendix B) may elect to have an individual audit conducted by his
staff, another Federal agency, state or local auditors, or an independent public account.
When the Area Audit Manager  elects to have the audit performed by an independent
public accountant, he will notify the grantee as to which firm will perform the audit. It will
be the selected firm's responsibility to contact the grantee to arrange the start of the audit.
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1.4  AUDIT STANDARDS

  Audits of EPA grants will be made in accordance with the Standards for Audit of
Governmental Organizations, Programs, Activities, and Functions promulgated by the
Comptroller General in 1972. The auditor will not be required to express an opinion as to
the efficiency and economy of operations or with respect to program evaluations, He may,
however, be requested by the Area Audit Manager to perform certain audit tests related to
these aspects and to report the results of his examination.

  In performing audits of EPA grants, the auditor is expected to adhere to generally
accepted auditing standards. In addition, he should utilize those portions of the American
Institute of Certified Public Accountants' (AICPA) industry audit guides considered
applicable. Of particular importance is the guide Audits of State and local Governmental
Units.
1.5  AUDIT OBJECTIVES

  The objectives of the audits of grants are:
• to determine whether the management controls exercised by the grantee through its
  management system, accounting system, procurement system, and property control
  system are adequate to provide assurance that costs claimed are reasonable, allowable
  and allocable to the sponsored project under the grant terms and conditions, Federal
  Management Circulars (FMC's) and applicable EPA regulations; and

• to review operations and report any noncompliance with applicable grant conditions or
  EPA rules and regulations and, based upon the review, to provide recommendations for
  improvement.

• to determine whether the costs claimed under the EPA grant are reasonable, allowable,
  and allocable to the sponsored project.
1.6  MATTERS REQUIRING IMMEDIATE ATTENTION
  During the course of the audit, the auditor may encounter suspected fruad, irregularity,
or collusion and insufficient evidence or inadequate systems.

  1.  Suspected Fraud, Irregularity, or Collusion
  The purpose of audits performed in accordance with this guide is not to detect fraud,
although performance of the audits may minimize fraud loss, discourage irregularities,
and identify conditions of gross mismanagement. If, during the examination, instances of
possible fraud, gross mismanagement, or other  irregularities are identified, the auditor
will:
• document the situation
• immediately notify the Area Audit Manager of the situation encountered; and

• proceed  only in accordance with instructions  provided.

  2.  Insufficient Evidence or Inadequate Systems

  Auditors are  expected  to use professional  judgment in  arriving at  conclusions
concerning the sufficiency  of available supporting evidence. If additional guidance is
needed  as  to the acceptability of certain evidence, the auditor should contact the Area
Audit Manager  or  his  designated  representative.  When insufficient evidence or
inadequate systems preclude the reaching of conclusions concerning the reasonableness,
allocability, and allowability of costs within a reasonable period of time, the auditor must,
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as a minimum:
• document tests  and observations to support the auditor's conclusions  regarding
  insufficient evidence or inadequate systems.

• inform the Area Audit Manager by telephone and confirm by letter; and
• cease work until instructions are received.
1.7  QUALITY CONTROL
  EPA retains the right to review audit work papers to evaluate the overall quality of the
audit. In this regard, EPA may require copies of the audit work papers to be forwarded,
along with the completed audit report, to the responsible Area Audit Manager or his
designated representative. The audit work papers will be returned to the auditor upon
completion of the EPA evaluation. Based on EPA's evaluation, the auditor may have to
return to the job site to perform additional work required. In this regard, the auditor
should retain the work papers applicable to the  audit of any EPA grant or contract for
three years after completion of the assignment and submission of the required audit
report.
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       CHAPTER 2: PRELIMINARY PROCEDURES


2.1  PRELIMINARY PLANNING

  Once a request for audit is received from EPA grants officials, the Area Audit Manager
will obtain and review the grant project file to:
• determine whether a field audit will be performed; and
• make a preliminary determination as to the general scope of audit.
Based on this review, the Audit Manager will assemble an audit planning package for use
in determining the  scope, schedule and resources needed for the audit. Normally this
package will contain the following information:

• Grant number
• Grantee name, address and telephone number
• Total project cost

• Federal share
• Narrative discussion of scope of audit contemplated.
  In reviewing the  project, the Audit Manager will determine if there are any areas
requiring  special audit attention. The Manager will  thus identify areas for which he
requires detailed audit coverage as well as areas requiring little or no coverage. In
addition,  The Manager may want to expand the audit to cover certain aspects  of
efficiency, economy, or program effectiveness. Whenever the scope is thus expanded, the
Manager will provide the additional audit guidance necessary for appropriate coverage of
the expanded areas.
2.2  PREPARING FOR THE AUDIT
  In accepting any grant from EPA, the grantee agrees to comply with those conditions or
requirements inherent in the award or provided in grant or contract regulations. To audit
these grants, the auditor must become thoroughly familiar with those conditions and
requirements related to the individual grant. Once the auditor has been selected and the
preliminary audit planning has been completed, the Area Audit Manager will provide the
auditor with EPA's  project  files, as well as copies  of the latest EPA audit reports
concerning the grantee. The auditor should:
• review in detail key grant material. Generally this will include:
• an  executed  copy of  the grant agreement (and any amendments) for each  grant
  included in the scope of the audit; and
• the approved budget for each grant.
• identify, obtain and review those EPA regulations and Federal Management Circulars
  applicable  to the grants  being audited;  (see  Appendix A for reference to EPA
  regulations)

• identify any special grant conditions requiring audit attention;
• review correspondence contained in the project file for indications of potential problem
  areas;
• determine whether the project file contains  indications  of  satisfactory  grantee
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  performance. This may be expressed in terms of correspondence accepting the grantee's
  product or in the form of periodic program evaluation reports; and

• review prior audit reports to identify potential or known problem areas to be examined
  during the audit.

2.3  ENTRANCE CONFERENCE

  After establishment of a mutually agreed upon date for starting the audit, an entrance
conference should be held with the grantee. During this conference, the grantee should be
advised of the purpose and scope of the audit. The results of the entrance conference
should be documented in the audit work papers, and this documentation should include a
list of entrance conference attendees.

2.4  INITIAL FIELD  AUDIT PROCEDURES

  In starting the audit, the auditor should:

• obtain background information on the grantee organization. This may be in the form of
  charters, bylaws,  incorporation  documents,  or  public relations documents which
  identify the nature of the organization's operations and key employees. In addition, the
  auditor should obtain copies of the organization's financial reports as well as access to
  any  audit reports issued by the organization's internal or external auditors.

• identify any additional EPA or other Federal grants or contracts being performed by
  the grantee. In this regard, the  auditor will obtain the grant/contract number, the
  amount of the agreement, the status of the grant/contract, and the Federal agency
  involved. The auditor should promptly communicate this to the Area Audit Manager so
  that a decision may be made as to whether the scope of the audit will be expanded to
  cover these agreements.

• familiarize himself with the grantee's  accounting, personnel, procurement, and
  property management systems as they relate to grant expenditures. In this regard, the
  auditor should initially obtain information regarding any established policies and
  procedures governing these activities.  He  should then perform a limited survey to
  identify significant weaknesses  in the systems  as they apply to the EPA grant,
  utilizing, as a minimum, the survey questionnaire contained in Appendix C of this
  audit guide. The survey should include sufficient testing of the records to validate the
  information obtained  in the survey.
• reconcile the reported expenditures as identified in the financial status report or final
  voucher with those amounts shown on the grantee's official accounting records.

• obtain a breakdown of reported costs by program function and/or cost element. The
  auditor should compare the breakdown with the amounts contained in the grant budget
  (see Final Grant Regulations 30.610).
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                CHAPTER 3: AUDIT OF COSTS


3.1 BASIC GUIDELINES

  Each grant contains reference to those cost principles to be used in evaluating the
acceptability of costs. Generally, EPA grants will be subject to one of the following:

• FMC 74-4, Cost Principles for grants and contracts with state and local governments;

• FPR 1-15.2, Cost Principles for grants and contracts with commercial institutions; or

• OSAC-5, DHEW, Guide for grants with nonprofit institutions.

In addition to containing references to the allowability of individual types of costs, these
principles contain excellent background information and guidance as to the proper
treatment of  costs,  and  the  auditor should  become thoroughly familiar  with the
information contained in them.

3.2  APPROACH TO COSTS

  In conducting an  audit of EPA grants, the  auditor will be attempting to reach a
conclusion as to the acceptability of costs claimed on reimbursement vouchers submitted
to EPA on the Reports of Expenditures/Financial Status Reports. When the grantee has
actually incurred costs in excess of the amounts claimed, the auditor may not increase the
amount of the grantee's claim. He should, however, disclose by means of footnotes the
extent of unclaimed costs, that might otherwise be considered allowable.

  Under the terms of the grant, EPA's participation in a project is for a limited period. In
reviewing project costs, the auditor is evaluating each cost to determine whether it is
acceptable as a charge  to  the  EPA project.  Costs  that are not acceptable will be
questioned.

  Costs questioned normally fall under one or more of the following categories:

  1.  Unallowable costs.  Costs which are specifically unallowable under the terms of the
grant or other cost principles cited in the grant or applicable EPA regulations.
  2. Unreasonable costs. In determining the reasonableness of a given cost, considera-
tion shall be given to:

• Whether the cost is of a type generally recognized as ordinary and necessary for the
  conduct of the grantee's (contractor's) business or the performance of the contract;

• The restraints or requirements imposed by such factors as generally accepted sound
  business practices, arm's length bargaining, Federal and State laws  and regulations,
  and grant/contract terms and specifications;

• The action that  a prudent businessman would take in the circumstances, considering
  his responsibilities to the owners of the business, his employees, his customers, the
  Government, and the public at large;  and,

• Significant deviations from the established practices of the grantee/contractor which
  may unjustifiably increase the grant/contract costs.

  The auditor in conducting his examination should be cognizant of costs incurred which
indicate to him that they may be excessively high or  even unwarranted. In making the
determination as to  any costs which might be questioned as being unreasonable the
auditor would rely on his own judgment. In making these determinations the auditor is
not expected to make judgments on technical matters outside  of his area of expertise.
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  3. Unallocable costs. In reviewing the alienability of costs, the auditor will be guided
by the following criteria:
• A cost is allocable to a particular grant/contract to the extent of benefits received.

• Any cost allocable to a particular project or function may not be shifted to a Federal
  grant/contract to overcome fund deficiencies, avoid restrictions imposed by law or
  grant/contract agreements or for other reasons.

• Where an allocation of joint cost will ultimately result in charges to a grant/contract,
  an indirect cost rate proposal will have to be prepared to justify the equitability of the
  charge.

  4. Undocumented costs. Costs for which detailed documentation is not available to
show that the costs claimed were in fact incurred under the EPA grant/contract.

  5. Unapproved costs. Costs for which grant/contract provisions  or applicable cost
principles require awarding agency approval, but for which the auditor finds no evidence
of such approval.

  Figure 3-1 contains examples of questioned costs. The  designation of  a  cost  as
questionable by the auditor does not necessarily mean that the cost will be disallowed.
The final determination as to the acceptability of costs will be made by the appropriate
EPA grants administration official.
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                              Figure  3-1

EXAMPLES OF UNALLOWABLE COSTS
• Interest on bonds or other financing
• Fines and penalties resulting from violation  of Federal, State, and local laws
• Personal injury compensation  or damages as a direct result of construction of the
  project
EXAMPLES OF UNREASONABLE COSTS
• Purchase of a six month's supply of materials during the last month of the grant except
  under EPA program grants where Federal assistance is obtained on a continuing basis
• Purchase of expensive equipment needed only for a short period when a lease would
  have been more economical
• Costs for which appropriate evidence is not available that the grantee employed those
  controls necessary to assure that the price was reasonable
EXAMPLES OF IMPROPERLY ALLOCATED COSTS
• Costs already matched to another Federal program
• Inequitable allocation of indirect costs to the grant
• Costs allocated in total to the grant, which also benefited other grant programs
EXAMPLES OF IMPROPER DOCUMENTATION OF COSTS
• Lack of time and attendance records, invoices, etc.
• Lack of written contracts with consultants and/or subcontractors
• Non-Federal contributions recorded but not documented
EXAMPLES OF COSTS NOT PROPERLY  APPROVED BY EPA
• Hire of consultants and/or subcontractors
• Purchase of capital equipment
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  In reviewing costs, the auditor will be examining total project costs. Costs recorded as
the grantee's share and those recorded as EPA's share will be subjected to the same audit
procedures and tests for allow ability. Costs considered questionable will be treated as a
reduction in total costs claimed in determining costs accepted. The percentage of project
costs in which EPA is participating, per the grant agreement, will then be applied to total
cost accepted. This will show the Federal share earned.

3.3  PAYROLL/FRINGE BENEFITS

  1.  Objective

  The objectives of the audit of payroll and fringe benefits costs are to determine whether:

• employee pay rates  and benefits are commensurate with  the  type of work being
  performed; and

• total labor and benefit costs charged to the EPA grant/contract are allocable and
  reasonable.

  2.  References

• FMC 74-4; Attachment B; B.10

• OASC-5; Appendix I; G.6, G.25

• FPR 1-15.205-6

  3.  General Audit Procedures

  Amounts charged to the EPA grant will be tested to determine that appropriate salary
rates were utilized for personnel working under the EPA grant, time charged was properly
supported, and fringe benefits claimed represent actual costs to the grantee.

  4.  Potential Areas Requiring Additional Audit

  a.  Compensation paid to key officials

  In evaluating the reasonableness of compensation paid to owners  of  closely  held
corporations, partners, sole proprietors or members of their immediate families, or persons
who are contractually committed to  acquire a substantial financial  interest in  the
grantee's enterprise, the auditor should determine that such compensation is reasonable
for the actual personal services rendered and not a distribution of profits. Compensation is
reasonable to the extent that the total amount of compensation paid under the company's
established policy conforms generally to compensation paid by other firms of the same
size, in the same industry,  or in  the same geographic area, for similar services. In the
administration of this principle, it is recognized that not every compensation case need be
subjected ii  derail to the above tests. Such tests need be applied only to those cases in
which  a general review reveals amounts  or types of compensation which appear
unreasonable or otherwise out of line.

  The auditor should determine that incentive compensation for management employees,
cash bonuses, suggestion awards, and incentive compensation based on production, cost
reduction, or efficient performance are paid or accrued pursuant to an agreement entered
into in  good faith  between the  grantee and the  employees before  the services were
rendered or pursuant to an  established plan followed by the grantee.

  For bonuses and incentive compensation paid in stock, the auditor should determine
that valuation placed on the stock transferred shall be the fair market value at the time of
transfer, determined upon the most objective basis available.
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  b. Deferred compensation

  The auditor should determine that any deferred compensation:

• is for services rendered during the grant period (except past service pension  and
  retirement costs);

• is paid pursuant to an agreement entered into in good faith between the grantee and
  employees before the services are rendered or pursuant to an established plan followed
  by the grantee so consistently as to imply,  in  effect, an agreement  to make such
  payment; and

• is made under a plan subject to approval by  the Internal Revenue Service and falls
  within the criteria and standards of the Internal Revenue Code and the regulations of
  the Internal Revenue Service.

  In determining the cost of deferred compensation  allowable under a grant, the auditor
should ascertain whether appropriate adjustments have been made for credits or gains,
including those arising out of both normal and abnormal employee turnover, or any other
contingencies that can result in a forfeiture by employees of such deferred compensation.
  The auditor should ascertain whether adjustments to deferred compensation for normal
employee turnover  have been based on the  grantee's experience  and  unforeseeable
prospects. If the grantee can demonstrate that his contributions take into account normal
forfeitures,  such an  adjustment will be unnecessary.

  c. Overtime

  When the grantee has claimed costs related to overtime, the auditor should:

  (1) Determine  whether the employee  is, under company policy, entitled to  receive
     overtime, did work the  overtime hours,  and  did receive payment.  Wherever the
     individual did work, but did not receive pay, appropriate adjustment should be made
     to the employee's hourly or daily billing  rates.

  (2) Review the grantee's rationale for requiring overtime under the EPA  project. Where
     employees are working on more than one project, there could be some question as to
     which project generated the overtime.
  (3) Determine  whether necessary justifications for overtime were  prepared  and
     submitted for approval, where required under applicable grant terms and conditions
     or cost principles.

  d. Fringe Benefits

  When a grantee has computed a fringe benefit rate, the auditor should identify the basis
used in computing  the rate and determine that those elements making up the fringe
benefit pool have not been included as a part  of direct labor charges.

  To prevent the grantee from over recovering fringe benefit costs, special consideration
should be given to the annual or sick leave portion of fringe benefits. In this regard, the
auditor should determine whether annual and sick leave costs are claimed based on the
accrual or  actual leave basis. Where leave costs are claimed on an accrual basis, the
auditor should examine the grantee's leave policies and leave administration in detail to
determine:

  (1) whether there are established annual or  sick leave ceilings which could cause
     employees to lose accrued annual or sick leave
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  (2) whether  employees are actually paid for  accrued annual  or  sick leave upon
     termination or retirement.
In instances where ceilings prevent employees from utilizing accrued leave or employees
do not get reimbursed for annual or sick leave upon termination or retirement, grantees
should not be permitted to claim leave cost on an accrual basis. They may never incur the
costs. Instead, leave costs should be based on actual leave taken, not leave entitlement.
3.4  SUBAGREEMENTS
  1. Objective
  The objective of the audit of subagreement costs is to determine whether appropriate
controls  were  exercised to assure that the services  were necessary,  obtained at a
reasonable price, and that the procurement  provided for free and  open competition.
  2. References
• FMC 74-7; Attachment O
• FMC 74-4; Attachment B; C-7
• OASC-5; Appendix I; G.31
• FPR 1-15-205-31
  3. General Audit Procedures
  The auditor should selectively review the rationale and documentation in support of
subagreements to determine that:
•  the grantee  evaluated his own resources to assure that the services or product could not
   have been provided in house;
•  the services or product was used under the EPA grant;
•  the method of procurement was sufficiently competitive (see FMC 74-7);
•  procurement techniques utilized by the grantee (competitive procurement or analysis of
   the composition of costs) were sufficient to obtain a reasonable price;
•  the grantee gave consideration to the type of subagreement most appropriate for the
   services or product obtained. (Fixed price contracts are appropriate when the scope and
   nature of work can be  clearly defined. Where the scope or nature of work is more
   indefinite, the cost type contract is more appropriate. The cost plus-a-percentage-of-cost
   and percentage-of-cost type contracts may not be used under EPA grants);
•  the nature,  scope, time period, and costs  were specific in the subagreement;
•  the grantee was satisfied with the work performed;
•  appropriate EPA approvals were obtained for all subagreements in  excess of $10,000.
  4. Potential Areas Requiring Additional Audit
  The existence of subagreements means that a portion of the project cost records are not
available at the grantee's site. The auditor should, therefore,  compile a list  of  the
subagreements. This list should identify the parties performing under the subagreement,
provide their address and telephone numbers, give a description of the nature of services
or products provided, and indicate the type and amount of each subagreement.
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  a. Fixed price subagreements
  Fixed price subagreements normally will not be audited. If these agreements were
obtained in such a way as to extablish the reasonableness of price and that the services
were needed, the related costs will be considered acceptable.

  b. Cost-type subagreements
  Cost-type subagreements may require audit. The auditor should determine whether the
grantee has audited the subagreements or requested that an audit be performed by the
cognizant Federal Audit Agency.  Where such action  has  not been taken, the auditor
should furnish the Area Audit Manager with a list of the subagreements. The Manager
will decide whether an audit is needed and, if one is needed, who will perform the audit.
  The auditor  selected  to perform the audit should advise the party performing work
under the subagreement that the review is being performed for both the grantee and EPA.
Thus, any information gathered during the course of the audit will be made available to
the grantee as well as to EPA.
  If another agency will perform  the audit, the Area Audit Manager will initiate the
request for audit and provide a copy of the request to the auditor performing the review of
the grant. The auditor does not have to wait for the results of an audit requested from
another Federal agency; he should prepare the  audit report and set aside the requested
portions. The audit report should explain  that the subagreement is being audited by
another audit agency and that the results will be transmitted as soon as received.
  If the Area  Audit Manager  has determined  that no other Federal audit agency is
cognizant and that the subagreement should be  audited, the  auditor should make
arrangements to audit the accounting records of the subagreement to determine that the
costs billed are allowable. The audit steps in this guide applicable to the particular types
of costs claimed should be followed, and the auditor should apply these cost criteria which
apply to the type of organization receiving the subagreement.

  If no audit of the subagreement is considered necessary, the Area Audit Manager will so
advise the auditor reviewing the grant. In  such cases, the costs claimed under the
subcontracts will be considered allowable if the costs were claimed in accordance with
subagreement provisions.

3.5  EQUIPMENT, SUPPLIES, AND MATERIAL

  1. Objective

  The objectives of the audit of equipment, supplies, and material costs are to determine
whether:

• such items were needed and used on the sponsored projects; and
• such items were obtained on a competitive basis.
  2. References
• FMC 74-4; Attachment B; B.18, C.3

• OASC-5; Appendix I; G-7, G-22, G-45
• FPR 1-15.205.22, 1-15.205-32, 1-15.205-40, 1-15.205-45, 1-15.205-50
  3. General Audit Procedures

  For selected items the auditor should determine that:
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• procurement was made in accordance with normal procedures and that appropriate
  supporting documentation was maintained;
• items purchased were not already available and were actually utilized under the EPA
  grant
• these items were  acquired through  appropriate use  of competitive purchasing
  techniques
• appropriate approvals were obtained for the purchase of capital items; and
• costs related to these capital items properly represent direct rather than indirect
  charges.
3.6  TRAVEL
  1.  Objective
  The  objective of the audit is to determine that the  cost of travel is allowable and
allocable to the EPA  grant.
  2.  References
• FMC 74-4; Attachment B; B.28
• OASC-5, Appendix I; G.46
• FPR 1-15.205-46
  3.  General Audit Procedures
  The  auditor should test travel charges to determine that:
• travel costs were incurred in accordance with the grantee's normal travel policies and
  amounts do not appear grossly unreasonable as compared to Federal travel policies;
• travel charges are adequately supported by travel vouchers and other documentation;
• travel claimed was applicable to the EPA grant; and
• first-class transportation was not utilized without necessary justification.
3.7  OTHER DIRECT COSTS
  1.  Objective
  The  objective of the audit of other direct costs is to determine whether the related costs
  are allowable and applicable to the EPA grant.
  2.  References
• FMC 74-4
• OASC-5
• FPR 1-15.205
  3.  General Audit Procedures
  In general, the auditor must determine that:
• the  types  of expenditures involved were contemplated in the original budget and the
  expenditures were  adequately documented.
• in instances where the  grantee has  established  separate pools for such costs as
  computer  services, reproduction, communications, etc., the methods used to calculate

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  and distribute such costs are equitable.
• amounts claimed are properly supported as other direct costs and that similar costs are
  not recovered through indirect costing methods.
• the grantee credits to the Government the applicable portion of any income, rebate,
  allowance,  and other credit relating to any allowable costs received by or accruing to
  the grantee.
• when applicable,  necessary approvals have been obtained from EPA. For example,
  FMC 74-4 requires the specific approval for inclusion of costs related to the acquisition
  of data processing equipment.
• such costs  are allowable under applicable cost principles.

3.8  INDIRECT COSTS
  The indirect costs  of a project  are those costs not readily identifiable with the project
itself but nevertheless incurred by an organization for the joint benefit of the project and
other activities  carried on by  the organization. To  recover its indirect costs,  an
organization  must submit an  indirect cost proposal showing its methods of determining
the portion of indirect costs each project should bear. Once this proposal is reviewed and
found to be equitable, the indirect cost rate is approved.

  The auditor will be responsible for assuring that the amount of indirect costs claimed on
any grant administered by EPA is acceptable.
  (1) Grants Awarded by EPA
    (a) Grants to Profit-Making Institutions

    The grants to profit-making institutions will utilize the indirect cost rate established
  in the grant as a ceiling rate. This rate must be based on the indirect cost proposal, for
  the fiscal year  preceding the  grant award, as audited and negotiated by a Federal
  agency. The grantee will be expected to prepare indirect cost proposals annually.
  • In instances where no such proposals were prepared, any indirect cost claims should
    be questioned.
  • In instances where the indirect cost proposals have been prepared, the auditor will be
    expected to audit the proposals to establish the acceptability of rates proposed. This
     audit should be conducted in accordance with the EPA "Audit Guide for Reviewing
    Indirect Cost Allocation Plans and Rate Proposals." The rates considered allowable
    by the auditor should be compared with the ceiling rate. Where the audited rate is
    higher, the ceiling rate should be used in determining the indirect cost applicable to
    the grant. Where the ceiling rate is  higher, the audited rate should be  used. Any
    reduction in  indirect costs resulting from this procedure should be treated as costs
    questioned.
    (b) Grants to Other Types of Institutions
    It is EPA's policy that indirect costs on all grants to other types of institutions are
  fixed in the grant. The indirect cost rate should have been computed based on fiscal data
  applicable to the fiscal year preceding the date of grant award. The rate should have
  been reviewed, audited, and negotiated by EPA or another Federal agency. In instances
  where:

  • the rate  was not based on current proposal, the auditor should question all indirect
    costs.
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  • the rate was based on a current proposal but, no review or negotiation of indirect costs
    has taken place; the auditor should audit the proposal of the applicable period in
    accordance with EPA's "Audit Guide for Reviewing Indirect Cost Allocation Plans
    and Rate Proposals" and adjust the grantee's claim to the audited rate.
  (2) Grants Awarded by  Other Agencies

  EPA is administering a few grants awarded by predecessor agencies. Under these
grants, indirect costs should be handled on an actual basis. Indirect cost rates should be
adjusted up or down to the rates actually experienced. When the auditor encounters such a
situation, he shall be guided by the following ground rules.
  (a) The auditor may find that EPA or another Federal agency has already audited and
negotiated the organization's indirect cost rate. The auditor may use this rate in making a
final determination  of allowable indirect costs. The auditor should be careful, however,
not to increase  costs above the amount of the grant award.
  (b) In instances where the grantee has claimed indirect costs but has not prepared an
indirect cost proposal to justify his rate, any indirect costs claimed should be questioned.

  (c) In instances where the indirect cost proposals have been prepared and submitted,
but not audited; the  auditor will be expected to audit the proposals to establish the
acceptability of the rates proposed. This audit should be conducted in accordance with the
EPA "Audit Guide for Reviewing Indirect Cost Allocation Plans and Rate Proposals."
The rates considered allowable by the auditor should be used in determining allowable
indirect costs under grants awarded by EPA's predecessor agencies.
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        CHAPTER 4: AUDIT OF OTHER MATTERS


  During the course of the audit, the auditor will be examining the acceptability of the
grantee's  controls as they relate to requiremer  s  contained in regulations, Federal
Management Circulars, and/or the terms of the i  ividual grants. A failure to adhere to
grant requirements may result in questioning a , ..rtion or all of the grant costs.

  In preparing this audit guide, we have examined in detail certain areas that should be
reviewed during all grant audits. These are discussed in the following paragraphs.

4.1  PROGRAM ACCOMPLISHMENT

  In addition to the basic determinations of allowability, allocability, and reasonable-
ness, an integral  part of the audit of EPA grants entails a determination of program
accomplishment. Simply stated, the auditor should address himself to the question "Did
the government receive what it has paid for?" Essentially this determination is made by
reviewing compliance with the terms and conditions of the government agreement.
Normally grants set forth certain milestones or objectives to be met during the course of a
project. In some instances, the grantee will be expected to submit a report or other product
of his work. The auditor should perform certain basic reviews to determine whether the
grantee accomplished the desired project. In this regard, the auditor will generally be
reviewing records maintained by the grantee, reports prepared for grantee management
or EPA, and correspondence between the grantee and EPA. Specific steps necessary to
determine program accomplishment will be provided by the Area Audit Manager on a
project-by-project  basis.

4.2  CASH

  Payments to EPA grantees are made in three ways: advance payment, after-the-fact
reimbursement, and National Institute of Health (NIH) letter-of-credit or (NIH) advance
payment. Depending on the method used, steps necessary to audit cash will vary.

  1. Advance Payment

  This method is currently used on all EPA grants, other than construction grants (see
Final Grant Regulations, 40 CFR 30.615). In auditing cash when advance payment has
been made, the auditor should:

• relate the advances to the grantee's expenditures to determine if cash was advanced
  prematurely;

• determine if EPA  received credit  for any interest earned by the grantee on funds
  advanced by EPA (unless the grantee is a state governmental organization, any
  interest must be returned to EPA); and

• after reviewing the acceptability of costs claimed, compute the  amount due to the
  grantee.
  2. After-the-Fact  Reimbursement

  This method is used for payment on  older research and development grants, and
demonstration grants. In auditing  cash when after-the-fact reimbursement has been
made, the auditor should:

• determine that vouchers were submitted based on the costs recorded on the grantee's
  accounting records;

• determine the payments received under these vouchers; and
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• after reviewing  the  acceptability of costs claimed,  compute the amount due  the
  government or the grantee.
  3.  NIH Letter-of-Credit or Advanced Payment
  Older EPA air or solid waste grants were financed in this manner. However, EPA
stopped using this method of financing in July 1973. Since the NIH letter-of-credit or
advance payment methods do not permit the identification of cash payments to individual
grants, the auditor should make no attempt to try to determine the amount of cash paid
under the grant.
  4.  EPA Letter-of-Credit

  This Section Reserved.
4.3  UNPAID OBLIGATIONS AND ENCUMBRANCES
  In the audit of the grantee's unpaid obligations and/or encumbrances, a determination
must be made as to whether the obligation or encumbrance was valid on the last day of
the grant performance period. For the obligation or encumbrance to be considered to have
been valid on the last day of the grant performance period, the grantee must have incurred
a legal liability (for which payment was not made) to pay for goods or services  utilized
during the grant period. In regard to costs claimed in this category, the auditor  should:
• ascertain that the amounts claimed as  unpaid obligations represented orders placed,
  contracts and grants awarded, services received or other similar transactions as of the
  end of the grant period.
• determine that the goods or services procured were received during the grant period and
  in time to benefit the grant.

• ascertain that the grantee's accounting procedures provide for appropriate adjustments
  to reported project costs to reflect any difference resulting between unpaid obligations
  and actual costs incurred when paid.
• determine that unpaid obligations are liquidated on a timely basis. When obligations
  are not promptly liquidated, the auditor should comment on this condition in the audit
  report. Unpaid obligations outstanding in excess of one year should be questioned if no
  valid reason exists as to why payment has not been made.
4.4  GRANT RELATED INCOME
  Grant related income represents earnings by the grantee realized from grant supported
activities. Such earnings exclude interest income earned by states and any agency or
instrumentality of a state on grant-in-aid funds. All other grantees, however, are required
to return interest earned on advances of grant-in-aid funds to the Federal Government.
Examples  of income for which a grantee would be held accountable are income from
service fees, proceeds from the sale or disposition of real and personal property, usage or
rental fees, sale of commodities, royalties on patents and copyrights, and any other type of
income generated from charges which are directly related to a principal project objective.
Revenue generated, however, under the governing powers of a State or local government
which may have been generated without grant support is not considered grant related
income. Such revenue shall include fines or penalties levied under judicial or penal power
and used as a means to enforce laws; license or permit fees for the purpose of regulation;
special assessments to abate nuisances and public irritations; inspection fees; and taxes.
See 40 CFR 30.620.
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  In auditing EPA grants, the auditor should:

• review the terms and conditions of the grant to determine if there are any special
  conditions relating to the use and/or disposition of grant related income;

• determine whether the grantee accounts for such program income in a manner that
  readily identifies it to the program;

• determine whether royalties received from copyrights and patents produced under the
  grant during the grant period have been either added to the funds committed to the
  program or deducted from total allowable project costs for determining the net costs on
  which the Federal share of costs will be based;

• determine for royalties received in excess of $200  annually after completion of the
  grant, that the grantee has returned to EPA its share of royalties computed on the same
  ratio basis as the Federal share of the total project cost;

• determine that all other program income earned during the grant period has either been
  added to funds committed to the project by the grantor and grantee and used to further
  eligible program objectives or deducted from the total project cost for the purpose  of
  determining the net costs on which the Federal share  of costs will be based; and

• determine if the grant agreement specifically earmarks for a grant project certain
  revenues  (such  as  taxes,  special assessments, levies, fines), that the grantee has
  recorded the receipt and expenditure of these revenues  as  a part of grant project
  transactions.

4.5  PROPERTY MANAGEMENT

  The scope of audit of property management will vary significantly based on the type of
audit performed. When the audit is a final audit and EPA has no continuing work with the
grantee, the auditor should limit himself to determining that property was reported  as
required and that appropriate  disposition action was taken. However, review of the
adequacy of grantee property management systems should be emphasized when auditing
grants, such as those for air and water pollution control programs, which have been and
will be funded year after year.

  The most important facets of grantee property management are set forth in EPA's Final
Grant Regulations, 40 CFR 30.810. In evaluating a grantee's property  management
system, the auditor should:

  a.  determine whether the grantee maintains property records to account for equipment
purchased for use in EPA grant programs.
  b.  review the property records maintained and consider whether they contain necessary
information, such as:

    • the manufacturer's serial number or other identification number, the acquisition
      date,  the cost,  the source of acquisition, percentage of EPA equity,  ultimate
      disposition data (including sales price and the method  used to determine fair
      market value), and the location, use, and condition of the property.

    • a description of the property.

  c. ascertain whether the grantee takes a physical inventory of grant equipment and
reconciles the results with property records at least once every two years to verify the
existence, current utilization and continued need for the property.
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 d. determine whether:

    • differences between  the  property-record balances and physical  balances  are
     investigated and fully documented;

    • property records are  adjusted as a result of the inventory;

    • the grantee takes action to dispose of an item of equipment if it is no longer needed;
     and

    • periodic inspections and routine maintenance are performed on equipment.

  e. select, from the property records, a sample of equipment items purchased for EPA
grants and physically inventory the equipment to see whether the system is adequate in
terms of c above.

  f. determine whether the grantee has established procedures for disposing of equipment
that is no longer necessary. If he has, are the procedures adequate to ensure that EPA's
equity is protected when property is sold or used as a trade-in? If the grantee has disposed
of grant equipment, the auditor should ascertain whether written approval was obtained
from EPA prior to the disposition and whether the net proceeds of the sale or fair market
value at the time of sale, whichever was greater, were paid to EPA in proportion to EPA's
participation in the grant project.

4.6  FINANCIAL AND PROGRESS REPORTS

  In accordance with Final Grant Regulations 40 CFR 30.635, grantees are required to
prepare and submit to EPA an acceptable final report and such progress, financial, and
other reports relating to the conduct and results of the approved project as may be
specified in the grant agreement. As might be expected, the content and frequency of these
reports vary from grant to grant. Reporting requirements for grantees to report financial
information to Federal agencies have been standardized by FMC 74-7, Attachment H. For
some older grants, the financial reports will be different for each type.

  During the final audit of grants, the auditor will be most concerned with the financial
expenditure report which the grantee is required to submit within 90 days of the end of the
budget period. This report is the grantee's official claim for expenditures incurred during
the grant budget period. The costs claimed on this  document are what the auditor must
verify during the audit. A final audit cannot be completed until a grantee has submitted a
final financial expenditure report for the grant budget period.

  For  progress  and other reports,  the auditor should review the grant agreement or
regulations to determine the reporting requirement for the  grant  being  audited. An
evaluation will also have to be made to determine whether (1)  the grantee submitted the
required reports  and (2) EPA was satisfied with the reports. The auditor should in the
course of his audit be alert for indications that information contained in these reports was
incorrect or invalid.
4.7 PROGRAMS REQUIRING SPECIAL COMPLIANCE COVERAGE

  1. Air Program Grants

  In auditing air program grants  (see EPA Regulations,  40 CFR 35.530), the  auditor
should determine that the sum rf*~ on-Federal recurrent expenditures made by the grantee
in the budget period for which ti. , grant was awarded is equal to or greater than the sum
of the grantee's recurrent expenditures during the fiscal year immediately preceding the
beginning of the current budget period. Recurrent expenditures are those expenditures not
considered nonrecurrent as defined by 40 CFR 35.501-8.
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  In some instances, prior to Fiscal Year 1973, EPA designated a certain amount of the
total non-Federal program budget as nonmatchable. This amount is stipulated on the
grant award document. In determining total allowable costs eligible for EPA participa-
tion, the nonmatchable non-Federal costs should be excluded.
  The auditor should determine that the matchable non-Federal recurrent costs of the
program are not less in any year than the total non-Federal recurrent expenditures were
for the applicant's air pollution control program in the applicant's fiscal year immediately
preceding  the beginning of the support period. (The support period is identified in the
grant award.)
  2. Water Program Grants
  In auditing water program grants (see EPA Interim Regulations 40 CFR 35.559-6), the
auditor  should  determine that recurrent  non-Federal  funds expended by the grantee
during the fiscal year in carrying out its water pollution control program as accepted by
audit, are  not less than the recurrent non-Federal expenditures made during Fiscal Year
1971 or the first year of Federal support, if such Federal  support was initiated subsequent
to the fiscal year ending June 30, 1971. EPA Office of Audit will provide the Fiscal Year
1971 expenditures that should be used as the base. When the grantee did not distinguish
between expenditures  under the incentive grant and  basic grant, the auditor should
determine whether the Fiscal Year 1971 base has been  met by performing the following
calculation:
      Total allowable expenditures per audit                             $
      Less: EPA base grant                                             	
           EPA incentive grant                                         	
      Non-Federal expenditures                                         $__

      Non-Federal Expenditures in Base year                            $	
  EPA awards incentive grants to fund key programs identified by the EPA annual
guidance. Generally, the state or interstate agency commits to produce certain outputs in
those key areas for which  incentive funds have been  provided.  The auditor should
determine, by review of EPA program evaluations, that programmed outputs have been
completed or substantially completed. In addition, the auditor should determine if EPA
made any  adjustments to incentive grants  as a result of the  grantee's failure to
substantially produce those outputs programmed.

4.8  MATCHING SHARE
  Generally, program funding will be provided by both EPA and its grantees. EPA Final
Grant Regulations,  40 CFR 30.720 require mandatory cost sharing for all projects for
which EPA grants are awarded. Except as required by statute, contributions made by the
grantee can be no less than 5 percent of the allowable actual project costs. Contributions
(non-Federal matching share) from the grantee may consist of  direct, in-kind contribu-
tions (see FMC 74-7, Attachment F), and allowable indirect costs. For grants awarded by
EPA, the cost sharing to be provided by grantees will vary depending on the type of grant
program.

  In performing the audit of project costs as described in Chapter 3: Audit of Costs, the
auditor will be reviewing both the grantee's and EPA's portion of the project. In reviewing
the grantee's portion, the auditor should ascertain the source of the non-Federal matching
share. Unless specifically authorized  by law, expenditures incurred  with Federal funds
may not  be considered  a part of the non-Federal matching share.
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  In addition, the auditor should be alert for instances where the non-Federal matching
share for the program under audit has been included as a matching share on any other
Federally assisted program.

  When volunteer services have been claimed as in-kind contributions, the auditor should
determine whether:

• volunteer services were provided to accomplish a normal part of the project;

• documentation has been maintained to support the number of hours charged to the
  grant and the type of service provided;

• rates charged are consistent with the regular rates  paid for similar work in other
  activities;

• rates charged for services required for Federally assisted activities and not found in the
  other activities of the grantee are consistent with those paid for similar work in the
  labor market in which the grantee competes for the kind of services involved; and

• rates charged for  services furnished by an employer other than the grantee are valued
  at the employee's regular rate of pay (exclusive of fringe benefits and overhead cost)
  provided that the  services are in the same skill for which the employee is normally paid.

  In addition, the auditor should determine whether the prices assessed to contributed
materials are not more than the cost of the materials to the donor or current market prices,
whichever is less, at the time they are charged to the project.

  The auditor should determine that the value of donated equipment or buildings was
based on the donor's cost less depreciation or the current market price of similar property,
whichever is less.

  When land or use of space has been claimed as an in-kind contribution, the auditor
should determine whether the value charged has been established by an independent
appraiser  (i.e.,  private realty firm or General Services Administration representatives)
and certified by the responsible official of the grantee.

  Finally, the auditor should determine whether the other charges claimed as in-kind
contributions were incurred specifically for and in direct benefit to the grant program and
were adequately supported and permissible under the law.
4.9   COMPUTATION OF FEDERAL SHARE

  The Federal share for any given grant can be defined as the percentage of total grant
expenditures in which EPA participates. This participation is usually in the  form of
Federal funds  awarded to a  grantee, however, it could include some other  form of
contribution to a grant program, such as personnel, equipment, or services,  paid for by
EPA and provided to the grantee. The maximum percentage of Federal participation in a
particular type of grant usually can be found in the Federal legislation under which the
grant was authorized. The maximum Federal share allowed  by  law, however, is  not
necessarily the percentage which a grantee is authorized to receive. Accordingly, the
auditor will have to determine what the Federal share  is for the particular grant being
audited. In the case of grants where the Federal share is set forth in the grant agreement
(award), the determination will be relatively easy. The auditor will only have to determine
that the Federal share stipulated is the same as or less than the maximum share allowed
by law. However, the auditor will encounter a number of grants where the Federal share is
not stipulated. In such instances, the auditor will have to calculate the Federal share.1 To
make this calculation, the auditor should first obtain a copy of the most recent grant
award document for the grant being audited. Using the information on the award
document, the  auditor should  perform the following Federal share computation:

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              CHAPTER 5:  EXIT CONFERENCE


  Through the course of the audit,  the auditors are expected to discuss deficiencies
disclosed during  audit, their effect,  and possible corrective actions  with responsible
officials of the audited parties. The primary purpose of these discussions is to ensure that
the audited parties had an opportunity to provide additional data with respect to the
problem areas identified during audit.
5.1  For audits with no findings or audits without significant findings the auditor should
notify the Area Audit Manager and then hold an exit conference with the audited party
(at the site or by telephone). When the audited party is a subcontractor, a separate or joint
exit conference may be held with the grantee and the subcontractor. If the audited parties
desire to provide written comments with respect to matters raised in the audit, they should
be furnished  a copy of the draft report and afforded the opportunity to provide written
comments.
5.2  For audits with significant findings the auditor should initially discuss the findings
with the Area Audit Manager by telephone. The auditor should then hold a preliminary
exit conference with the audited party to discuss the factual information disclosed during
the audit. It should be emphasized that the audit results and findings are tentative at that
point, and that they will be included in a draft report forwarded to the audited party for
written comment.
  The auditor should prepare his draft audit report, highlighting the costs considered
unallowable and other deficiencies disclosed  during the audit. The Area Audit Manager
should be promptly furnished a preliminary copy of the draft report. If after reviewing the
draft report, the Area Audit Manager agrees  that the deficiencies are significant, he will
meet with the responsible EPA program officials to brief th<-m of the situation. In addition
he shall require that the grantee and other  audited parties (such as those performing
under subagreements) be furnished a copy of the draft audit findings and conclusions to
enable review and written comment prior to the exit conference.

  After receipt of written comments from the audit td parties, the auditor will conduct an
exit conference with each of the responsible parti' s involved. Thus, exit conferences must
be held with the grantee and other parties having subagreements whose operations andlor
costs were audited.
5.3  The auditor's workpapers shall contain  the name of the auditor who conducted the
exit conference, the names and positions of grantee representatives, details of the matters
discussed, and a summary  of the reactions of the audited parties.
  A synopsis of the audited parties  reactions to the  conclusions and findings will be
included in  the  section of the audit report  entitled, "Comments on Compliance,
Performance, and Internal Controls." When written comments are obtained, they may be
included as an attachment to the report. The  auditor may also include any rebuttal
considered appropriate in light of the audited parties comments.
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             CHAPTER  6:   THE AUDIT REPORT


6.1  INTRODUCTION

  Audits of EPA grants may result in findings and recommendations concerning costs
questioned or deficiencies in the administration of the grant. For effective administration
of the grant program, it is imperative that audit reports contain all findings, observations,
conclusions, and recommendations resulting from the audit.

6.2  CONTENT AND FORMAT OF AUDITORS' REPORT

  The audit report will be prepared in accordance with the following instructions and in
the formats  shown in the Example Accountant's Reports and Exhibits and Schedules
contained at the end of this chapter.

  1. Scope Paragraph

    a. The scope paragraph will identify the grant audited and the period audited.

    b. The scope paragraph will also include a statement that the examination was made
in accordance with the EPA "Audit  Guide for EPA Grants (Other Than Construction
Grants)" and the GAO "Standards for Audit of Governmental Organizatior s, Programs,
Activities, and Functions." If conditions were encountered which preclude the inclusion of
such a statement, an appropriate statement will be prepared explaining  the nature of
conditions which required a deviation.

  2. Opinion

  The report will contain an opinion  as to the costs claimed under the EPA grant. Based
on the review of the reasonableness, allowability, and allocability  of costs claimed in
conjunction  with grant terms and conditions and applicable Federal  regulations, the
auditor will  classify costs as "accepted" or "questioned" in a separate schedule in the
report.

  3. Comments on Compliance, Performance, and Internal Controls

  The report will include a separate section relating to the compliance, performance and
internal control  reviews made during the examination. The report should include a
discussion of any deficiencies identified during the course of the audit.  In addition, the
report  must contain comments as  to the adequacy of the accounting system and
procurement system.

6.3  PRESENTING THE FINDINGS

  Audit findings, whether  they relate to costs questioned or grant administration
procedures, will be presented in sufficient written detail to ensure that report recipients
may readily:

• understand the finding;
• understand the basis for the finding;
• grasp the significance of findings not directly related to the costs questioned; and

• include management improvement recommendations as applicable.

6.4  AUDITOR'S REPORT ON SUBAGREEMENT COSTS

  Findings and recommendations concerning costs questioned or deficiencies disclosed in
the audit of subagreement costs will  be reported on in a separate Schedule.
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EXAMPLE AUDITOR'S REPORTS
              6.2

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                     EXAMPLE AUDITOR'S REPORT
   8-
   o
  GO
Area Audit Manager
Office of Audit
Environmental Protection Agency
Any City, U.SA.

We have examined the statement of costs claimed (Exhibit A) by the City of Anywhere,
U.S.A. under EPA Grant No. XXXX for the period (month, day, year) to (month, day,
year). Our  examination was made in accordance with the "Standards  for Audit of
Governmental Organizations, Programs, Activities, and Functions" the "Audit Guide for
EPA Grants (Other Than Construction Grants)" issued in February 1976 by EPA, and
accordingly  included such tests of the accounting records  and such other auditing
procedures as we considered necessary in the circumstances.

As part of our  examination, the allowability  of costs claimed under  the Grant  was
determined in accordance with the provisions of the Grant and applicable Federal
regulations. Schedule A-I sets forth the costs which we questioned in this regard and
includes an explanation of the reason such costs were questioned.
   o
  •a
  •a
   o
In our opinion subject to the effects, if any, on Exhibit A of the ultimate resolution by the
Environmental Protection Agency of the questionable expenditures  referred to in the
preceding paragraph,  Exhibit A presents fairly the financial information contained
therein in accordance with the financial provisions of the Grant and generally accepted
accounting principles.
II
In addition, in connection with our examination of the statement of costs claimed, we
have reviewed the Grantee's system of internal control and compliance with provisions of
the Grant and applicable Federal regulations. Our report thereon appears as Exhibit B.

This report is intended for use in connection with the grant to which it refers and should
not be used for any other purpose.
           DATE
        SIGNATURE
                                          6.3

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                                                                EXHIBIT A

                          City of Anywhere, U.SA.
            Statement of Costs Claimed Under EPA Grant No. XXXX
          For the Period (month, day, year) Through (month, day, year)

                                                                Costs
                                                                Claimed

   Personnel                                                  $1,225,373
   Indirect Costs                                                 122,537
   Equipment                                                   368,848
   Subcontracts                                                   94,473
   TOTAL COSTS                                             $1,811,231
   FEDERAL SHARE: 44 Percent                                $ 796,941

  EPA Grant No. XXXX was awarded to the City of Anywhere, U.S.A. on  (month, day,
year). The grant provided for "	". Work under the grant began
on (month, day, year) and was completed (month, day, year). See Schedule A-I through A-
3 for costs accepted and questioned during the audit.
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                                                                   Schedule A-l
                            City of Anywhere, U.S.A.
                             EPA Grart No. XXXX
               Statement of Costs Claimed, Accepted and Questioned
           For the Period (month, day, year) Through (month, day, year)
Description

Personnel
Indirect Costs
Equipment
Subcontracts
  Total Costs
          Audit Recommendation
  Costs      Costs      Costs
 Claimed   Accepted  Questioned
$1,225,373
122,537
368,848
94,473
$1,225,373
-0-
291,196
86,770
$ -0-
122,537
77,652
7,703
Reference
  Notes
                                      1
                                      2
                                      3
$1,811,231  $1,603,339   $207,892
Federal Share -
44 Percent
$  796,941  $  705.469 $ 91,472
Federal Funds
Provided
           $  814,000
Amount due to Government
or Grantee
           $  108,531
Reference Notes

1. The 10 percent indirect cost rate included in the grant was based on an indirect cost
rate proposal prepared, audited and negotiated with the Department of Health, Education
and Welfare for FY 1969. Since that date, the City had not prepared any indirect cost
proposals. The DHEW Guide for Local (government Institutions required local grantees to
prepare indirect cost proposals annually.  Such proposals should be retained for future
audit. Since the City had prepared no such proposals, it has not complied with Federal
requirements and accordingly is not entitled to indirect costs.

  Grantee officials indicated  that they were  unaware of the requirement to prepare
indirect cost proposals annually.
2. For an explanation of the amounts questioned, see comments included in  property
management section of the  comments  on Compliance,  Performance, and  Internal
Controls. Exhibit B.

3. Amounts accepted and questioned were based on an audit of the subcontractor's
records. See Schedule A-2.
                                      6.5

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                                                                   Schedule A-2
                               XYZ Corporation
                 Subcontract XXXX Under EPA Grant No. XXXX
              Statement of Costs Claimed, Accepted, and Questioned
           For the Period (month, day, year) Through (month, day, year)
                                              Audit Recommendation
                                                 Costs      Costs
Description                           Claimed   Accepted  Questioned
Personnel
Fringe Benefits
Indirect Costs
Travel
  Total Costs

Fee
 Costs
Claimed

$48,712
 13,152
 20,859
  5,000
$87,723

  6,750
                      Reference
                       Notes
$45,797
 10,067
 19,620
  4,536
$80,020

  6,750
$2,915
 3,085
 1,239
   464
$7,703

   -0-
ScheduleA-3
      1
      2
      3
  Total Costs Plus
    Fixed Fee

Funds Provided
           $94,473
Amount Due Grantee
           $ 7,703
Reference Notes

1. The Corporation claimed fringe benefits at a rate of 27 percent of direct payroll costs.
This rate covered vacation, sick leave, holidays, and the company's portion of payroll
taxes. In analyzing this rate, we noted that the company included the 13 days of sick leave
accrued each year. Since Corporation employees are not paid for sick leave unless it is
taken, the accrual does not represent an actual cost. Accordingly, we adjusted the fringe
benefit rate  by removing the accrual and adding  in the actual sick leave taken. This
reduced the Corporation's fringe benefit rate to 22 percent. We then calculated allowable
fringe benefits as follows:
                                      6.6

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                                                                     Schedule A-2
    Claimed: 27 percent of $48,712                                          $13,152
    Accepted: 22 percent of $45,761*                                          10,067
    Questioned                                                            $ 3,085

    * Amount of accepted personnel costs.

 Corporation officials agreed with the adjustment to the fringe benefit rates.

 2. Indirect costs were claimed at the fixed rate of 42 percent of direct labor included in the
 subcontract. Amounts  questioned were computed as follows:

    Claimed: 42 percent of $48,712                                          $20,459
    Accepted: 42 percent of $45,761*                                          19,220
    Questioned                                                              $1,239

    * Accepted personnel costs

 3. The  Corporation's  administrative procedures provide a per diem  rate  of $25 for
 overnight travel. In several instances, travelers were reimbursed for actual subsistence
 expense which exceeded the per diem allowance. The subsistence costs in excess of the per
 diem are unallowable in  that the costs  were not incurred in  accordance with the
 Corporation's normal practices. The total of $464 of unallowable travel costs were charged
 to the EPA subcontract.

  Details of the unallowable claims  are shown as follows:

                                                      Maximum   Unallowable
                                No. of                  Using       Travel
Employee     Date of Trip      Days    Subsistence   Per Diem       Cost

    A      May 1-5, 1973         4%        $166.82      $118.75      $ 48.07
    B      May 24-30, 1973        6          382.54       150.00       232.54
    C      Mar 20-25,  1974       5V6         291.66       137.50       154.16
    D      Mar 14-16,  1974       2%          85.70        56.25        29.45
Total                                       $926.72      $462.50      $464.22

Corporation officials told us that the maximum per  diem  was not applied because trips
were made to high cost areas.
                                       6.7

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                                                                   Schedule A-3

                                XYZ Corporation
                 Subcontract XXXX Under EPA Grant No. XXXX
                            Analysis of Payroll Costs

                    Payroll         Payroll          Payroll
                     Costs           Costs           Costs            Reference
Individual          Claimed        Accepted       Questioned         Notes

    A              $14,897          $13,428         $1,469               1
    B               14,911           14,430            481               2
    C               11,043           10,225            818               3
    D                3,199            3,052            147               4
    E                3,257            3,257            -0-
    F                1,405            1,405            -0-

Total               $48,712          $45,797         $2,915

Reference Notes

1. Mr. A was employed full time at a salary of $10,500 per annum. Mr. A is a professional
employee who receives no overtime. His salary was charged to the subcontract at $5.05 an
hour, $10,500 -: 2080 hours. Our analysis of Mr. A's salary claims for FY 1973 and FY 1971
are as follows:

  FY 1973

  Claimed: 2,350 Hours @ $5.05/Hr.,                                 $11,867
  Accepted:  Total Salary Paid Mr. A                                  10,500
    FY  1973 Questioned                                                    $1,367
  FY  1974

  Claimed: 600 Hours @  $5.05/Hr.,                                    $3,030
  Accepted:  During 1974  Mr. A worked 2,150 hours, by
            dividing 2,150 hours into Mr. A's salary,
            $10,500, we computed an actual salary of
            $4.88/hr - 600 Hours @ $4.88/Hr.,                          2,928
    FY  1974 Questioned                                                    $  102
Total Questioned                                                          $1,469

2. In FY 1973, Mr. B's time records showed only 1,450 hours spent on the subcontract. We
have questioned the 100 hours claimed in excess of that amount using the hourly salary
rate claimed by the subcontractor.

  100 Hours @ $4.81/Hr.,                                                   $  481

3. In FY 1974, Mr. C's time records showed only 1,300 hours spent on the subcontract. We
have questioned the 200 hours claimed in excess of that amount using the hourly salary
rate claimed by the subcontractor.

  200 Hours @ $4.09/Hr.,                                                   $  818
                                      6.8

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4. Mr. D was employed full time at a salary of $9,500 per annum. Mr. D is a professional
employee who receives no overtime. His salary was charged to the subcontract at $4.57 an
hour, $9,500 -: 2080 hours. Our analysis of Mr. D's salary claims are as follows:

  FY 1973
  Claimed: 700 hours @ $4.57/Hr.,                                   $3,199
  Accepted:  During 1973 Mr. D worked 2180 hours,
            by dividing  2180 hours into Mr. D's salary,
            $9,500, we computed an actual salary of
            $4.36/hr. - 700 hours @  $4.36/Hr.,
    Questioned

Corporation officials indicated that Mr. A and Mr. D had put in extra time and that they
did intend to pay them for this time. They agreed however that the claims for Mr. B and
Mr. C had inadvertently been overstated.

  (While the Corporation may have intended to pay Mr. A and Mr. D for their overtime, no
action had been taken to do so. There were no accruals of other liabilities established to
indicate that payment would be made.)
                                      6.9

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                                                                     EXHIBIT B
                         CITY OF ANYWHERE, U.S.A.
                           EPA GRANT NO. XXXXX
COMMENTS   ON    COMPLIANCE,   PERFORMANCE,
                  AND INTERNAL CONTROLS


  As part of our examination, we reviewed and tested the grantee's system of internal
accounting controls to the extent we considered necessary to evaluate the  system as
required by generally accepted auditing standards. Under these standards the purpose of
such evaluation is to establish a basis for reliance thereon in determining the nature,
timing, and extent of other  auditing procedures that  are necessary for expressing an
opinion on the financial reports. The objective of internal accounting control is to provide
reasonable, but not absolute, assurance as to the safeguarding of assets against loss from
unauthorized use or  disposition, and the reliability of financial records for preparing
financial  statements  and maintaining  accountability for assets.  The  concept of
reasonable assurance recognizes that the costs of a system of internal accounting controls
should not exceed the benefits derived and also recognizes that the evaluation of these
factors necessarily requires estimates and judgments by management.
  There are inherent limitations that should be recognized in considering the potential
effectiveness of any system of internal accounting controls. In the performance of most
control procedures, errors can result from misunderstanding of instructions, mistakes of
judgment, carelessness, or other personal factors. Control procedures whose effectiveness
depends upon  segregation of duties can be circumvented by collusion. Similarly, control
procedures can be circumvented intentionally by management either with respect to the
execution and recording of transactions or with respect to the estimates and judgments
required in the preparation of financial statements. Further, projection of any evaluation
of internal accounting controls to future periods is subject to the risk that the  procedures
may become  inadequate  because  of  changes in conditions  and that the degree of
compliance with the procedures may deteriorate.

  The Audit Guide for EPA Grants (Other Than Construction Grants) issued February
1976 by the -Environmental Protection Agency requires a review and evaluation of the
adequacy of the accounting system and internal controls to safeguard assets, check the
accuracy  and reliability  of the accounting  data, promote operating  efficiency, and
encourage compliance with prescribed management policies and such additional fiscal,
accounting, and administrative requirements as EPA may establish. We understand that
procedures in conformity with the criteria referred to in the aforementioned Audit Guide
are considered by EPA to be adequate for its purposes in accordance with the Audit Guide
and that procedures that are not in conformity therewith indicate some inadequacy for
such purposes. Based on this understanding and on our study, we believe that the City's
procedures were inadequate for the purposes of EPA because of the conditions described
below, which we believe are material weaknesses in relation to the grant to which this
report refers. In addition to such weaknesses, other conditions which we believe are not in
conformity with the criteria referred to above are described on the following pages.
                                      6.10

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GRANTEE'S PERFORMANCE
  In June 19XX, EPA terminated this grant. The close-out report prepared by program
officials stated:

  "Because of the poor performance record and because continuation of this program did
  not support the immediate objectives of the FY 19XX program, we determined that we
  could not justify continuation of this program. It was decided to inform the grantee that
  the project  would be  terminated and  that a  final report  should be  submitted
  documenting all data and progress to date.
  "This office requested that the grantee submit a final technical report including the
  Phase I interim report updated to include a description of all field work conducted and
  data collected. The  Phase  I report,  as  submitted,  covers project  planning and
  preliminary laboratory analysis in preparation for the field studies. Record-keeping and
  reporting on the field activities is totally inadequate. It appears that with the exception
  of the Phase I report the grantee dumped out his files, correspondences and all, and
  bound them with a cover titled final report. Unfortunately, adequate technical records of
  the field work are not believed to exist and personnel connected with the project left the
  grantee's organization  before or within several weeks  after the 'Final Report' was
  submitted. It is recommended that the 'Final Report' not be published."
  Since the EPA grant was awarded to accomplish specific objectives, the acceptability of
the work performed becomes critical in the determination of whether or not the grantee
has earned his  grant. In this instance, the program official's close-out report raised
considerable doubt as to the acceptability of work performed. The report did not, however,
indicate whether the grantee's "Final Report" was acceptable or sufficient  competent
work was performed by the grantee to earn the total EPA grant.
  Recommendation: We recommend that  EPA obtain  a determination as  to  the
acceptability of the grantee's work under this grant from responsible program officials
prior to closing out the grant.  If EPA decides that the work was not acceptable, they
should establish the value of work actually performed.
GRANTEE'S ACCOUNTING SYSTEM
  Several improvements to the accounting system are necessary in order for it to be
considered adequate. Specifically, these are the maintenance of time and attendance
records, and initiation of a procedure to provide an appropriate review and authorizing
signature on all "memo invoices" forwarded to the accounting division for payment.
  There were no formal procedures for maintenance of time and attendance records at the
time of our audit. Even though the personnel working at the Agency are employed solely
for grant work, a record of time and attendance is necessary for annual and sick leave
purposes and as a  matter of good business practice.
  The personnel working under the grant were hired as independent consultants. As such,
a "memo invoice" was prepared for each employee every pay period by the administrative
assistant. These "memo invoices" were then forwarded to the accounting division where
individual pay checks were prepared and the expenditures recorded on the accounting
records. At the time of our audit, there was no procedure in effect for a review of these
invoices, or an authorizing signature by the Administrator of the Agency. As a result, the
administrative assistant was preparing the documentation for payment of all pay checks,
including her own,  as well as other miscellaneous payments, and the accounting division
made payment without further verification. In order to ensure proper internal control and
                                      6.11

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protect all employees involved, "memo invoices" should be reviewed by the Administrator
and an authorizing signature affixed, prior to payment.

  Recommendation: We recommend that the grantee be required to implement procedures
to assure that time and attendance records are maintained to strengthen internal controls
over processing of "memo invoices."

  Grantee's Comments: Grantee officials indicated a willingness to make the suggested
changes.

GRANTEE'S PROCUREMENT SYSTEM

  The  City did  not  go  through a competitive  selection  process  in  hiring their
subcontractor. Instead, they simply hired the XYZ Corporation with whom they had done
previous business. In addition, no reviews were made to determine whether the $100,000
cost proposed by the Corporation under their cost plus fixed fee contract was reasonable.
Thus, the procurement was not made in accordance with FMC 74-7.
  Recommendation: We recommend that  the grantee be informed of the necessity of
adhering to the procurement requirements contained in FMC  74-7. In this regard, they
should be made aware that in the future the failure to adhere to such requirements may
result in the total costs of subcontracts  being disallowed.

  Grantee's Comments: Grantee officials indicated that  they would request a copy of
FMC 74-7 and assure the adequacy of their procurement  methods.
GRANTEE'S PROPERTY MANAGEMENT

  At the termination of the grant, the grantee did not properly account for  $368,848 of
  luioment purchased with oroiect funds.
equipment purchased with project funds.
  On September 21, 19XX, EPA's Grants Administration Division sent a letter to the
grantee concerning the actions needed with respect to the termination of the project. The
letter stated:

  "In accordance with Agency Interim Grants Regulations, you are required to submit to
  this office ... a listing of all items of equipment acquired with grants funds with an
  acquisition cost of $300 or more and having a useful life of more than one year. This
  listing should include a complete description  of the  equipment,  original date of
  purchase, original cost, an estimate of the current value and condition as well as your
  recommendation as to the disposition of each item of equipment. A negative report
  would aid in closing out your project  if there are no applicable equipment items."
  On November 12, 19XX, responsible representatives of the grantee responded that:
  "To the best of my knowledge, there is nothing on inventory that would  meet the
  requirements of your letter of September 21."
  In reviewing the City's accounting records, we found, however, that this response was
incorrect. As  shown on Exhibit B, the City had actually acquired 14 such  pieces of
equipment with $368,848 of project  funds. At the  time of our review they had already
disposed of 11 pieces of the equipment. In this regard we noted that one piece of equipment
had been scrapped; three pieces of equipment had been sold for $3,275; and seven pieces of
equipment valued at $62,376 have been traded in on new equipment.
  By relating EPA's portion of the project costs to  the total project costs, we determined
that EPA provided 44 percent of the project costs. Thus, EPA's interest in the property, as
computed in accordance with Paragraph 3c of FMC Circular 74-7 would be 44 percent of
the equipment's current fair market value of $77,652.


                                      6.12

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  Recommendation: We recommend that EPA take appropriate action to recover the
Federal share of the fair market value of the equipment purchased with project funds.

  Grantees Comments: We discussed this matter with representatives of the grantee who
indicated that they had misinterpreted GAD's letter and actually believed that the listing
of equipment was to be furnished to the auditor at the time of audit. In addition, they
pointed out that the equipment still on hand, as well as the equipment acquired under the
trade-in, was being used at other municipal landfills.

SUBCONTRACTOR'S PERFORMANCE

  The  Corporation completed its  work and  submitted its  final  report to the City of
Anywhere, U.S.A. on May 15, XXXX. According to correspondence, City officials accepted
this report and thanked the Corporation for its excellent work.

SUBCONTRACTOR'S ACCOUNTING SYSTEM

  Several improvements in the Corporation's accounting system are needed in order for it
to be considered fully  adequate.

  The Corporation must establish procedures to adjust the payroll billing rates to reflect
the actual cost of work performed. When professional employees are not paid for overtime
hours,  the salary charges should be computed by dividing the employees salary by the
hours actually worked.

  Improved reconciliation procedures are needed to assure that salary charges are based
upon labor distribution records which tie with the Corporation's  payroll. This will help
prevent unsupported or inappropriate salary charges.

  In computing its fringe benefits rate, the Corporation should include only the costs of
sick leave actually expended. This will help prevent the over-recovery of fringe benefits
costs.

  Recommendation: We recommend that the contractor implement procedures to assure
that:

    (1) Salary charges are based on actual salary costs divided by actual hours worked;

    (2) salary  costs are properly supported by appropriate time records; and
    (3) fringe benefits rates be computed exclusive of accrued sick leave.

  Subcontractor's Comments: Subcontractor officials gave no indication as to whether or
not they would take the required corrective actions.

  Grantee's Comments: The grantee concurred with the audit finding and recommenda-
tion.

SUBCONTRACTOR'S PROCUREMENT SYSTEM

  Since no items were purchased under this subcontract, no review was made of the
Corporation's procurement system.

SUBCONTRACTOR'S PROPERTY MANAGEMENT

  Since no equipment has been purchased under Federal grants or contracts, no review
was made of the Corporation's property management system.
                                      6.13

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                    EXAMPLE AUDITOR'S REPORT
      Area Audit Manager
      Office of Audit
      Environmental Protection Agency
      Any City, U.S.A.

      We have examined the statement of costs claimed (Exhibit A) by the City of Anywhere,
      U.S.A. under EPA Air Program Grant No. XXXX for the period (month, day, year) to
      (month, day, year). Our examination was made in accordance  with the "Standards for
  §•  Audit of Governmental Organizations, Programs, Activities, and Functions" and "Audit
      Guide for EPA Grants (Other Than Construction Grants)" issued February 1976 by EPA,
      and accordingly included such tests of the accounting records  and such other auditing
      procedures as we considered necessary in the circumstances.
      As part of our examination, the allowability  of costs claimed under the Grant  was
      determined in accordance with the  provisions of the Grant  and applicable Federal
      regulations.  Schedule A-l sets forth the costs which we questioned  in this regard and
      includes an explanation of the reason such costs were questioned.


      In our opinion subject to the effects, if any, on Exhibit A of the ultimate resolution by the
  §   Environmental  Protection Agency of the questionable  expenditures  referred to in the
      preceding paragraph, Exhibit A presents  fairly the financial information contained
      therein in accordance with the financial provisions of the Grant and generally accepted
      accounting principles.

      In addition, in connection with our examination of the statement of costs claimed, we
      have reviewed the Grantee's system of internal controls and compliance with provisions
§ i3  of the Grant and applicable Federal regulations. Our report thereon appears as Exhibit B.

'53 fa  This report is intended for use in connection with the Grant to which it refers and should
«! g  not be used for any other purpose.
 -On
            DATE
        SIGNATURE
                                         6.14

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                                                                 EXHIBIT A
                          City of Anywhere, U.S A.
                            EPA Grant No. XXXX
                         Statement of Costs Claimed
           For the Period (month, day, year) Through (month, day, year)
                                                                      Costs
                                                                    Claimed
  Personnel                                                         $  937,562
  Equipment                                                           46,462
  Supplies                                                             31,813
  Travel                                                               14,099
  Consultation & Services                                                48,984
  Alterations & Rennovations                                             4,241
  Tuition                                                               1,262
  Other                                                                56,261
  TOTAL COSTS                                                    $1,140,684
  FEDERAL SHARE:                                                $  657,814

  EPA Air Program Grant No. XXXX was awarded to the City of Anywhere U.S.A. on
(month, day, year). The grant provided for "	". This project grant covers the
period from (month, day, year) through (month, day, year). See Schedule A-l for costs
accepted and questioned during the audit.
                                   6.15

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                                                                    Schedule A-l
                             City of Anywhere, U.S.A.
                              EPA Grant No. XXXX
               Statement of Costs Claimed, Accepted, and Questioned
            For the Period (month, day, year) Through (month, day, year)

                                               Auditor's Recommendations
                                       Costs      Costs       Costs     Reference
Description                          Claimed   Accepted  Questioned   Notes

Personnel                            $  937,562  $  937,562    $
Equipment                             46,462     46,462
Supplies                                31,813     31,813
Travel                                  14,099     14,099
Consultation & Services                  48,984     48,984
Alteration & Renovations                 4,241      4,241
Tuition                                  1,262      1,262
Other                                  56,261     43,895     12,366            1

  Total                              $1,140,684  $1,128,318    $12,366
Federal Share                        $ 657,814  $ 595,978   $ 6,532            2

Federal Funds Provided                          $ 660,000

Amount Due Government                        $  64,022


Reference Notes

1. The costs questioned under the"Other" category consist of $12,166 in refunds of fees and
$200 paid to a real estate firm.
  In our opinion, the fees refunded should be considered as a reduction of income from fees
received and not as project maintenance expense.
  The amount paid to the real estate firm is considered a real estate acquisition cost which is
an unallowable charge under FMC 74-4. Grantee officials agreed with costs questioned.
2. The Federal share reported by the grantee of $657,814 represented 57.67 percent of total
costs reported. The grant agreement, however, limited the Federal share to 52.82 percent of
total approved costs, resulting in the Federal share questioned as shown.
  Grantee officials disagreed with our calculation of Federal share. They pointed out that
the law permitted a grant of up to 60 percent of total eligible costs. We explained that the
grant was offered and accepted with the percentage limitations. Also, that the Office of
Audit has no authority to change the conditions of the grant. Such authority may only be
exercised by those officials responsible for the award and administration of the grant.
                                      6.16

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                                                                    EXHIBIT B
                            City of Anywhere, U.S.A.
                             EPA Grant No. XXXX
COMMENTS ON COMPLIANCE, PERFORMANCE, AND
                      INTERNAL CONTROLS


  As part of our examination, we reviewed and tested the grantee's system of internal
accounting controls to the extent we considered necessary to evaluate the system as
required by generally accepted auditing standards. Under these standards the purpose of
such evaluation is to establish a basis for reliance thereon in determining the nature,
timing, and extent of other auditing procedures that are necessary for expressing an
opinion on financial reports.
  The objective of internal accounting control is to provide reasonable, but not absolute,
assurance as  to the safeguarding of assets  against loss from unauthorized use or
disposition, and the reliability of financial records for preparing financial statements and
maintaining accountability for assets. The concept of reasonable assurance recognizes
that the costs of a system of internal accounting controls should not exceed the benefits
derived and also recognizes that the evaluation of these factors necessarily requires
estimates and judgements by management.

  There are inherent limitations that should be recognized in considering the potential
effectiveness of any system of internal accounting controls. In the performance of most
control procedures, errors can result from misunderstanding of instructions, mistakes of
judgement, carelessness,  or other personal factors. Control procedures whose effectiveness
depends upon segregation of duties can be circumvented by collusion. Similarly, control
procedures can be circumvented intentionally by management either with respect to the
execution and recording  of transactions or with respect to the estimates and judgements
required in the preparation of financial statements. Further, projection of any evaluation of
internal accounting controls to future periods is subject to the risk that the procedures may
become inadequate because of changes in conditions and that the degree of compliance
with the  procedures may deteriorate.

  The Audit Guide for EPA Grants (Other Than Construction  Grants) issued February
1976 by the Environmental Protection Agency requires a review and evaluation of the
adequacy of the accounting system and internal controls to safeguard assets, check the
accuracy  and reliability of the  accounting data, promote operating efficiency, and
encourage compliance with  prescribed management policies and such additional fiscal,
accounting, and administrative requirements as EPA may establish. We understand that
procedures in conformity with the criteria referred to in the aforementioned Audit Guide are
considered by EPA to be adequate for its purposes in accordance with the Audit Guide and
that procedures that are not in conformity therewith indicate some inadequacy for such
purposes. Based on this  understanding and on our study,  we believe that the County's
procedures were adequate for the purposes of EPA except for the conditions described
below, which we believe are material weaknesses in relation to the grant to which this
report refers. In addition to such weaknesses, other conditions which we believe are not in
conformity with the criteria referred to above are described on the following pages.
PERFORMANCE

  According to Region I's evaluation of the Grantee's air program, the City has one of the
best air  pollution control programs in  the  Region. No significant weaknesses were
discussed in the Region's evaluation report.


                                      6.17

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ACCOUNTING SYSTEM

  Based upon our review, we have determined that the Grantee's accounting system is
adequate to account for costs incurred under the EPA grant.
PROCUREMENT SYSTEM

  The procurements made under the grant were handled in accordance with the City's
normal procurement practices and such practices were found to be in conformance with
FMC 74-7.
PROPERTY MANAGEMENT

  In reviewing property management, we found that the Grantee's procedures were in
accordance with EPA regulations. Our tests indicated that these procedures were being
followed.
                                     6.18

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             APPENDIX A
EPA FINANCIAL ASSISTANCE PROGRAMS
                 A.I

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       ENVIRONMENTAL PROTECTION AGENCY


     OFFICE  OF AIR AND WASTE MANAGEMENT


          66.001 AIR POLLUTION CONTROL PROGRAM GRANTS

FEDERAL AGENCY: OFFICE OF AIR AND WASTE MANAGEMENT, ENVIRON-
   MENTAL PROTECTION AGENCY
AUTHORIZATION: Sections 105 and 106, Clean Air Act of 1963; Public Law 88-206 as
   amended by Public Law 91-604; 42 U.S.C. 1857c.
OBJECTIVES: To assist State, municipal, intermunicipal, and interstate agencies in
   planning, developing, establishing, improving, and maintaining adequate programs
   for prevention and control of air pollution or implementation of national primary and
   secondary air quality standards.
TYPES OF ASSISTANCE: Project Grants.
USES  AND USE  RESTRICTIONS: Grant funds may be used for costs specifically
   incurred in the conduct of a project in accordance with the purposes enumerated in the
   approved application. These include personnel costs, supplies, equipment, training of
   personnel, travel, and other necessary expenditures during the approved project period.
   Funds may not be used for construction of facilities, nor for expenses incurred other
   than during each approved award period.
ELIGIBILITY REQUIREMENTS:
  Applicant Eligibility: Any municipal, intermunicipal, State, or interstate agency with
   legal responsibility for air pollution control is eligible for grant support provided such
   organization furnishes funds for the current year in excess of its expenditures for the
   previous year for its air pollution program.
  Beneficiary Eligibility: Same as applicant eligibility.
  Credentials/Documentation:  The  application  must  supply  evidence  of legal
   authority for air pollution control; evidence of the availability of non-Federal matching
   funds; and  a workable program officially adopted for the agency. A State Plan,
   coordinated with the Governor's office, is required under Part III of OMB Circular No.
   A-95 (revised).
APPLICATION AND AWARD PROCESS:
  Preapplication Coordination: Prior to approval of any grants, the official State air
   pollution control agency must coordinate local efforts. The standard application forms
   as  furnished by the EPA and required by FMC 74-7 must be used for this program.
  Application Procedure: Requests for application forms and completed applications
    should be submitted to the appropriate EPA Regional Grants Administration Branch.
   Application must meet the requirements of the grant regulations and will be reviewed
    to determine merit and relevancy of the proposed project.
  Award Procedure: Notification of grant award must be made to the State Central
   Information Reception Agency and Department of Treasury on SF 240.
  Deadlines: None.
  Range of Approval/Disapproval Time: 90 to 120 days.
  Appeals: None.
  Renewals: None.
ASSISTANCE CONSIDERATIONS:
  Formula and Matching Requirements: For State, interstate and intermunicipal
    programs with an approved applicable State Implementation Plan may receive up to 75
    percent Federal, others 66 2/3 percent Federal. The amount of Federal share of grant
    costs should be determined by reference to the entitlement criteria set forth in Section


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    105 of the Act. Not more than 10 percent of the funds available shall be granted for air
    pollution control programs in any one-State.
  Length and Time Phasing of Assistance: The term of grant shall be determined at
    time of grant award.
POST ASSISTANCE REQUIREMENTS:
  Reports: As specified in grant award (usually quarterly interim and final progress and
    expenditure reports).
  Audits: Subject to inspection  and audit by EPA and Comptroller General.
  Records: Financial records, including all documents to support entries on accounting
    records and to substantiate charges to each grant, must be kept available to personnel
    authorized to examine EPA grant accounts. All records must be maintained for 3 years
    after the end of each budget period, and if questions still remain, such as those raised as
    a result of audit, related records should be retained until the matter is completely
    resolved.
FINANCIAL INFORMATION:
  Account Identification: 20-00-0108-0-1-404.
  Obligations:  (Grants) FY 73 $46,800,000;  FY  74  est $48,500,000;  and FY 75 est
    $48,500,000.
  Range and Average of Financial Assistance: $5,000 to $2,515,000; $201,700.
PROGRAM ACCOMPLISHMENTS:  During fiscal  year  1973, 232 grants, totaling
    $46,800,000 were awarded to  State, local, and regional air pollution control agencies to
    develop, establish, improve and maintain air pollution control programs.
REGULATIONS,   GUIDELINES,  AND LITERATURE:  Air Pollution  Control
    Program Grants, EPA Federal Register, Vol. 39, No. 41, 40 CFR 35; General Grant
    Regulations and Procedures, EPA, Federal Regulations, Vol. 36, No. 228, 40 CFR 30.
INFORMATION CONTACTS:
  Regional or Local Office: Contact  appropriate EPA Regional Administrator.
  Headquarters Office: For program information: Control Programs Development
    Division,  Air Quality  Planning and Standards,  Air  and Waste Management,
    Environmental Protection Agency, Research Triangle Park, NC 27711.
RELATED PROGRAMS: 66.002, Air Pollution Fellowships; 66.003, Air Pollution
    Manpower Training Grants; 66.501, Air Pollution Control Research Grants; 66.005,
    Air Pollution Survey and Demonstration Grants;  11.404,  Weather Forecasts and
    Warnings.

         66.002 AIR POLLUTION  FELLOWSHIPS


FEDERAL AGENCY: OFFICE OF AIR AND WASTE MANAGEMENT, ENVIRON-
    MENTAL PROTECTION AGENCY
AUTHORIZATION: Section 103 of the Clean Air Act, 42 U.S.C. 1857b. Public Law 88-
    206, as  amended by Public Law 91-604.
OBJECTIVES:  To encourage  and promote the specialized  training of individuals as
    practitioners in pollution abatement and control. Agency fellowships  for full-time
    study are awarded to present or prospective employees of a regional, State or local
   t environmental  pollution control or  regulatory agency to provide training for and
    upgrading of personnel in  the areas of pollution abatement and control.  Agency
    fellowships for  part-time study  are awarded only to personnel presently employed in
    an Agency. Special fellowships are awarded to individuals for study in specialty areas
    which are supportive of pollution abatement and control efforts.
TYPES OF ASSISTANCE: Project Grants.
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USES AND USE RESTRICTIONS: Recipients of assistance under this part shall be
    entitled to tuition and fees, an allowance for books and supplies up to a maximum of
    $250, and the normal student holidays observed by an  academic institution. In
    addition, full-time fellows who are employees of regional, State or local environmental
    pollution control or regulatory agencies may receive a stipend in an amount not to
    exceed $6,500 from EPA. Part-time fellows may receive a small stipend when justified
    by needs related to the purpose of the fellowship.
ELIGIBILITY REQUIREMENTS:
  Applicant Eligibility: All applicants  for fellowships under this part must be (a)
    citizens of the United States, its territories, or possessions, or lawfully admitted to the
    United States for permanent residence, and (b) accepted by an accredited educational
    institution for full- or part-time  enrollment for academic credit in an educational
    program which, for agency fellowships, directly relates to  pollution abatement and
    control, and for special fellowships, directly relates to, or is supportive of, pollution
    abatement  and control.  Applicants for  agency fellowships must be present or
    prospective  employees of a regional, State, or local environmental pollution control or
    regulatory agency. Present employees must be recommended for a fellowship by their
    employing agency. Priority in award of fellowships to prospective agency employees
    will be given to those applicants who provide evidence of having explored by direct
    agency contact, opportunities for employment. Such evidence may include written
    appraisal of their employment potential and statement of probability of employment
    with the agency upon completion of the training.
  Beneficiary  Eligibility: Same as applicant eligibility.
  Credentials/Documentation: Applicant must submit evidence of past  academic
    achievements (official transcripts of grades and  degrees awarded), scores  from
    graduate record exams, and pertinent experience, as well as evidence of having made
    necessary prior acceptance arrangements at the institution of his choice and with a
    sponsor who will guide his studies.
APPLICATION AND AWARD PROCESS:
  Preapplication Coordination: None.
  Application  Procedure: Requests for application forms and completed applications
    should be  submitted to  the Washington,  DC, Grants  Administration  Division
    headquarters office.
  Award Procedure: Each application shall be subjected to administrative evaluation
    to determine  adequacy of the application in relation to grant regulations and to
    technical and program evaluation to determine merit and relevancy of the project.
  Deadlines: Applications should be submitted six months in advance of the academic
    period in which the study would begin. Agency fellows may commence study at any
    semester or quarter of the academic year. Fellowships study must be initiated within
    six months of award or will be terminated. Special fellows may commence study only
    at the fall semester or quarter.
  Range of Approval/Disapproval Time:  90 to  120  days prior to the desired
    commencement date.
  Appeals: None.
  Renewals: None.

ASSISTANCE CONSIDERATIONS:
  Formula and Matching Requirements: None.
  Length and Time Phasing of Assistance: The term of grant shall be determined at
    time of award.
POST ASSISTANCE REQUIREMENTS:
  Reports: Such reports as specified in grant agreement.
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  Audits: Fellowships are subject to inspection and audit by representatives of EPA and
    the Comptroller General.
  Records: None.
FINANCIAL INFORMATION:
  Account Identification: 20-00-0108-0-1-404.
  Obligations:  (Grants) FY 73 $370,000; FY 74 est $400,000; and FY 75 est $400,000.
  Range and Average of Financial Assistance: $1,000 to $10,000; $6,250.
PROGRAM ACCOMPLISHMENTS: In fiscal year 1973, 59 fellowships were funded
    and 17 individuals completed graduate studies. During fiscal year 1974, EPA expects
    to fund 40 full-time and 20 part-time agency fellows and 10 new and 5 continuations
    in specialty  areas.
REGULATIONS, GUIDELINES, AND LITERATURE: All  information included in
    application kit. Training Grants and Fellowships (Final Regulations), Environmen-
    tal Protection Agency No.  778 (40 USC 45, 46); General Grant Regulations and
    Procedures,  EPA Federal Register, Vol. 36, No. 2286 (40 CFR 30). Vol. 38, Federal
    Register.
INFORMATION CONTACTS:
  Regional  or  Local Office:  Individuals  are encouraged to communicate with the
    appropriate  EPA Regional Administrator.
  Headquarters Office: For information concerning grant applications and procedures
    contact Environmental Protection Agency, Grants Administration Division, Wash-
    ington, DC  20460. For program  information contact Control Programs Develop-
    ment Division, Office of Air Quality Planning and Standards, Office of Air and Waste
    Management, Environmental Protection Agency, Research Triangle Park, NC 27711.
    Telephone: (919) 549-8411, Ext. 2492.
RELATED PROGRAMS: 66.001, Air Pollution Control Program Grants; 66.003, Air
    Pollution Manpower Training Grants; 66.501, Air Pollution Control Research Grants;
    66.005, Air Pollution Survey and Demonstration Grants.

66.003 AIR   POLLUTION   MANPOWER   TRAINING
                                GRANTS


FEDERAL AGENCY: OFFICE OF AIR AND WASTE MANAGEMENT, ENVIRON-
    MENTAL PROTECTION AGENCY
AUTHORIZATION: Section 103 of the Clean Air Act; Public Law 88-206, as amended
    by Public Law 91-604; 42 U.S.C. 1857b.
OBJECTIVES: To develop career-oriented personnel qualified to work in pollution
    abatement and control. Grants are awarded to assist in planning, implementing, and
    improving environmental training programs; increase the number of adequately
    trained pollution  control and abatement personnel; upgrade the level of training
    among State and local environmental control personnel; bring new people into the
    environmental control field.
TYPES OF  ASSISTANCE: Project Grants.
USES AND USE RESTRICTIONS: In addition to the EPA general grant conditions 40
    CFR 45,  each training grant is subject to the following conditions: (a) The grantee
    shall not require the performance of personal services by  individuals receiving
    training  as  a condition for  assistance, (b) Recipients of assistance under training
    grants shall be entitled to  the normal student holidays observed by an academic
    institution or the holiday  and vacation schedule applicable to all trainees at a
    nonacademic institution, (c) Recipients of assistance under training grants must be
    citizens of the U.S., its territories, or possessions or lawfully admitted to the U.S. for
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    permanent residence, (d) Generally training grants will provide for student only
    through scholarships. Stipends are permitted when, in the judgement of the grantee,
    they are needed to attract qualified students provided that not more than $20,000 may
    be used for such stipends within a budget period and further provided that no stipend
    may be less than $1,000 or more than $3,000. For additional statement of conditions,
    see Vol. 38, Federal Register, June 20, 1973.
ELIGIBILITY REQUIREMENTS:
  Applicant Eligibility: Section  103(b)(3): Air Pollution control agencies, public and
    non-profit  private agencies, institutions, organizations, and individuals. Section
    103(b)(5): Personnel of air pollution control agencies and other qualified persons. No
    grant may be made under this Act to any profit-making organization.
  Beneficiary Eligibility: Same  as applicant eligibility.
  Credentials/Documentation:  None.
APPLICATION AND AWARD  PROCESS:
  Preapplication Coordination: The standard  application forms are furnished  by
    EPA. Standards  of  FMC  74-7  only  apply  to  State and local  governments.
  Application Procedure: Requests for application forms and completed applications
    should be  submitted  to the  Washington, DC Grants Administration Division
    headquarters office listed below.
  Award Procedure: Each application shall be subjected to administrative evaluation
    to determine the adequacy of the application in relation to grant regulations and to
    technical and program evaluation to determine the merit and relevancy of the project.
  Deadlines:  None.
  Range of Approval/Disapproval Time: 90 to 120 days.
  Appeals:  None.
  Renewals: None.
ASSISTANCE CONSIDERATIONS:
  Formula  and Matching  Requirements: A minimum of 5 percent cost sharing is
    required.
  Length and Time Phasing of Assistance: The term of grant shall be determined at
    time of award.
POST ASSISTANCE REQUIREMENTS:
  Reports:  As specified in grant  award (usually quarterly interims and final progress
    and expenditure reports).
  Audits: Grants are subject to inspection and audit by representatives of EPA  and the
    Comptroller General.
  Records: Financial records, including all documents to support entries on accounting
    records and to substantiate charges to each grant, must be kept available to personnel
    authorized to examine EPA grant accounts. All records must be maintained for 3
    years after the end of each budget period, and if questions still remain, such as those
    raised as a result of audit,  related records should be retained until the matter is
    completely resolved.
FINANCIAL INFORMATION:
  Account Identification:  20-00-0108-0-1-404.
  Obligations: (Grants) FY 73 $1,750,000; FY 74 est $1,600,000; and FY 75 est $1,300,000.
  Range and Average of Financial Assistance: $10,000  to $164,000; $45,000.
PROGRAM ACCOMPLISHMENTS: In fiscal year 1973, the program graduated ilO
    technicians and specialists and 240 trainees with graduate degrees. For fiscal year
    1974,180 trainees will be funded for graduate degrees, and 18 institutions will receive
    support.
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REGULATIONS, GUIDELINES, AND LITERATURE: All information included in
    application kit. Training Grants and Fellowships (Final Regulations), Environmen-
    tal Protection Agency, Federal Register, Vol. 38, No. 118 (40 U.S.C. 45, 46); General
    Grant Regulations and Procedures, EPA, Federal Register, Vol. 36, No. 228 (40 CFR
    30).
INFORMATION CONTACTS:
  Regional or Local Office: Individuals are encouraged to communicate with the
    appropriate EPA Regional Administrator.
  Headquarters Office: For information concerning grant applications and procedures
    contact Environmental Protection Agency,  Grants Administration Division, Wa-
    shington, DC 20460. For  program information contact Control Programs Develop-
    ment Division, Office of Air Quality Planning and Standards, Office of Air and Waste
    Management, Environmental Protection Agency, Research TrianglePark, NC 27711.
    Telephone (919) 549-8411, Ext. 2492.
RELATED PROGRAMS: 66.001, Air Pollution Control Program Grants; 66.002, Air
    Pollution Fellowships; 66.501, Air Pollution Control Research Grants; 66.005, Air
    Pollution Survey and Demonstration Grants.


           66.005  AIR POLLUTION  SURVEY AND
                  DEMONSTRATION  GRANTS


FEDERAL AGENCY: OFFICE  OF AIR AND WASTE MANAGEMENT, ENVIRON-
    MENTAL PROTECTION AGENCY
AUTHORIZATION: Sections 103 and 104 of the Clean Air Act; Public Law 88-206, as
    amended by Public Law 91-604; 42 U.S.C. 1857b and 1857b-l.
OBJECTIVES: To assist applicants in: (1) demonstrating innovative control strategies
    and  program operations necessary to achieve National Ambient Air Quality
    Standards and (2) demonstrating new or improved methods for air pollution control.
TYPES OF ASSISTANCE: Project Grants.
USES AND USE RESTRICTIONS: Funds may be used for expenses necessary to
    carry out the approved projects including, but not restricted to,  personnel costs,
    supplies, equipment, travel, and contractual services. Funds may not be used for
    expenses incurred outside the approved project.
ELIGIBILITY REQUIREMENTS:
  Applicant Eligibility: Air pollution control agencies, appropriate nonprofit organiza-
    tions and institutions.
  Beneficiary Eligibility: Same as applicant eligibility.
  Credentials/Documentation: Not applicable.
APPLICATION AND AWARD PROCESS:
  Preapplication Coordination: By letter including information on objectives  and
    methods of project investigators and budget information. Submit to the appropriate
    EPA Regional Office and to the Control Programs Development Division in Research
    Triangle Park,  NC.  Standards of FMC  74-7 only  apply  to  State and local
    governments. Applications should be reviewed under Procedures in Part I of OMB
    Circular No. A-95 (revised), for projects dealing with demonstrations.
  Application Procedure: Requests for application forms and completed applications
    should   be  submitted to the Grants  Administration Division, Environmental
    Protection Agency, Washington, DC 20460.
  Award Procedure: Each application shall be subjected to administrative evaluation
    to determine the adequacy of  the application in relation to grant regulations and to
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    technical and program evaluation to determine the merit and relevancy of the project.
    Notification of grant award to a State or local government must be made by EPA to
    the designated State Central Information Reception Agency and Department of the
    Treasury on SF 240.
  Deadlines: None.
  Range of Approval/Disapproval Time: 30 to 90 days.
  Appeals: There are no appeals procedures  as such. If application is  rejected, the
    reasons for refusal are  stated, and applicant may make necessary changes and
    reapply.
  Renewals: None.
ASSISTANCE CONSIDERATIONS:
  Formula and Matching Requirements: Negotiable. Maximum Federal share is 95
    percent.
  Length and Time Phasing of Assistance: Length of project is negotiable—usually 1
    to 3 years. Grants are made in budget period basis (usually 12 months). Funds must
    be encumbered within the approved budget period. Grant may be paid by letter of
    credit or monthly cash demand.
POST ASSISTANCE REQUIREMENTS:
  Reports: Progress reports  are required. Final progress  report due 90 days after
    completion of the project. Annual expenditure report due 90 days after end of each
    budget period.
  Audits: Expenditures are  subject to audit by EPA and Comptroller General.
  Records: Financial records, including all documents to support entries on accounting
    records and to substantiate charges to each grant, must be kept available to personnel
    authorized to examine EPA  grant accounts. All records must be maintained for 3
    years after the end of each budget period, and if questions still remain, such as those
    raised as a result of audit, related records should be retained until the matter is
    completely resolved.
FINANCIAL INFORMATION:
  Account Identification:  20-00-0107-0-1-404.
  Obligations: (Grants) FY 73 $214,000; FY 74 est $324,000; and FY 75 est $500,000.
  Range and Average of Financial Assistance: Three grants funded in fiscal year of
    1974  ($24,000, $50,000, and $250,000).
PROGRAM  ACCOMPLISHMENTS:  In fiscal year 1974, the  program awarded 3
    grants totaling $324,000  to demonstrate new or improved methods for abatement and
    control of air pollution.
REGULATIONS, GUIDELINES, AND LITERATURE: Research and Demonstra
    tion Grants, Interim Regulations, EPA, Federal Register, Vol. 38, No. 93 (40 CFR 40);
    General Grant Regulations and Procedures, EPA, Federal Register, Vol. 36, No. 228
    (40 CFR 30).
INFORMATION CONTACTS:
  Regional or Local  Office: Individuals are  encouraged to communicate  with the
    appropriate Regional Administrator.
  Headquarters Office: For information concerning grant applications and procedures,
    contact Environmental  Protection Agency, Grants Administration Division, Wa-
    shington, DC 20460. For program information, contact Control Programs Develop-
    ment Division, Office of Air Quality Planning and Standards, Office of Air and Waste
    Management, Environmental Protection Agency, Research Triangle Park, NC 27711.
    Telephone: (919) 549-8411, Ext. 2492.
RELATED PROGRAMS: 66.002,  Air Pollution Fellowships;  66.003, Air Pollution
    Manpower Training Grants; 66.501, Air Pollution Control Research Grants.
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       66.026  SOLID WASTE TRAINING GRANTS


FEDERAL AGENCY: OFFICE OF AIR AND WASTE MANAGEMENT, ENVIRON-
   MENTAL PROTECTION AGENCY
AUTHORIZATION: Solid Waste Disposal Act, Sections 204 and 210, as amended;
   42 U.S.C. 3253 and 3254d.
OBJECTIVES: To develop, expand, or carry out programs for training persons for
   occupations involving management, supervision, design, operation, or maintenance
   of Solid Waste Disposal and Resource Recovery Equipment Facilities.
TYPES OF ASSISTANCE: Project Grants.
USES AND USE  RESTRICTIONS: Full support is provided for training projects.
   Allowable costs are determined by EPA,  Office of Solid Waste Management
   Programs. Grants cannot be awarded to profitmaking organizations. Due to limited
   appropriations and EPA'S annual plans, Training grants are awarded only to State
   agencies. (Normally such solicitations are announced in  the "Commerce Business
   Daily.")
ELIGIBILITY REQUIREMENTS:
  Applicant Eligibility:  Any  public  or private  nonprofit institution  or agency.
   Individuals to be trained apply directly to  grantee.
  Beneficiary Eligibility: Same as applicant eligibility.
  Credentials/Documentation: Cost will be determined in accordance with General
   Services Administration FMC 74-4 for entities that are State and local government.
APPLICATION AND AWARD PROCESS:
  Preapplication Coordination: The  standard application forms are furnished by
   EPA. Standards of Services Administration FMC 74-7 only apply to State and local
   governments, however,  applications from State and  local governments  will be
   accepted on either General Services Administration FMC  74-7 forms or EPA Form
   5700-12.
  Application Procedure: Requests for application forms and completed applications
   should be submitted to EPA Grants Administration Division, Washington, DC 20460.
  Award Procedure: Each application shall be subjected to administrative evaluation
   to determine adequacy of application in relation to grant regulations and to technical
   and program evaluation to determine the merit and relevancy of project.
  Deadlines: None.
  Range of Approval/Disapproval Time: None.
  Appeals: None.
  Renewals: None.
ASSISTANCE CONSIDERATIONS:
  Formula and Matching  Requirements: A minimum of five percent of cost sharing is
   required.
  Length and Time Phasing of Assistance:  Term of grant shall be determined at time
   of award.
POST ASSISTANCE REQUIREMENTS:
  Reports: As specified in  grant award  (usually quarterly interims and final progress
   and expenditure reports).
  Audits: Grants  are  subject  to inspection and audit by representatives  of the
   Comptroller General of the United States and EPA.
  Records:  Financial records,  including  all documents to support entries on the
   accounting records and to substantiate charges to each grant must be kept available
   to personnel authorized  to examine EPA grant accounts in  an institution. All records
   must be maintained for three years after the end of each budget period, and if
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    questions still remain, such as those raised as a result of audit, related records should
    be retained until the matter is completely resolved.
FINANCIAL INFORMATION:
  Account Identification: 20-00-0108-0-1-304.
  Obligations: (Grants) FY 74 $100,000; FY 75 $325,000; and FY 76 est $150,000.
  Range and Average of Financial Assistance: $25,000 to $100,000; $35,000.
PROGRAM ACCOMPLISHMENTS: These grants are providing technically trained
    personnel for solid waste management and resource recovery systems. Grants have
    primarily been awarded to States and public interest groups over the past several
    years.
REGULATIONS, GUIDELINES, AND LITERATURE: Interim Regulations, Grant
    Programs, Environmental Protection Agency, Federal Register, Vol. 36, No. 299, P.
    22716. "Federal Assistance Programs of the Environmental Protection Agency," no
    charge. Federal Register, Vol. 38, No. 118 (40 CFR 45,46), EPA, Training Grants and
    Fellowships.
INFORMATION CONTACTS:
  Regional or Local  Office:  Individuals are encouraged  to communicate with the
    appropriate EPA Regional Administrator.
  Headquarters Office: For information concerning grant applications and procedures
    contact Environmental Protection Agency, Grants Administration Division, Wash-
    ington, DC 20460. For program information contact Program Analysis State Office of
    Solid Waste Management Programs, EPA, Washington, DC 20460.
RELATED PROGRAMS: 66.027.  Solid Waste Demonstration and Planning Grants;
    66.504, Solid Waste Research Grants.

      66.027  SOLID WASTE  DEMONSTRATION AND
                        PLANNING  GRANTS


 FEDERAL AGENCY: OFFICE OF AIR AND WASTE MANAGEMENT, ENVIRON-
    MENTAL PROTECTION AGENCY
 AUTHORIZATION: Solid Waste Disposal Act, Sections 204 and 207, as amended; 42
    U.S.C. 3251 et seq.
 OBJECTIVES: To assist State, interstate, municipal, and intermunicipal agencies and
    organizations in development of plans and programs leading to the solution of solid
    waste management problems.
 TYPES OF ASSISTANCE:
 USES  AND  USE RESTRICTIONS:  For making  surveys of solid waste disposal
    practices and problems within the jurisdictional areas of eligible agencies; developing
    and revising solid waste disposal plans as part of regional environmental protection
    systems for such areas. Providing for recycling or recovery of materials from wastes
    whenever possible and including planning for the reuse of solid waste disposal areas
    and studies of the effect and relationship of solid waste disposal practices on areas
    adjacent to waste disposal sites, or planning programs for the removal and processing
    of abandoned motor vehicle hulks. Federal support up to 66 2/3 percent of the cost of
    planning programs including only one municipality, and not to exceed 75 percent of
    the cost in any other case. Full restrictions are contained in procedures for applicants,
    available  upon request. Due to limited appropriations and EPA's annual plans,
    planning  grants are awarded only  to State agencies.  Demonstration grants are
    awarded only to State agencies and grantees solicited for special projects designed to
    meet those annual  plans  (Normally such solicitations are announced  in  the
    "Commerce Business Daily").
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ELIGIBILITY REQUIREMENTS:
  Applicant eligibility:  Nonprofit  institutions such  as  universities and colleges,
    hospitals, laboratories. State and local government departments, other public or
    private nonprofit institutions, and individuals who  have demonstrated unusually
    high scientific ability.
  Beneficiary Eligibility: Same as applicant eligibility.
  Credentials/Documentation: A State Solid Waste Management Plan coordinated
    with the Governor's office, is required under Part III of OMB Circular No. A-95
    (revised) for Section 207 Grants. Cost will be determined in accordance with General
    Services Administration FMC 74-4.

APPLICATION AND AWARD PROCESS:
  Preapplication Coordination: Preproposals should be submitted to the appropriate
    EPA Regional Office. Instructions for preproposals are available from the Regional
    Office. Applications should be reviewed under procedures in Part I of OMB Circular
    No. A-95 (revised). Environmental  assessment required with application.  The
    standard application forms are furnished by EPA. The standard application forms as
    furnished by the Federal agency and required by General Services Administration
    FMC 74-7 only apply to State and local governments, however, applications from
    State and local governments will be accepted on either General Services Administra-
    tion FMC 74-7 forms or EPA  Form 5700-12.
  Application Procedure: Application  should  be submitted to the appropriate EPA
    Regional Office. The Solid Waste Management Representative of the appropriate EPA
    Regional Office (listed in the appendix) is available  to a isist in preparation of the
    application.
  Award Procedure: Each application shall be  subjected to administrative evaluation
    to determine adequacy of application in relation to grant regulations and to technical
    and program evaluation to determine the merit and relevancy of project. Notification
    of grant award must be made to the designated State Central Information Reception
    Agency and the Department of the Treasury on SF 240.
  Deadlines: None.
  Range of Approval/Disapproval Time: 90  days.
  Appeals: None.
  Renewals: None.
ASSISTANCE CONSIDERATIONS:
  Formula  and Matching Requirements: Up to two-thirds of project costs for one
    municipality, and up to three-fourths of the cost in any other case.
  Length and Time Phasing of Assistance:  Grants  are normally funded on a 12-
    month basis (yearly). Total project period varies according to program requirements.
POST ASSISTANCE REQUIREMENTS:
  Reports: As specified in grant award (usually quarterly interims and final progress
    and expenditure report)
  Audits: Grants  are subject  to inspection and audit by representatives of  the
    Comptroller General of the United States and EPA.
  Records:  Financial  records,  including  all documents to support entries on  the
    accounting records and to substantiate charges to each grant, must be kept available
    to personnel authorized to examine EPA grant account in an institution.
FINANCIAL INFORMATION:
  Account Identification: 20-000-0108-0-1-304.
  Obligations: (Grants) FY 74 $3,600,000; FY 75 $3,000,000; and FY 76 est $4,000,000.
  Range and Average of Financial Assistance: $5,000 to $230,000; $36,200.
PROGRAMS ACCOMPLISHMENTS: Planning and demonstration grants have been
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    awarded to 50 State agencies. District of Columbia, Puerto Rico, Guam, and.American
    Samoa. Solid Waste Management Plans, staffs, and active programs now exist in
    these agencies for solution of solid waste problems. Several demonstration grants
    have been  awarded  to  local communities  to  evaluate waste disposal control
    technology and to speed the process of implementing resources recovery systems.
REGULATIONS, GUIDELINES, AND LITERATURE: Interim regulations. Grant
    Programs. Environmental Protection Agency. Federal Register. Vol. 36, No. 229, P.
    22716. Federal Assistance Programs  of the Environmental Protection Agency,  no
    charge. Interim Regulations. Research, and Demonstration Grants. EPA, Federal
    Register, Vol. 38,  No. 83. P12781. State and local assistance. 40 CFR Part 35.
INFORMATION CONTACTS:
  Regional or Local Office:  Individuals are encouraged to communicate with the
    appropriate EPA  Regional Administrator.
  Headquarters Office: For information concerning grant applications and procedures
    contact GAD. EPA.  Washington, DC 20460 For program  information contact
    Program  Analysis Staff, Office  of  Solid Waste  Management  Programs,  EPA.
    Washington, DC 20460.
RELATED PROGRAMS:  66.026. Solid Waste Training Grants; 66.504. Solid Waste
    Research Grants.
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OFFICE  OF  WATER  AND
                HAZARDOUS
                  MATERIALS
66.419  WATER POLLUTION  CONTROL-STATE  AND
            INTERSTATE PROGRAMS GRANTS


                           (Section 106 Grants)

FEDERAL AGENCY:  OFFICE OF  WATER  AND  HAZARDOUS MATERIALS,
    ENVIRONMENTAL PROTECTION AGENCY
AUTHORIZATION:  Section  106 of the  Federal Water Pollution Control Act, as
    amended; Public Law 92-500; 33 U.S.C. 1256.
OBJECTIVES: To assist State and interstate agencies in establishing and maintaining
    adequate measures for prevention and control of water pollution.
TYPES OF ASSISTANCE: Formula Grants.
USES AND USE RESTRICTIONS: Broad support for the prevention and abatement
    of  water  pollution including permitting,  pollution  control  studies, planning,
    surveillance and enforcement; advice and assistance to local agencies; training; and
    public information. Funds cannot be used for construction, operation, or maintenance
    of waste treatment plants, nor can they be used for  costs financed by other Federal
    grants or by funds used for matching other Federal grants.
ELIGIBILITY REQUIREMENTS:
  Applicant Eligibility: State and interstate water pollution control agencies as defined
    in the Federal Water Pollution Control Act. Agencies making application for funds
    must submit annually their pollution-control program to the appropriate Regional
    Administrator, EPA for approval. Requirements of the program are based on Section
    106 of the Act, and 40 CFR Part 35.
  Beneficiary  Eligibility: Same as applicant  eligibility.
  Credentials/Documentation. A State Plan is required under Part III of OMB
    Circular No. A-95 (revised).
APPLICATION AND AWARD PROCESS:
  Preapplication Coordination: Informal meetings are held between regional office
    and State applicant agency concerning  program preparation.
  Application Procedure: Submit State Program Grant Application Form or Interstate
    Agency Program Grant Application Form to EPA,  Grants Administration Branch
    (regional office).
  Award Procedure: Program  plan is reviewed, and if approvable, signed by the
    Regional Administrator. Notification of grant award must be made by EPA to the
    designated  State Central Information Reception Agency and Department of the
    Treasury on SF 240.
  Deadlines: June 15  deadline for grant application.
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  Range of Approval/Disapproval Time: 30 days.
  Appeals: None.
  Renewals: None.
ASSISTANCE CONSIDERATIONS:
  Formula and Matching Requirements: Appropriated funds are prorated among the
    States and interstate water pollution control agencies on the basis of the extent of the
    water pollution problem in the respective States but an amount not less than its FY 73
    grants.
  Length and Time Phasing of Assistance: 1 year; payments are approved quarterly
    and disbursed monthly.
POST ASSISTANCE REQUIREMENTS:
  Reports: Annual expenditure  reports; Semi-Annual program report; revised budget
    following reallocation of funds.
  Audits: Periodic audit conducted for each year of Federal assistance.
  Records: Financial records, including all documents to support entries on accounting
    records and to substantiate charges to each grant, must be kept available to personnel
    authorized to examine EPA grant accounts. All records must be maintained for 3
    years after the end of each budget period, and if questions still remain, such as those
    raised as a result  of audit, related records should be retained until the matter is
    completely resolved.
FINANCIAL INFORMATION:
  Account Identification: 20-00-0108-0-1-404.
  Obligations: (Grants) FY 73 $22,600,000; FY 74 est $40,000,000; and FY 75  est
    $40,000,000.
  Range and Average of Financial Assistance:  $65,000 to $2,368,770; $150,000.
PROGRAM  ACCOMPLISHMENTS: The program started in 1957 with an annual
    authorization of $2,000,000. The annual figure has grown to an estimated $40,000,000
    and the State and interstate agency expenditures have increased more than seven
    times during that period. Many of these agencies have substantially  strengthened
    their programs. There were 60 grants awarded in fiscal year 1974.
REGULATIONS, GUIDELINES, AND LITERATURE: General Grant Regulations
    and Procedures> Environmental Protection Agency; Federal Register, Vol. 36, No.
    229, 40 CFR  30, Digest  oi  fiscal year  1972 State Program Plans; Handbook of
    Procedures, State and Interstate Program Grants; Federal Assistance Programs of
    the  Environmental Protection  Agency (no  charge); Environmental Protection
    Agency, State and Local Assistance Program, Interim Regulations, Federal Register,
    Vol. 38, No. 125 (40 CFR 35).
INFORMATION CONTACTS:
  Regional or Local Office: EPA Regional Administrator.
  Headquarters  Office: Chief, State  Program Branch, Water  Planning Division,
    Environmental Protection Agency, Office of  Water  and Hazardous Materials,
    Washington, DC 20460. Telephone:  (202) 755-2114.
RELATED PROGRAMS: 66.424, Water  Quality  Management  Technical Planning
    Assistance; 15.950, Additional Water Resources  Research.

66.420 WATER  POLLUTION CONTROL-STATE  AND
            LOCAL MANPOWER DEVELOPMENT


FEDERAL  AGENCY:  OFFICE  OF  WATER  AND HAZARDOUS MATERIALS,
    ENVIRONMENTAL PROTECTION AGENCY
AUTHORIZATION:  Section   104(g)(l), Federal  Water Pollution Control  Act as
    amended; Public Law 92-500; 33 U.S.C. 1254 (g)(l).


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OBJECTIVES: To design and carry out innovative and imaginative training programs
    which complement existing manpower development and training programs; to
    provide advanced teacher training to those involved in conducting operator training
    programs, and to train operators in advanced waste treatment technology.
TYPES OF ASSISTANCE: Project Grants.
USES AND USE RESTRICTIONS: Funds are basically used for the design and
    implementation  of innovative training courses and teaching techniques in water
    pollution control and abatement. Funds may not be used for construction.
ELIGIBILITY REQUIREMENTS:
  Applicant Eligibility: State, local, or district water pollution control agencies, or
    private nonprofit institutions.
  Beneficiary Eligibility: Same as applicant eligibility.
  Credentials/Documentation: None.
APPLICATION AND AWARD PROCESS:
  Preapplication  Coordination:  Applicants for  this program  should  apply on
    application form required by Federal Management Circular 74-7 furnished by EPA.
    Standards  of Federal Management Circular 74-7 only  apply to State  and local
    governments.

Application Procedure: Training applications submitted under Section 104(g)(l) of the
    Federal Water Pollution Control Act will be submitted as follows,  (a) State Operator
    Training, appropriate EPA Regional Office, and (b) National Impact and Special
    Project, U.S.  Environmental Protection Agency, Grants Administration Division,
    Washington, DC 20460.
Award Procedure: Each application shall be subjected to administrative evaluation to
    determine adequacy in relation to grant regulations  and to technical and program
    evaluation  to determine merit and  relevancy of  the project. Notification of grant
    award to a State or local government must be made by EPA to the designated State
    Central Information Reception Agency and Department of the Treasury on SF 240.
    (State operator training only.)
  Deadlines: None.
  Range of Approval/Disapproval Time: 90 to 120 days.
  Appeals: None.
  Renewals: None.
ASSISTANCE CONSIDERATIONS:
  Formula and Matching Requirements:  A minimum of 5 percent cost sharing is
    required.
  Length and Time Phasing of Assistance: Term of grant shall be determined at time
    of award.
POST ASSISTANCE REQUIREMENTS:
  Reports: As specified in grant award (usually quarterly interims and final progress
    and expenditure reports).
  Audits: Grants  are subject  to inspection  and  audit by representatives  of the
    Comptroller General and EPA.
  Records: Financial records, including all documents to support entries on accounting
    records and to substantiate charges to each grant, must be kept available to personnel
    authorized  to examine EPA grant accounts. All records must be maintained for 3
    years after the end of each budget period, and if questions still remain, such as those
    raised as a result of audit, related records should be retained until the matter is
    completely resolved.
FINANCIAL INFORMATION:
  Account Identification: 20-00-0108-0-1-404.
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  Obligations: (Grant) FY 73 $1,041,692; FY 74 est $1,483,000; andFY 75 est$ 1,505,000.
  Range and Average of Financial Assistance: $3,000 to $130,000; $35,000.
PROGRAM ACCOMPLISHMENTS: 2,000 operators were trained in fiscal year 1974.
    To date 50 States have received training grant funds.
REGULATIONS, GUIDELINES, AND LITERATURE: General Grant Regulations
    and Procedures, Environmental Protection Agency; Federal Register, Vol. 36, No.
    229, (40 CFR 30); OMB A-87; FMC 74-4; OMB A-27; OMB Circular No. A-27; "Grant
    Assistance Programs of the Environmental Protection Agency" (no charge). Training
    Grants and Fellowships, Final Regulations, EPA, Federal Register, Vol 38, No. 118,
    (40 CFR 45, 46).
INFORMATION CONTACTS:
  Regional   or Local  Office:  Individuals  are encouraged to communicate with
    appropriate EPA Regional Administrator.
  Headquarters Office: For program information contact EPA, OWPO, Chief, Water
    Quality Control Training Branch,  Municipal Permits  and  Operations Division,
    Washington, DC 20460.  Telephone: (703) 557-2242.
RELATED  PROGRAMS: 66.417, Water  Pollution Control-Direct  Training; 66.421,
    Water Pollution Control-Training Grants; 66.423, Water Quality Control Information
    System-Orientation and Training Seminars.

  66.421  WATER POLLUTION CONTROL TRAINING
                                GRANTS


FEDERAL   AGENCY:  OFFICE OF  WATER  AND HAZARDOUS  MATERIALS,
    ENVIRONMENTAL PROTECTION AGENCY
AUTHORIZATION: Sections 104(g)(3), 109,110, and 111 of the Water Pollution Control
    Act as amended; Public Law 92-500; 33 U.S.C. 1254, 1259, 1260,  1261.
OBJECTIVES: To improve training and education for professional, scientific, and
    technical personnel in the causes, control,  and prevention of water pollution.
TYPES OF ASSISTANCE: Project Grants.
USES AND  USE RESTRICTIONS: In addition to the EPA general grant conditions
    (Appendix A to Subchapter B of 40 CFR), each training grant shall be subject to the
    following conditions: (a) The grantee shall not require the performance of personal
    services by individuals receiving training as a condition for assistance, (b) Recipients
    of assistance under training grants shall be entitled to the normal student holidays
    observed  by an academic institution, or the holiday and vacation schedule applicable
    to all trainees at a  nonacademic institution, (c) Recipients of assistance  under
    training grants must be citizens of the United States, its territories, or possessions, or
    lawfully  admitted  to the United States for permanent  residence, (d) Generally
    training grants will provide for student support only through scholarships. Stipends
    are permitted  when,  in the judgment  of the grantee, they  are needed to attract
    qualified  students provided that no more than $20,000 may be used for such stipends
    within a  budget period and further provided that no stipend may  be less than $1,000
    or more than $3,000. (e) Training grants awarded under Section III of the Federal
    Water Pollution Control Act will be subject to the following condition: Grantees must
    obtain the following agreement in writing from persons awarded scholarships under
    Section III for undergraduate study of the operation and maintenance of treatment
    works: I  agree to enter and remain in an occupation involving the design, operation,
    or maintenance of waste treatment works for a period of 2 years after the satisfactory
    completion of my studies under this program. I  understand that if I fail to perform
    this obligation I may be required to repay the amount of my scholarship. The grantee
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    agrees to take such action as may reasonably be required to enforce the foregoing
    agreement. Any sums received by the grantee shall be credited or paid to the United
    States in accordance with 40 CFR 30.603.
ELIGIBILITY REQUIREMENTS:
  Applicant  Eligibility:  Public  and  private agencies, municipalities,  educational
    institutions, and individuals.
  Beneficiary Eligibility: Same as applicant eligibility.
  Credentials/Documentation: None.
APPLICATION AND AWARD PROCESS:
  Preapplication Coordination: The standard application forms required by FMC 74-7
    are  furnished by  EPA.  Standards of FMC 74-7  only apply  to  State and local
    governments.
  Application Procedure: Requests for application forms and completed applications
    should be submitted to the Grants Administration Division headquarters office.
  Award Procedure: Each application shall be subjected to administrative evaluation
    to determine adequacy in relation to grant regulations and to technical and program
    evaluation to determine merit and relevancy of the project. Applicant must agree to
    administer the grant in accordance with EPA Grant Policies and procedures in effect
    at time of award.
  Deadlines: None.
  Range of Approval/Disapproval Time: 90 to 120 days.
  Appeals: None.
ASSISTANCE CONSIDERATIONS:
  Formula and Matching Requirements: A minimum of 5 percent cost-sharing is
    required.
  Length and Time Phasing of Assistance: Term of grant shall be determined at time
    of award.
POST ASSISTANCE REQUIREMENTS:
  Reports: As specified in grant award (usually quarterly interims and final progress
    and expenditure reports).
  Audits: Grants are subject to inspection and  audit by EPA and the  Comptroller
    General.
  Records: Financial records, including all documents to support entries on accounting
    records and to substantiate charges to each grant, must be kept available to personnel
    authorized to  examine EPA grant  accounts. All records must be maintained for 3
    years after the end of each budget period, and if questions still remain, such as those
    raised as a result of  audit,  related records should be retained until the matter is
    completely resolved.
FINANCIAL INFORMATION:
  Account Identification: 20-00-0108-0-1-404.
  Obligations: (Grants) FY 73 $5,973,252; FY 74 est $3,440,000; andFY 75 est $2,770,000.
  Range and Average of Financial Assistance: $1,000 to $110,000; $43,576.
PROGRAM ACCOMPLISHMENTS:  The Office of Water Program Operations and
    predecessor organizations, during  the last 10 fiscal years, have supported 4,843
    graduate students, 228 are in the pipeline, that is, still being supported by WQO
    training grants on June 30,1974. Of the others, 3,518 have received graduate degrees
    in water quality control, 176 are going on for further education, and 40 are employed
    but  did not receive graduate degrees. The program has supported almost  50,000
    months of graduate student education (nearly 7,200 student years), with an average
    of 13 months  per student and about 14  months per  degree. There were 215  grants
    awarded in fiscal year 1973. A total of 87 grants are to be awarded in fiscal year 1974;
    and up to 33 may be awarded in fiscal year 1975.


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REGULATIONS, GUIDELINES, AND LITERATURE: General Grant Regulations
    and Procedures, Environmental Protection Agency; Federal Register, Vol. 36, No. 229
    (40 CFR 30); Federal Assistance Programs of the Environmental Protection Agency
    (no charge). Federal Register, Vol. 38, No. 118,  (40 CFR 45, 46). Environmental
    Protection Agency, Training Grants and Fellowships.
INFORMATION CONTACTS:
  Regional or Local Office:  Individuals are encouraged  to  communicate with
    appropriate EPA Regional Administrator.
  Headquarters Office: For information concerning grant applications and procedures
    contact Environmental Protection Agency, Grants Administration Division, Wa-
    shington, DC  20460. For program information contact Chief, Academic Training
    Section, Water Quality Control Training Branch, Municipal Permits and Operations
    Division, Office of Water and  Hazardous Materials, Environmental  Protection
    Agency, Washington, DC 20460. Telephone: (703) 557-2242.
RELATED PROGRAMS:  66.417, Water  Pollution  Control-Direct Training; 66.420,
    Water Pollution Control-State and Local Manpower Development; 66.423, Water
    Quality Control-Information  System Orientation and Training Seminars; 15.951,
    Water  Resources  Research-Assistance  to  States  for Institutes;  15.952, Water
    Resources Research Matching Grants to State Institutes.

66.426 WATER POLLUTION CONTROL-AREA WASTE
 TREATMENT MANAGEMENT PLANNING GRANTS


FEDERAL AGENCY: OFFICE  OF WATER AND  HAZARDOUS  MATERIALS,
    ENVIRONMENTAL PROTECTION AGENCY
AUTHORIZATION: Federal Water Pollution Control Act Amendments of 1972, Section
    208, Public Law 92-500; 33 U.S.C. 1288.
OBJECTIVES: To encourage and facilitate the development and implementation of
    areawide waste treatment management plans in designated areas.
TYPES OF ASSISTANCE: Project Grants.
USES AND USE RESTRICTIONS: Funds are provided to designated planning
    agencies for a period of up to 24 months to develop an initial  areawide waste
    treatment management plan for the area.
ELIGIBILITY REQUIREMENTS:
  Applicant Eligibility: An applicant agency must be designated by  the Governor or
    appropriate local officials in conformance with 40 CFR 126.11 or 126.16 and approved
    by the Administrator of EPA as the official areawide waste treatment management
    planning agency for the area and must agree to develop a plan and a continuing
    planning process meeting the requirements of 40 CFR 35, Subpart F for the entire
    designated area.
  Beneficiary Eligibility: Same as applicant eligibility.
  Credentials/Documentation: In the  case of an area designated by the Governor(s),
    the  grant application  must include a statement of certification or  refusal  or
    certification by the chief official(s) of the reviewing agency(ies) wherein the area is
    located.
APPLICATION AND AWARD PROCESS:
  Preapplication Coordination: Preapplication coordination with appropriate Region-
    al Office recommended. Must comply with all requirements of Part 1, OMB Circular
    No. A-95. In the case of an area designated by the Governor(s), the application and
    supporting data must be submitted by the State reviewing agency(ies) designated by
    the Governor(s) prior to submission to EPA. Additionally in interstate cases, the
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   application must be submitted to the Governor of the State wherein the greatest
   portion of the planning area resides. The standard application forms required by
   FMC 74-7 are furnished by EPA.
  Application Procedure: The grant application must be submitted in duplicate to the
   appropriate Regional Administrator of EPA on such forms as the Administrator may
   prescribe.
  Award Procedure: Grant application is reviewed by appropriate EPA Regional Office
   and if approvable, the grant is awarded by the Regional Administrator. Notification
   of grant award must be made to the State Central Information Reception Agency and
   Department of the Treasury on SF 240.
  Deadlines: Grant applications  must be received within one year after the planning
   area and agency have been  designated.
  Range of Approval/Disapproval Time:  45 days.
  Appeals: Within one year after date of designation.
  Renewals: Not applicable.
ASSISTANCE  CONSIDERATIONS:
  Formula and Matching Requirements: The Federal rate of assistance is 100 percent
   of eligible costs for all grant awards made through fiscal year  1975.
  Length and Time Phasing of Assistance: 24 months.
POST ASSISTANCE REQUIREMENTS:
  Reports: Semi-annual progress report must be submitted by grantee.
  Audits: Grants are  subject  to inspection and audit  by representatives  of the
   Comptroller General of the U.S. and EPA.
  Records: Grantee financial management systems must comply with provision of FMC
   74-7.
FINANCIAL INFORMATION:
  Account Identification: 20-00-0108-0-1-404.
  Obligations:  (Grants) FY 73  $0; FY 74 est $100,000,000; and FY 75 est $150,000,000.
  Range and Average of Financial Assistance: $300,000 to $3,000,000; $1,250,000.
PROGRAM ACCOMPLISHMENTS: Not applicable - new program.
REGULATIONS, GUIDELINES, AND LITERATURE: 40 CFR 126; 40 CFR 35,
   SubpartF; 40 CFR 30.
INFORMATION CONTACTS:
  Regional or Local Office: EPA Regional  Administrator.
  Headquarters  Office: Director, Water Planning  Division, EPA, Washington, DC
   20460.
RELATED PROGRAMS: 66.419, Water Pollution Control - State and Interstate
   Program Grants; 66.418, Water  Pollution  Control - Grants for Construction  of
   Treatment Works.
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OFFICE    OF   RESEARCH
    AND   DEVELOPMENT
        66.500  ENVIRONMENTAL PROTECTION-
          CONSOLIDATED RESEARCH GRANTS


FEDERAL AGENCY: OFFICE OF RESEARCH AND DEVELOPMENT, ENVIRON-
    MENTAL PROTECTION AGENCY
AUTHORIZATION: Sections 103 and 104 of the Clean Air Act as amended; Public Law
    88-206; 42 U.S.C. 1857b and 1857b-l. Sections 104, 105, 107, 108,113 of the Federal
    Water Pollution Control Act as amended; Public Law 92-500;
  U.S.C. 1254, 1257, 1258, 1263; Public Health Service Act as amended, Public
    Law 78-410; 42 U.S.C. 242b. Public Health Service Act as amended; 42
    U.S.C. 241 and 246. Section 204 and 205 of the Solid Waste Disposal Act as
    amended; Public Law 89-272; 42 U.S.C. 3253.
OBJECTIVES: To support research to explore and develop strategies and mechanisms
    for those in the economic, social, governmental and environmental systems to use in
    environmental management.
TYPES OF ASSISTANCE: Project Grants.
USES AND USE RESTRICTIONS: Available for allowable direct cost expenditures
    incident to research performance plus allocable portions of allowable indirect costs of
    the institutions, in accordance with the established policies of EPA.
ELIGIBILITY REQUIREMENTS:
  Applicant Eligibility: Nonprofit institutions  such as  universities and colleges,
    hospitals, laboratories, State and local government departments, other public or
    private  non-profit institutions and individuals  who have demonstrated unusually
    high scientific ability.
  Beneficiary Eligibility: Same as applicant eligibility.
  Credentials/Documentation: None.
APPLICATION AND AWARD PROCESS:
  Preapplication Coordination: Discussion with program office advisable. Environ-
    mental  impact assessment  required with application. Standards of FMC 74-7 only
    apply to State and local governments.
  Application Procedure:  Request  for application forms and completed applications
    should be submitted to the Environmental Protection Agency, Grants Administration
    Division, Washington, DC 20460.
  Award Procedure: Each application shall be subjected to administrative evaluation
    to determine the adequacy of the application in relation to grant regulations and to
    program evaluation; technical and  extramural review determines the merit and
    relevance of the project.
  Deadlines: None.
  Range of Approval/Disapproval Time: Approximately 90 days.
  Appeals: No appeals procedure; however, revised proposals may be resubmitted in
    light of "Award Procedure."
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  Renewals: None. Standard grant application should be prepared and submitted. It will
   be reviewed in same manner as a new application and will compete for available
   funds.
ASSISTANCE CONSIDERATIONS:
  Formula and Matching Requirements: A minimum of 5 percent cost sharing is
   required except for programs where matching funds are required by statute.
  Length and Time Phasing of Assistance: Grants normally funded on a 12-month
   basis (yearly). Total project period varies according to program requirements.
POST ASSISTANCE REQUIREMENTS:
  Reports: As specified in grant agreement (usually quarterly and final progress and
   expenditure reports).
  Audits: Grants are subject  to inspections and  audit  by representatives of the
   Comptroller General of the United States and EPA.
  Records: Financial records, including all documents to support entries on accounting
   records and to substantiate changes to  each grant, must be  kept available to
   personnel authorized to examine EPA grant accounts. All records must be maintained
   for 3 years after the end of each budget period and if questions still remain, such as
   those raised as a result of audit, related records should be retained until the matter is
   completely resolved.
FINANCIAL INFORMATION:
  Account Identification: 20-00-0107-0-1-404.
  Obligations: (Grants) FY*73 $1,171,000; FY 74 est $1,455,000; andFY 75 est$1,449,000.
  Range and Average of Financial Assistance: $5,000 to $94,160; $40,969.
PROGRAM ACCOMPLISHMENTS: In fiscal year 1973,  27 research  projects were
   funded. Studies are  being conducted which provide an understanding of the total
   effects of environmental policy.
REGULATIONS, GUIDELINES, AND LITERATURE: Interim Regulations, Grant
   Programs, Environmental Protection Agency; Federal Register, Vol. 36, No. 229, p.
   22716; Interim Regulations. Research  and Demonstration Grants; Environmental
   Protection Agency; Federal Register, Vol. 38, No. 93, p.  12784; Federal Assistance
   Programs of the Environmental Protection Agency, no charge.
INFORMATION CONTACTS:
  Regional or Local Office: Individuals are  encouraged to communicate with the
   appropriate EPA Regional Administrator listed in the appendix.
  Headquarters Office: For information on grant applications and procedures contact
   Environmental Protection Agency, Grants Administration Division, Washington, DC
   20460. For program information contact Chief, Project Processing Staff, Office of
   Research  and Development, Environmental Protection Agency, Washington, DC
   20460. Telephone: (202) 426-2275.
RELATED  PROGRAMS:  66.501, Air Pollution Control Research Grants; 66.502,
   Pesticides Research Grants; 66.503, Radiation Research Grants; 66.504, Solid Waste
   Research  Grants; 66.505,  Water Pollution  Control-Research,  Development, and
   Demonstration.

    66.501 AIR POLLUTION CONTROL RESEARCH
                               GRANTS


FEDERAL AGENCY: OFFICE OF RESEARCH AND DEVELOPMENT, ENVIRON-
   MENTAL PROTECTION AGENCY
AUTHORIZATION: Sections 103 and 104 of the Clean Air Act, as amended; Public Law
   88-206; 42 U.S.C.  1857b and 1857b-l.
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OBJECTIVES: To support and promote research and development projects relating to
    the causes, effects, extent, prevention and control of air pollution.
TYPES OF ASSISTANCE: Project Grants.
USES AND USE RESTRICTIONS: Available for allowable direct cost expenditures
    incident to research performance plus allocable portions of allowable indirect costs of
    the institutions, in accordance with the established policies of EPA.
ELIGIBILITY REQUIREMENTS:
  Applicant  Eligibility:  Nonprofit  institutions such as universities and colleges,
    hospitals, laboratories, State and local health  departments, and  other public or
    private nonprofit institutions. Grants may also be awarded to individuals who have
    demonstrated  unusually high scientific ability.
  Beneficiary Eligibility: Same as applicant eligibility.
  Credentials/Documentation: None.
APPLICATION  AND AWARD PROCESS:
  Preapplication Coordination: Discussion with program office advisable. Environ-
    mental assessment required with application. Standards of FMC 74-7 apply only to
    State and local governments.
  Application Procedure: Requests for application forms and completed applications
    should be submitted to the Environmental Protection Agency, Grants Administration
    Division, Washington, DC 20460.
  Award Procedure: Each application shall be subjected to administrative evaluation
    to determine the adequacy of the application in relation to grant regulations and to
    program evaluation; technical and  extramural review determines the merit and
    relevance of the project.
  Deadlines: None.
  Range of Approval/Disapproval Time: Approximately 90 days.
  Appeals: No appeals procedure; however, revised proposals may be resubmitted in
    light of "Award Procedure."
  Renewals: None. Standard grant application should be prepared and submitted. It will
    be reviewed in same manner as a new application and will compete for available
    funds.
ASSISTANCE CONSIDERATIONS:
  Formula and Matching Requirements: A minimum of 5 percent cost  sharing is
    required except for programs where matching funds are required by statute.
  Length and Time Phasing of Assistance: Grants normally funded on a 12-month
    basis (yearly). Total project period varies according to program requirements.
POST ASSISTANCE REQUIREMENTS:
  Reports: As specified in grant award (usually  quarterly interims and final progress
    and expenditure reports).
  Audits:  Grants are  subject to inspection  and  audit by  representatives  of the
    Comptroller General of the United States and EPA.
  Records: Financial records, including all documents to support entries on accounting
    records and to substantiate charges to each grant, must be kept available to personnel
    authorized to examine EPA grant accounts. All records must be maintained for 3
    years after the end of each budget period, and if questions still remain, such as those
    raised as a result of audit, related records should be retained until the matter is
    completely resolved.
FINANCIAL INFORMATION:
  Account Identification: 20-00-0107-0-1-404.
  Obligations: (Grants) FY 73 $5,537,000; FY 74 $3,726,000; and FY 75 est $4,950,000.
  Range and Average of Financial Assistance: $3,300 to $182,383; $44,478.
PROGRAM ACCOMPLISHMENTS:  In fiscal year 1972, 96 grants were funded.
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REGULATIONS, GUIDELINES, AND LITERATURE: Interim Regulations; Grant
   Programs; Environmental Protection Agency; Federal Register, Vol. 36, No. 229, p.
   22716; Interim Regulations. Research  and Demonstration Grants; Environmental
   Protection Agency; Federal Register; Vol. 38, No. 93, p. 12784; "Federal Assistance
   Programs of the Environmental Protection Agency," no charge.
INFORMATION CONTACTS:
  Regional or Local Office:  Individuals are encouraged  to communicate with the
   appropriate EPA Regional Administrator.
  Headquarters Office: For information concerning grant applications and procedures
   contact Environmental Protection Agency, Grants Administration Division, Wash-
   ington, DC 20460. For program information contact Chief, Project Processing Staff,
   Office of Research and Development, Environmental Protection Agency, Washington,
   DC 20460. Telephone: (202) 426-2275.
RELATED PROGRAMS: 66.001, Air Pollution Control Program Grants; 66.002, Air
   Pollution Fellowships; 66.003, Air Pollution Manpower Training Grants; 66.005, Air
   Pollution Survey and Demonstration Grants.

        66.502 PESTICIDES  RESEARCH GRANTS


FEDERAL AGENCY: OFFICE OF RESEARCH AND  DEVELOPMENT, ENVIRON-
   MENTAL PROTECTION AGENCY
AUTHORIZATION: Section 20 of the Federal Insecticide, Fungicide and Rodenticide
   Act, as amended; Public Law 92-516; 7 U.S.C. 136r.
OBJECTIVES: To support and promote the coordination of research projects relating to
   human and ecological effects from pesticides, pesticide degradation products, and
   alternatives to pesticides.
TYPES OF ASSISTANCE: Project Grants.
USES AND USE RESTRICTIONS: Available for the allowable direct cost expendi-
   tures incident to research performance plus allocable portions of allowable indirect
   costs of the institutions,  in accordance with the established policies of EPA.
ELIGIBILITY REQUIREMENTS:
  Applicant Eligibility: Universities or others as may be necessary.
  Beneficiary Eligibility: Same as applicant eligibility.
  Credentials/Documentation: None.
APPLICATION AND AWARD PROCESS:
  Preapplication Coordination: Discussion with program office advisable. Environ-
   mental assessment required with application. Standards of FMC 74-7 apply only to
   State and local government.
  Application Procedure: Requests for application forms and completed applications
   should  be submitted to Environmental Protection Agency, Grants Administration
   Division, Washington, DC 20460.
  Award Procedure: Each application shall be subjected to administrative evaluation
   to determine the adequacy of the application in relation to grant regulations, and to
   program evaluation; technical and extramural  review determines the merit and
   relevance of the project.
  Deadlines: None.
  Range of Approval/Disapproval Time:  Approximately 90 days.
  Appeals: No appeals procedure; however,  revised proposals may  be resubmitted in
   light of "Award Procedure."
  Renewals: None. Standard grant application should be prepared and submitted. It will
   be reviewed in same manner as a new application and will compete for available
   funds.
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ASSISTANCE CONSIDERATIONS:
  Formula and Matching Requirements: A minimum of 5 percent cost sharing is
   required except for programs where matching funds are required by statute.
  Length and Time Phasing of Assistance: Grants normally funded on a 12-month
   basis (yearly). Total project period varies according to program requirements.
POST ASSISTANCE REQUIREMENTS:
  Reports: As specified in grant award (usually quarterly interims and final progress
   and expenditure  reports).
  Audits: Grants are subject to  inspections  and audit by representatives  of the
   Comptroller General of the United States and EPA.
  Records: Financial records, including all documents to support entries on accounting
   records and to  substantiate changes to each grant,  must be kept  available to
   personnel authorized to examine EPA grant accounts. All records must be maintained
   for 3 years after the end of each budget period, and if questions still remain, such as
   those raised as a result of audit, related records should be retained until the matter is
   completely resolved.
FINANCIAL INFORMATION:
  Account Identification: 20-00-0107-0-1-404.
  Obligations: (Grants) FY 73 $904,000; FY 74 est $1,140,000; andFY 75 est $1,202,000.
  Range and Average of Financial Assistance: $13,850 to $300,000; $48,924.
PROGRAM ACCOMPLISHMENTS: In fiscal year 1973, 18 grant applications were
   awarded.
REGULATIONS, GUIDELINES, AND LITERATURE: Interim Regulations, Grant
   Programs, Environmental Protection Agency; Federal Register, Vol. 36, No. 229, p.
   22716; Interim Regulations, Research and Demonstration Grant,  Environmental
   Protection Agency; Federal Register, Vol. 38, No. 93, p. 12784; "Federal Assistance
   Programs of the Environmental Protection Agency," no charge.
INFORMATION CONTACTS:
  Regional or Local Office: Individuals are  encouraged to communicate with the
   appropriate EPA Regional Administrator.
  Headquarters Office: For  information concerning grant applications and procedures
   contact Environmental Protection Agency, Grants Administration Division, Wash-
   ington, DC 20460. For program information contact Chief, Project Processing Staff,
   Office of Research and Development, Environmental Protection Agency, Washington,
   DC  20460. Telephone: (202) 426-2275.
RELATED  PROGRAMS:  10.053,  Dairy  Indemnity  Payments;  15.604,  Fishery
   Research-Information; 15.607, Pesticide Appraisal and Monitoring; 15.610, Wildlife
   Research  Information.

         66.503  RADIATION RESEARCH GRANTS


FEDERAL AGENCY: OFFICE OF RESEARCH AND DEVELOPMENT, ENVIRON-
   MENTAL PROTECTION AGENCY
AUTHORIZATION: Public  Health Service Act, as amended; Public law 78-410; 42
   U.S.C. 241 and 246.
OBJECTIVES:  To support  and  promote research relating to the exploration of
   environmental radiation hazards and reduction of the resultant risk to health.  "
TYPES OF ASSISTANCE: Project Grants.
USES AND  USE RESTRICTIONS: Available for the allowable direct cost expendi-
   tures incident to research performance plus allocable portions of allowable indirect
   costs of the institutions, in accordance with the established policies of EPA.
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ELIGIBILITY REQUIREMENTS:
  Applicant Eligibility: Universities, hospitals, laboratories, other public or private
   institutions, or individuals.
  Beneficiary Eligibility: Same as applicant eligibility.
  Credentials/Documentation: None.
APPLICATION AND AWARD PROCESS:
  Preapplication Coordination: Discussion with program office advisable. Environ-
   mental assessment required with application. Standards of FMC 74-7 apply only to
   State and local governments.
  Application Procedure: Requests for application forms and completed applications
   should be submitted to the Environmental Protection Agency, Grants Administration
   Division, Washington, DC 20460.
  Award Procedure: Each application shall be subjected to administrative evaluation
   to determine the adequacy of the application in relation to grant regulations, and to
   program evaluations; technical and extramural review determines  the merit and
   relevance of the project.
  Deadlines: None.
  Range of Approval/Disapproval Time:  Approximately 90 days.
  Appeals: No appeals procedure; however,  revised proposals may be resubmitted in
   light of "Award Procedure."
  Renewals: None. Standard grant application should be prepared and submitted. It will
   be reviewed in the same manner as a new  application and will compete for available
   funds.
ASSISTANCE CONSIDERATIONS:
  Formula and Matching Requirements:  A minimum of 5 percent cost sharing is
   required except for programs where matching funds are required by statute.
  Length and Time Phasing of Assistance: Grants normally funded on a 12-month
   basis (yearly). Total project period  varies  according to program requirements.
POST ASSISTANCE REQUIREMENTS:
  Reports: As  specified in grant award (usually quarterly interims and final progress
   and expenditure reports).
  Audits: Grants  are  subject  to inspection  and audit by representatives  of  the
   Comptroller General of the United States  and EPA.
  Records: Financial records, including all documents to support entries on accounting
   records and to substantiate charges to each grant, must be kept available to personnel
   authorized to examine EPA  grant  accounts. All records must be maintained for 3
   years after the end of each budget period, and if questions still remain, such as those
   raised as a result of audit, related records  should be retained until the matter is
   completely resolved.
FINANCIAL INFORMATION:
  Account Identification: 20-00-0107-0-1-404.
  Obligations: (Grants) FY 73 $284,000; FY  74 est $158,000;  and FY 75 est $149,000.
  Range and Average of Financial Assistance: $15,170 to $52,800; $38,809.
PROGRAM ACCOMPLISHMENTS: In fiscal year 1973, seven grants were funded for
   research work.
  Regulations, guidelines, and literature: Interim Regulations, Grant Programs,
   Environmental Protection Agency; Federal Register, Vol. 36, No.  229, p. 22716;
   Interim Regulations, Research and Demonstration Grants, Environmental Protection
   Agency; Federal Register, Vol. 38, No. 93, p. 12784; "Federal Assistance Programs of
   the Environmental Protection Agency," no charge.
INFORMATION CONTACTS:
  Regional or Local Office: Individuals are encouraged to communicate with the
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   appropriate EPA Regional Administrator.
  Headquarters Office: For information concerning grant applications and procedures
   contact Environmental Protection Agency, Grants Administration Division, Wash-
   ington, DC 20460. For program information contact Chief, Project Processing Staff,
   Office of Research and Development, Environmental Protection Agency, Washington,
   DC 20460. Telephone: (202) 426-2275.
RELATED PROGRAMS: None.

       66.504 SOLID WASTE RESEARCH GRANTS


FEDERAL AGENCY: OFFICE OF RESEARCH AND DEVELOPMENT, ENVIRON-
   MENTAL PROTECTION AGENCY
AUTHORIZATION: Solid Waste Disposal Act, Section 204 & 205, and as amended;
   Public Law 89-272; 42 U.S.C. 3253.
OBJECTIVES: To support and promote the coordination of research and development
   in the area of collection, storage, utilization, salvage or final disposal of solid waste.
TYPES OF ASSISTANCE: Project Grants.
USES AND USE RESTRICTIONS: Available for the  allowable direct cost expendi-
   tures incident to research performance plus allocable portions of allowable indirect
   costs of the institutions, in accordance with established EPA policies.
ELIGIBILITY REQUIREMENTS:
  Applicant Eligibility: Public or private agencies and institutions and individuals.
  Beneficiary Eligibility: Same as applicant eligibility.
  Credentials/Documentation: None.
APPLICATION AND AWARD PROCESS:
  Preapplication Coordination: Discussion with program office advisable. Environ-
   mental Assessment required with application. Standards of FMC 74-7 apply only to
   State and local governments.
  Application Procedure: Requests for application forms and completed applications
    should be submitted to EPA Grants Administration Division, Washington, DC 20460.
  Award Procedure: Each application shall be subjected to administrative evaluation
    to determine adequacy of application in relation to grant regulations, and to program
    evaluation; technical and extramural review determines the merit and relevance of
    the project.
  Deadlines: None.
  Range of Approval/Disapproval  Time: Approximately 90 days.
  Appeals:  No appeals procedure; however,  revised  proposals may be resubmitted in
    light of "Award Procedure."
  Renewals: None. Standard grant application should be prepared and submitted. It will
    be reviewed in same manner as a new application and will compete for available
    funds.
ASSISTANCE CONSIDERATIONS:
  Formula  and Matching Requirements:  A minimum of 5 percent cost sharing is
    required.
  Length and Time Phasing of Assistance: Term of grant shall be determined at time
    of award.
POST ASSISTANCE  REQUIREMENTS:
  Reports:  As specified in grant award (usually quarterly interims and final progress
    expenditure reports).
  Audits: Grants are subject to inspection  and  audit by representatives  of the
    Comptroller General of the United States and EPA.
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  Records: Financial records, including all documents to support entries on accounting
   records and to substantiate charges to each grant, must be kept available to personnel
   authorized to examine EPA grant accounts. All records must be maintained for 3
   years after the end of each budget period, and if questions still remain, such as those
   raised as a result of audit,  related records should  be retained  until the matter is
   completely resolved.
FINANCIAL INFORMATION:
  Account Identification: 20-00-0107-0-1-404.
  Obligations: (Grants) FY 73 $464,000; FY 74 est $295,000;  and FY 75 est $418,000.
  Range and Average of Financial Assistance: $13,667 to $158,295; $58,696.
PROGRAM ACCOMPLISHMENTS: Studies are being conducted to determine means
   of recovering materials  and energy  from  waste materials and methods  for  the
   reduction, neutralization, recovery and disposal of solid waste. In fiscal year 1973, 8
   research grants were awarded.
  Regulations,  Guidelines  and Literature:  Interim  Regulations,  Grant Pro-
   grams, Environmental Protection Agency; Federal Register, Vol. 36, No.  229, p.
   22716; Interim Regulations, Research and Demonstration Grants, Environmental
   Protection Agency, Federal Register, Vol. 38, No. 93, p. 12784;  Federal Assistance
   Programs of the Environmental Protection Agency, no charge.
INFORMATION CONTACTS:
  Regional  or Local Office:  Individuals are encouraged to communicate with  the
   appropriate EPA Regional Administrator.
  Headquarters Office: For information concerning grant applications and procedures
   contact Environmental Protection Agency, Grants Administration Division, Wash-
   ington, DC 20460. For program information contact Chief, Project Processing Staff,
   Office of Research and Development, Environmental Protection Agency, Washington,
   DC 20460. Telephone: (202) 426-2275.
RELATED  PROGRAMS: None.

66.505 WATER POLLUTION CONTROL-RESEARCH,
        DEVELOPMENT, AND DEMONSTRATION


FEDERAL  AGENCY: OFFICE OF RESEARCH AND DEVELOPMENT, ENVIRON-
   MENTAL PROTECTION AGENCY
AUTHORIZATION: Sections  104, 105,  107, 108, 113 of the Federal Water Pollution
   Control Act as amended;  Public Law 92-500; 33 U.S.C. 1254, 1255, 1257, 1258, 1263.
OBJECTIVES: To  support and promote the coordination and acceleration of research,
   development, and  demonstration projects relating to  the causes, effects,  extent,
   prevention, reduction and elimination of water pollution.
TYPES OF ASSISTANCE: Project Grants.
USES AND USE RESTRICTIONS: Available for allowable direct cost expenditures
   incident to research performance plus allocable portions of  allowable indirect costs of
   the institution, in accordance with established EPA policies.
ELIGIBILITY REQUIREMENTS:
  Applicant Eligibility: Nonprofit institutions such as universities  and colleges,
   hospitals, laboratories, State and local government departments, other public or
   private nonprofit institutions.  Grants may also be awarded to individuals and
   persons who have demonstrated unusually high scientific  ability.
  Beneficiary Eligibility: Same as applicant eligibility.
  Credentials/Documentation: None.
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APPLICATION AND AWARD PROCESS:
  Preapplication Coordination: Discussion with program office advisable; environ-
    mental assessment required with application. Applications should be reviewed under
    procedures in Part I of OMB Circular No. A-95 (revised). Standards of FMC 74-7 apply
    only to State and local governments.
  Application Procedure: Requests for application forms and completed applications
    should be submitted to the Environmental Protection Agency, Grants Administration
    Division, Washington, DC 20460.
  Award Procedure: Each application shall  be subjected to administrative evaluation
    to determine the adequacy of the application in relation to grant regulations and to
    program evaluation; technical and  extramural  review  determines the merit  and
    relevance of the project.
  Deadlines: None.
  Range of Approval/Disapproval Time:  Approximately 90 days.
  Appeals: No appeals procedure; however,  revised proposals may be resubmitted in
    light of "Award Procedure." Standard grant application should be prepared  and
    submitted. It will be reviewed in same manner as a new application and will compete
    for available funds.
  Renewals: None.
ASSISTANCE CONSIDERATIONS:
  Formula and Matching Requirements:  A minimum of 5  percent cost sharing is
    required, except for programs where matching funds are required by statute.
  Length and Time Phasing of Assistance: Grants normally funded on a 12-month
    basis (yearly). Total project period varies  according to program requirements.
POST ASSISTANCE  REQUIREMENTS:
  Reports: As  specified in grant award (usually quarterly interims and final progress
    and expenditure reports).
  Audits: Grants  are  subject to inspection  and audit by  EPA  and  the Comptroller
    General.
  Records: Financial records, including all documents to support entries on accounting
    records and to substantiate charges to each grant, must be kept available to personnel
    authorized to examine EPA grant accounts. All records must be maintained for 3
    years after the end of each budget period, and if questions still remain, such as those
    raised as a result of audit, related records should be retained until the matter is
    completely resolved.
FINANCIAL INFORMATION:
  Account Identification: 20-00-0107-0-1-404.
  Obligations: (Grants) FY 73 $16,773,429; FY 74  est $15,053,000; and FY 75 est
    $13,000,000.
  Range and Average of Financial Assistance: Research Grants: $2,750 to $502,354;
    $47,536; Demonstration Grants: $5,000 to $487,788; $127,169.
PROGRAM  ACCOMPLISHMENTS:  Significant projects  include  research  and
    demonstration  of methods for the control  and treatment of wastewaters discharged
    from  the urban environment. Efforts are also  directed toward new or improved
    treatment of wastes from agricultural activities, oil and hazardous material spills,
    industrial manufacturing, and mining operations. Projects also include research to
    increase the understanding of the aquatic ecosystem and eutrophication process. In
    fiscal year 1973, 231 grants were awarded.
REGULATIONS, GUIDELINES, AND LITERATURE: Interim Regulations, Grant
    Programs, Environmental Protection Agency; Federal Register, Vol. 36, No. 229, p.
    22716; Interim Regulations, Research and Demonstration  Grants, Environmental
    Protection Agency; Federal Register, Vol. 38, No. 93, P.12784, "Federal Assistance
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   Programs of the Environmental Protection Agency," (no charge).
INFORMATION CONTACTS:
  Regional  or  Local Office: Individuals are encouraged  to  communicate with
   appropriate EPA Regional Administrator.
  Headquarters Office: For information concerning grant applications and procedures
   contract Environmental Protection Agency, Grants Administration Division, Wash-
   ington, DC 20460. For program information contact,  Chief, Project Processing Staff,
   Office of Research and Development, Environmental Protection Agency, Washington,
   DC 20460. Telephone: (202) 426-2275.
RELATED  PROGRAMS: 15.950, Additional Water Resources Research; 66.418,
   Construction Grants for Wastewater Treatment Works.

      66.506  WATER SUPPLY  RESEARCH GRANTS


FEDERAL AGENCY: OFFICE OF RESEARCH AND DEVELOPMENT, ENVIRON-
   MENTAL PROTECTION AGENCY
AUTHORIZATION: Section 301 of the Public Health  Service Act; 42 U.S.C. 241.
OBJECTIVES:  To support research aimed at establishing health criteria for organic,
   inorganic and microbiological contaminants of drinking water and to establish safe
   recreational water quality standards.
TYPES OF ASSISTANCE: Project Grants.
USES AND USE  RESTRICTIONS: Available for the allowable direct cost expendi-
   tures incident to research performance plus allocable portions of allowable indirect
   costs of the institutions, in accordance with the established policies of EPA.
ELIGIBILITY  REQUIREMENTS:
  Applicant Eligibility:  Universities,  hospitals, laboratories, and other  public or
   private institutions, or individuals.
  Beneficiary Eligibility:  Same as  applicant eligibility.
  Credentials/Documentation: None.
APPLICATION AND AWARD PROCESS:
  Preapplication  Coordination: Discussion with program office advisable. Environ-
   mental assessment required with application. Standards FMC 74-7 apply only to
   State and local governments.
  Application Procedure: Requests for application forms and completed applications
    should be submitted to the Environmental Protection Agency, Grants Administration
   Division, Washington, DC 20460.
  Award Procedure: Each application shall be subjected to administrative evaluation
   to determine the adequacy of the application in relation to grant regulations and to
   program evaluation, technical and extramural review to determine the merit and
   relevance of the project.
  Deadlines: None.
  Range of Approval/Disapproval Time: Approximately 90 days.
  Appeals:  No  appeals  procedure  as  such. However, revised  proposals may be
   resubmitted according to instructions above.
  Renewals: None. Standard grant application should be prepared and submitted. It will
    be reviewed in  same manner as a new application  and will compete for available
    funds.
ASSISTANCE CONSIDERATIONS:
  Formula  and Matching Requirements: A minimum of 5  percent cost sharing is
   required except for programs where matching funds are required by statute.
  Length and Time Phasing  of Assistance: Grants normally funded on a 12-month
   basis (yearly). Total project period varies according to program requirements.


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POST ASSISTANCE REQUIREMENTS:
  Reports: As specified in grant award (usually quarterly interims and final progress
    and expenditure reports).
  Audits: Grants are  subject  to  inspection and audit by  representatives of the
    Comptroller General of the United States and EPA.
  Records: Financial records, including all documents to support entries on accounting
    records and to substantiate charges to each grant, must be kept available to personnel
    authorized to examine EPA grant accounts. All such records must be maintained for 3
    years after the end of each budget period, and if questions still remain, such as those
    raised as a result of audit, related records should be retained until the matter is
    completely resolved.
FINANCIAL INFORMATION:
  Account Identification: 20-00-0107-0-1-404.
  Obligations: FY 73 $87,571; FY 74 est $128,000; and FY 75  est $182,000.
  Range and Average of Financial Assistance: $8,843 to $54,579; $29,190.
PROGRAM ACCOMPLISHMENTS: Projects have been started for the effective and
    economical control of drinking water contaminants during  storage, treatment, and
    distribution. Studies  also include the biological effects resulting from the presence of
    infectious agents and toxic contaminants. In fiscal year 1973, 3 research grants were
    awarded.
REGULATIONS, GUIDELINES, AND LITERATURE: Interim Regulations, Grant
    Programs, Environmental Protection Agency; Federal Register, Vol. 36, No. 229, p.
    22716; Interim Regulations, Research and Demonstration  Grants, Environmental
    Protection Agency; Federal Register, Vol. 38, No. 93, p. 12784; "Federal Assistance
    Program of the Environmental Protection Agency," no charge.
INFORMATION CONTACTS:
  Regional or Local Office: Individuals are  encouraged to communicate with the
    appropriate EPA Regional Administrator.
  Headquarters Office: For information concerning grant applications and procedures
    contact Environmental Protection Agency, Grants Administration Division, Wash-
    ington, DC 20460. For program information contact, Chief, Project Processing Staff,
    Office of Research and Development, Environmental Protection Agency, Washington,
    DC 20460. Telephone:  (202) 426-2275.
RELATED PROGRAMS: 15.950, Additional Water Resources Research, 66.505, Water
    Pollution Control-Research, Development, and Demonstration.
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OFFICE    OF    PLANNING
      AND  MANAGEMENT
        66.600 ENVIRONMENTAL PROTECTION-
           CONSOLIDATED PROGRAM  GRANTS


FEDERAL AGENCY: OFFICE OF PLANNING AND MANAGEMENT, ENVIRON-
    MENTAL PROTECTION AGENCY
AUTHORIZATION: Including but not limited to: Section  105 of the^Clean Air Act, 42
    U.S.C. 1857c. Section 106 of the Federal Water Pollution  Control Act Amendments of
    1972,33U.S.C. 1151. Section 207 or 208 of the Solid Waste Disposal Act, 42U.S.C. 3251
    et seq.
Objectives: To enable States to coordinate and manage environmental approaches to
    their pollution problems. Consolidated grants are alternate grant delivery mecha-
    nisms. These mechanisms provide for consolidating into one grant instrument those
    grants awarded separately to States for management of environmental protection
    activities including but not limited to air pollution control, water pollution control,
    and solid waste management.
TYPES OF ASSISTANCE: Project Grants.
USES AND USE RESTRICTIONS: Grant funds may be used for costs specifically
    incurred in the conduct of a project in accordance with the purposes enumerated in the
    approved application.
ELIGIBILITY REQUIREMENTS:
  Applicant  Eligibility: Any  State  with a single agency  eligible to receive and
    administer funds  made available through the  applicable statutory  authorizations.
    Such an agency is eligible even though it may not be currently receiving funds under
    one of the grant authorities.
  Beneficiary Eligibility: Same as applicant eligibility.
  Credentials/Documentation:  States  and EPA Regional Offices  together have
    flexibility in developing the format of the application so long as funding sources are
    indicated, and the State presents an interdisciplinary approach to its  pollution
    problems. States  are  encouraged to describe all their environmental protection
    activities. The application should include quantified State objectives. If possible, the
    State should include critical path/strategy charts of its pollution control decision-
    making efforts. The applicant's  program should complement the applicable EPA
    Regional  Office  program plans and priorities. Information  contained  in the
    application should not duplicate information already provided or to be provided by
    the State to satisfy other  EPA requirements such as air implementation plan
    documentation. A State Plan is required under Part III of OMB Circular No. A-95
    (revised).
APPLICATION AND AWARD PROCESS:
  Preapplication Coordination: Preapplication communications should be directed to
    the appropriate EPA Regional Administrator. Environmental assessment required
    with application. Applicants  for  State  and  local entities should use  standard
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   application forms as required by FMC 74-7 and furnished by EPA.
  Application Procedure: The application should be submitted to the appropriate EPA
   Regional Office.
  Award Procedure: Notification of grant award must be made by EPA to  the
   designated State Central Information Reception Agency and Department of Treasury
   on SF 240.
  Deadlines: Grant must be approved by EPA prior to beginning of State's fiscal year.
  Range of Approval/Disapproval Time: Minimum review time is 7 days.
  Appeals: None.
  Renewals: None.
ASSISTANCE CONSIDERATIONS:
  Formula and Matching Requirements: See applicable program descriptions.
  Length and Time Phasing of Assistance: The terms of the grant agreement shall be
   determined by the State and EPA at time of award.
POST ASSISTANCE REQUIREMENTS:
  Reports: Only  final expenditure reports  are required.  State-regional office grantee
   program performance evaluation meetings may be scheduled 60 days after initiation
   of the grant and approximately every 90 days thereafter. After each meeting, the
   regional office will prepare an evaluation report and submit a copy to the State. A
   semi-annual evaluation is required. Both State and  EPA performance should be
   evaluated at the meetings. The final quarterly report should be an annual report. The
   State will not be required to submit written progress reports during the course of the
   grant cycle. The State must be provided with the evaluation format early enough to be
   prepared for the scheduled evaluation conferences.
  Audits: Subject to inspection and audit by EPA and the U.S. Comptroller General.
  Records: See EPA Grant Programs, Interim Regulations, Subchapter B, Appendix A.
FINANCIAL INFORMATION:
  Account  Identification: 20-00-0108-0-1-404.
  Obligations: See applicable program descriptions.
  Range and Average of Financial Assistance: See applicable program descriptions.
PROGRAM ACCOMPLISHMENTS: Nine grants totaling $12,300,000 were awarded to '
   States for support of their fiscal year 1974 activities.
REGULATIONS, GUIDELINES, AND  LITERATURE: EPA Grant Programs,
   Interim  Regulations,  40  CFR  Part 30; EPA, General  Grant Regulations  and
   Procedures, State and Local Assistance, 40 CFR Part  35.
INFORMATION CONTACTS:
  Regional or Local Office: Contact appropriate EPA Regional Administrator.	
  Headquarters  Office:  Director, Grants  Administration Division,  Environmental
   Protection Agency, Washington, DC 20460.
RELATED PROGRAMS: 66.001, Air Pollution Control Program Grants; 66.419, Water
   Pollution Control-State and Interstate Program Grants.
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    APPENDIX B
 EPA AREA AUDIT
   OFFICES AND
    COGNIZANT
GEOGRAPHIC AREAS
         B.I

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             EPA AREA AUDIT OFFICES AND
            COGNIZANT GEOGRAPHIC AREAS
         Geographic Area

Pennsylvania, Delaware, Maryland, Vir-
ginia, West Virginia, and Washington,
D.C.
Maine, Connecticut, New York, Massa-
chusetts,  Rhode Island, Vermont, New
Hampshire, New Jersey, Puerto Rico, and
Virgin Islands
Ohio, Michigan, Wisconsin,  Minnesota,
Indiana, Illinois, Iowa, Nebraska, Missou-
ri, and Kansas
Colorado, Utah, Nevada, Hawaii, Wash-
ington, Oregon, California, Idaho, Monta-
na, Wyoming, Arizona, North  Dakota,
Alaska, and South Dakota
Alabama, North Carolina, South Caroli-
na, Florida, Georgia, Mississippi, Texas,
Arkansas, Tennessee, Kentucky, Oklaho-
ma, New Mexico, and Louisiana
Address of  Cognizant EPA Area
           Audit Office
Mr. Juan Soto, Jr.
Area Audit Manager
Environmental Protection Agency
Mid-Atlantic Area Audit Group
401 M Street, S.W., Rm. 3708
Washington, D.C. 20460
(202) 755-0953
                      •
Mr. Joseph J.  DeRosa
Area Audit Manager
Eastern Area Audit Group
90 Church St.  - Suite 802
New York, New York 10007
(212) 264-5730
Mr. Roger Smith
Area Audit Manager
Northern Area Audit Group
1 North Wacker Drive
Chicago, Illinois 60606
(312) 353-7910
Mr. Truman R. Beeler
Area Audit Manager
Environmental Protection Agency
Western Area  Audit Group
100 California Street
San Francisco, California 94111
(415) 556-1954
Mr. Leslie M.  Buie
Area Audit Manager
Southern Area Audit Group
Suite 921
1720 Peachtree Road, N.W.
Atlanta, Georgia 30309
(404) 526-3623
                                    B.2

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     APPENDIX C

SURVEY OF GRANTEE'S
    MANAGEMENT
      SYSTEMS
          c.i

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 Survey of Grantee's
Management Systems
System
Accounting
1. Has the grantee established project accounting
records to record the costs applicable to EPA
grants or contracts?
2. Are all costs of a project recorded on these records?
3. Are the costs in these records used as the basis for
the grantee's financial status reports or vouchers?
4. Are the costs recorded on these records reflected on
and reconciled with control accounts contained in
the grantee's general ledger?
5. Are project accounts broken into subaccounts by
program element or cost objective?
6. Are approvals requested for significant deviations
from amounts contained in the grant proposals?
7. Is appropriate documentation maintained to
support the costs of:
a. personnel?
b. consultants?
c. fringe benefits?
d. purchases of material, supplies, and equip-
ment?
e. travel?
f. other costs?
8. Before being recorded, are the costs contained in
the project accounting records subjected to review
as to their reasonableness, allowability, and
allocability to the EPA grants?
9. Are controls established to assure that the grantee
does not claim costs incurred prior to or subse-
quent to the established grant period?
10. Are the controls or procedures exercised in
administering federal expenditures the same as
those utilized in the expenditure of the grantee's
funds? (When the grantee's requirements are more
stringent than EPA requirements, it is expected
that the grantee will treat federal funds as he
would treat his own.)
Yes












No












N/A












W/P Ref.












        C.2

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System
11. Are the grantee's accounting records subjected to
an independent audit at least every two years?
Cash
12. Are appropriate controls in effect to assure that
vouchers or requests for advances are based on
actual expenditures recorded on the grantee's
project accounting records?
Personnel
13. Are procedures established to assure that em-
ployees working under federal grants are paid at
rates comparable to the rates paid other em-
ployees?
14. Do the personnel and/ or payroll records provide
support for time and attendance, leave, and
earnings for all employees?
15. Are time distribution records maintained to show
the amount of time spent on federal grants as well
as the time spent on other activities?
16. Are controls in effect to assure that personnel
costs are distributed in accordance with the time
reflected on time distribution records, i.e., reconcil-
iation of labor distribution and payroll records?
17. Have controls been established to assure that
overtime is appropriate for the project approved in
accordance with grantee policies, and acceptable
under the terms of the grant and applicable
Federal Regulations?
18. When personnel are working on projects other
than that sponsored by the federal grant, is the
cost of overtime:
a. charged to the federal project on which the
overtime was spent?
b. allocated over the individual's total work
during that period?
c. treated as an indirect cost?
d. other?
Yes











No











N/A











W/P Ref.











C.3

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System
Personnel (continued)
19. Have procedures been established governing the
charges of personnel time related to partners or
principles in closely held corporations?
20. Are formal procedures established with respect to
bonuses, retirement plans, and/ or profit sharing?
Procurement
21. Are procedures established to assure that profes-
sional services, equipment, material and/ or sup-
plies requested are really needed?
22. Are existing supplies or inventories reviewed to
assure that items requested are not already
available?
23. Are formal procurement procedures established to
assure that equipment, material, and supplies are
obtained on a competitive basis?
24. Are solicitations obtained from several sources so
that the grantee has assurance of obtaining the
most qualified party to perform needed profession-
al services?
25. Are quotations obtained and reviewed to assure
that the price proposed is reasonable to the
grantee and EPA?
26. Are procedures established to assure that the type
of contract utilized is appropriate for the procure-
ment being undertaken?
27. Are controls in effect to assure that the grantee
does not utilize types of contracts unacceptable to
the Federal Government?
28. Are internal controls utilized to assure that
contracts contain all required clauses:
a. access to records?
b. ownership of data?
c. termination?
d. applicable cost principles?
e. defective pricing (in fixed price contracts)?
Yes













No













N/A













W/P Ref.













C-4

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                     System
No
N/A.
W/PIUC
Procurement (continued)
29  Are procedures in effect to assure that the grantee
    requests and obtains all required approvals:
    a.  subcontracts?
    b.  equipment purchases?
    c.  other capital expenditures?

Travel
30. Does  the grantee  have  adequate  established
    policies governing reimbursement for travel?

31. Do these policies:
    a.  require the  submission  of travel  vouchers
       showing the time and purpose of travel?
    b.  clearly indicate the nature  of expenses being
       claimed?
    c.  require the submission of supporting documen-
       tation?
Obligations
32. Are procedures established to assure that obliga-
    tions  reported  are supported by  appropriate
    purchase orders, contracts, etc?

Obligations (continued)
33. Do these procedures require that obligations are
    periodically reviewed with regard to their validi-
    ty?
34. Do the procedures require the timely liquidation of
    the obligations and the updating of information
    contained on financial status reports?
Indirect Costs
35. Has the grantee established procedures indicating
    which costs are considered direct costs as opposed
    to indirect costs?
36. Is the  grantee claiming indirect costs under
    federal grants and contracts?
37. Has the grantee been submitting the required
    indirect cost proposals to the federal agencies or
    retaining them for review during audit?
                                       C.5

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System
38. Have these proposals been audited and negotiat-
ed?
Property Management
39. Has the grantee established an equipment inven-
tory system for controlling property obtained
under federal grants?
40. Does this inventory system show:
a. a description of the item?
b. a related property tag number?
c. the federal equity in the equipment?
d. the location of the equipment?
e. the condition of the equipment?
41. Are periodic inventories made to validate invento-
ry information?
42. Are procedures established governing the use and
disposition of property acquired with federal
funds?
43. Do these procedures assure that EPA is notified of
any change in the use of the property?
44. Do the procedures assure that EPA receives its
appropriate share of any proceeds from disposi-
tion of the property?
Grant-Related Income
45. Have procedures been established to assure that
any income generated under the grant is identified
and that EPA will receive appropriate benefit from
such income?
Yes



























No



























N/A



























W/P Ref.



























C.6

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               APPENDIX  D
                         ^ERENCES
                          REFERENCES

1.   GAO "Standards for  the  Audit  of Governmental Organizations,  Programs,
    Activities, and Functions"
2.   FMC 74-4 Cost Principles Applicable to Grants and Contracts with State and Local
    Governments
3.   FPR Section 15.2 Cost Principles Applicable  to Grants and Contracts with
    Commercial Organizations
4.   FMC 74-7 Uniform Administrative Requirements for Grants-in-Aid to State and
    Local Governments
5.   40 CFR 30 Interim General Grant Regulations issued November 1971
6.   40 CFR 30 Final General Grant Regulations issued May 1975
7.   40 CFR 35 Interim Regulations State and Interstate Grant Programs
8.   40 CFR 40 Interim Regulations Research and Demonstration Grants
9.   40 CFR 45, 46 Interim Regulations EPA Training Grants and Fellowships
10.  40 CFR 126 Interim Regulations EPA Water Planning Grants
11.  OASC-8, DHEW "A Guide for Local Governmental Agencies"
12.  OASC-6, DHEW "A Guide for State Agencies"
13.  OASC-5, DHEW "A Guide for Non-Profit Institutions"
                                 •D.I

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