Office of Inspector General
Special Report
REGION 8'S BUDGET
EXECUTION PROCESS
E1AMB5-08-0031-6400042
March 22,1996
EPA
350/
1996.18
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Inspector General Division
Conducting the Audit:
Region 8 Program Offices(s)
Involved:
Central Audit Division
Kansas City, Kansas
Office of Technical and
Management Services
¥».
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EXECUTIVE SUMMARY
Background
We conducted a survey of Region 8's role in the budget
execution process. Our general objectives were to determine
how Region 8 managed its budget and determine if the Region
used its resources in accordance with congressional and
Agency requirements.
We Found That
Region 8 generally followed budget execution
requirements, involved all levels of the Region in budgeting
issues, and executed the budget as intended. The Region
generally had a good system of internal controls for budget
execution and used the Environmental Protection Agency's
financial systems for Regional decisionmaking. However,
Region 8 needed to update its internal control policies and
procedures, did not always use resources as intended, and
should reexamine its philosophies regarding charging the
personnel cost of management and support activities and
reprogramming personnel resources to more accurately reflect
Agency requirements and program costs. The Region also
overspent personnel resources by program element. While
Region 8 considered the budgetary impact of new initiatives,
it did not complete its analysis of the budgetary impact of
the Region's reorganization before the reorganization went
into effect on October 1, 1995.
We Recommended That
The Regional Administrator should update internal
controls for budget execution, ensure all employees charge
their time to the correct program, allocate personnel
resources to programs based on anticipated need rather -than
Regional averages, reprogram workyears and funds where
appropriate, and continue to provide training for
administrative officers to ensure consistent application of
budget principles.
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TABLE OF CONTENTS
Page
EXECUTIVE SUMMARY i
ACTION REQUIRED 1
PURPOSE . 3
BACKGROUND 3
SCOPE AND METHODOLOGY 4
REVIEW RESULTS 6
REGION 8'S SYSTEM OF INTERNAL CONTROLS FOR BUDGET
EXECUTION WAS GENERALLY GOOD 6
REGION 8 GENERALLY USED RESOURCES AS PLANNED 7
REGION 8 OVERSPENT PERSONNEL RESOURCES
AT THE PROGRAM LEVEL 8
REGION 8 GENERALLY USED THE FINANCIAL MANAGEMENT
SYSTEMS FOR REGIONAL DECISIONMAKING 9
REGION 8 CONSIDERED THE BUDGETARY IMPLICATIONS
OF NEW INITIATIVES 10
BUDGETARY IMPACT OF REORGANIZATION HAD NOT
BEEN COMPLETED 10
RECOMMENDATIONS . 11
REGIONAL COMMENTS AND OIG EVALUATION 11
APPENDICES
APPENDIX I: AGENCY COMMENTS 14
APPENDIX II: ABBREVIATIONS 18
APPENDIX III: DISTRIBUTION 19
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL (913| 551-7878
CENTRAL DIVISION FAX |913| 551-7837
726 MINNESOTA AVENUE
KANSAS CITY. KANSAS 66101
March 22, 1996
MEMORANDUM
SUBJECT: Special Report E1AMB5- 08 -003 1-6400 042
Region 8's Budget Execution Process.
FROM: Bennie S. Salem
Acting Divisional Inspector General
for Audit
TO: Jack W. McGraw
Acting Regional Administrator
Region 8
We have completed our survey of Region 8's budget
execution process. We found instances where administrative
officers (AO) could improve the efficiency of their budgeting
activities and the Region could improve the accuracy of
program costs. Specifically, we found that generally the
Region used the Agency financial management systems to
provide information for budget execution purposes. However,
Region 8 needed to update its budget execution internal
control documentation, mischarged the personnel cost of five
management and support employees, was reluctant to reprogram
staff resources to better reflect staff functions, and
overspent personnel resource funds by program element .
Although the Region considered the budgetary implications of
new initiatives, it had not completed analysis of the
budgetary impacts of reorganizing. In addition, we found
that divisional AOs could be more consistent in monitoring
their budgets.
Resolving these issues is especially important as the
Region implements its new organization and works to meet the
challenges of the Government Performance and Results Act.
The Agency and Region 8 must accurately capture and report
program cost in order to assess the cost of program
performance, accurately report environmental results, and
measure the success of Region 8's reorganization.
ACTION REQUIRED
In accordance with Environmental Protection Agency (EPA)
Order 2750, you, as the action official, are required to
provide us a written response to the special report within 90
days. For corrective actions planned but not yet completed
RECYCLE-;*
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by the response date, reference to specific milestone dates
will assist us in deciding whether to close this report.
This special report contains findings that describe
issues the Office of Inspector General (OIG) has identified
and corrective actions OIG recommends. This report
represents the opinion of OIG. The findings contained in
this report do not necessarily represent the final EPA
position. Final determinations on matters, in this report
will be made by EPA managers in accordance with established
EPA audit resolution procedures.
We have no objections to the release of this report to
any member of the public. This report contains no
confidential business or proprietary information that cannot
be released to the public.
Thank you for the courtesy and assistance that you and
your staff provided our auditors, especially during these
difficult budgetary times. If you have any questions, please
call me at (913) 551-7831 or Jeff Hart, Audit Manager in our
Denver office, at 312-6169. Please refer to the report
number on all related correspondence.
E1AMB5-08-0031-6400042
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PURPOSE
Federal spending practices are receiving increased
scrutiny and criticism. EPA, in its response to the National
Performance Review entitled, Creating A U.S. Environmental
Protection Agency That Works Better And Costs Less {December
1993), cited problems with EPA's budget and planning process.
An OIG audit report on Region 7's budget process, Region 7's
Budget Execution Process, dated March 31, 1995, found that
Region 7 used funds allocated for environmental programs on
management and support activities, violated the congressional
reprogramming limitation, and did not provide program
managers adequate information to make informed management
decisions.
Our survey objectives were to determine how Region 8
managed its budget execution activities and whether resources
were used in accordance with congressional intent and Agency
requirements. Specifically, we sought to determine if Region
8:
o accurately reported and used workyears and
personnel resource funds as allocated in its
operating plan,
o reprogrammed funds in accordance with EPA
requirements,
o provided program managers with information needed
to make informed decisions, and
o considered the budget impact of its new
organizational structure.
BACKGROUND
Each year Congress gives EPA a budget to operate
programs that protect human health and the environment.- In
1994 and 1995, EPA received its spending authority from 10
appropriations which enabled it to carry out the missions
specified in authorizing legislation. EPA's National Program
Managers are responsible for developing both Headquarters and
regional budgets for their respective environmental programs.
EPA's budget structure is hierarchial. It has multiple
levels including appropriations, media (Air, Water,
E1AMB5-08-0031-6400042
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Superfund, etc.), and program elements. EPA generally
monitors spending by program element and object classes
within each program element. Program elements are
subcategories of media programs that identify funds for
specific activities such as indoor air program, regional
management, and hazardous substance spill and site response.
Program elements inform Congress, the Office of Management
and Budget, and others of the legal .basis, objectives, goals,
and resource requirements of each EPA program. Object
classes are a Governmentwide, uniform expense classification
system. Examples of object classes include personnel,
travel, and grants.
The Region 8 Administrator, the Region's allowance
holder, receives an annual budget from the Headquarters
Budget Division based on a congressionally approved Agency
operating plan. The budget provides funds by appropriation,
program element, and object class, to manage the Region and
to operate its environmental programs. Region 8 senior
managers determine overall budget execution policies, budget
staff analyze budget issues, and divisional AOs generally
execute budget details for Division Directors, the Region's
suballowance holders.
If, during the year, an allowance holder finds it cannot
operate a particular program for the amount Congress
approved, EPA reprograms funds from one program to cover
shortfalls in another. EPA must obtain congressional
approval to reprogram funds into or out of any program in
excess of $500,000. EPA's internal policies require an
allowance holder to obtain EPA Headquarters approval to
reprogram funds in excess of $250,000.
EPA's Resources Management Directive 2510, Planning and
Budgeting, and 2520, Administrative Control of Appropriated
Funds, dated June 1987, guide budget execution activities.
They provide managers guidance for executing the budget
including the reprogramming requirements.
SCOPE AND METHODOLOGY
This survey was part of a broader survey by the OIG
Central Audit Division's Kansas City office of EPA's budget
formulation and execution process. We conducted fieldwork
from April'through December 1995 at Region 8's offices in
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Denver, Colorado. Our survey covered the Region 8 budget
execution process for fiscal 1994 and 1995.
To determine if Region 8 used its resources as planned
or exceeded budgeted amounts, we assessed the Region's
allocation of workyears and funds, its compliance with
reprogramming requirements, and compared budgeted amounts
with actual charges. We compared initial,workyear
distributions for all program elements and offices to the
Region's operating plan and EPA's payroll data system. We
compared initial operating plan workyear and expense ceilings
provided in the fiscal 1994 advice of allowance letter with
the actual use of resources, as recorded in the Integrated
Financial Management System (IFMS), to determine whether
Region 8 exceeded ceilings. We reviewed staffing data for
the 596 Region 8 employees on board at the time of our
survey. We interviewed a judgmental sample of seven
employees to determine if their work activities corresponded
to their time charges. We selected the seven because it
appeared that they may have been incorrectly charging their
time.
To assess the Region's compliance with reprogramming
requirements, we reviewed all fiscal 1994 reprogrammings that
exceeded $250,000 using data from EPA's IFMS. We did not
review the integrity or security of EPA's data processing
systems.
To assess whether budget information available to
program managers was adequate for decisionmaking, we obtained
representative information from IFMS and the Management
Accountability Reporting System. We discussed the adequacy
and reliability of this information with Region 8 budget
analysts and AOs.
To determine if the Region weighed the impact that new
initiatives had on other programs, we reviewed senior
management decision memos and discussed the budget
formulation process with budget officials. Due to the timing
of our survey, we did not complete analysis of the impact of
Region 8's reorganization. We discussed the process that
Region 8 followed to assign staff fixed account numbers in
the new organization with Region 8 budget officials. We also
evaluated the recent Region 8 workforce survey conducted in
conjunction with the Region's reorganization.
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We designed our survey to gather information about
Region 8's budget execution process and identify potential
vulnerabilities for Region 8's attention. Our survey was
more limited in scope than an audit and, as such, did not
necessarily comply with all Government Auditing Standards.
We performed our survey in accordance with provisions of OIG
Manual Chapter 150, Reports of Review. Other than the issues
discussed below, no other significant issues- came to our
attention that warranted expanding the scope of our survey.
REVIEW RESULTS
Region 8 generally followed budget execution
requirements, involved all levels of the Region in budgeting
issues, and executed the budget as intended. The Region
generally had a good system of internal controls over
budgeting and used EPA financial systems to provide adequate
information for Regional budgetary decisionmaking. However,
Region 8 needed to update its internal control documentation,
did not always use resources as intended, and should
reexamine its philosophy regarding reprogramming staff and
funds to more accurately reflect program costs. The Region
also overspent personnel resources by program element. While
Region 8 considered the budgetary impact of new initiatives,
it did not complete its analysis of the budget impact of the
Region's reorganization before the reorganization went into
effect on October 1, 1995.
REGION 8'S SYSTEM OF INTERNAL
CONTROLS FOR BUDGET EXECUTION
WAS GENERALLY GOOD
Although extensive organizational changes require Region
8 to update its system of internal controls for budget
execution, its control system was generally good. Senior
managers were very aware of and involved in budget decisions.
Region 8 AOs managed personnel resources and other funds such
as travel, contracts, and cooperative agreements, although
reprogramming requests were approved only by the budget
officer or comptroller.
Region 8 budget execution involved all levels of the
organization. Region 8 budget officials analyzed various
budget issues, the Region's senior managers established
general policy and direction, and budget division staff and
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divisional AOs executed budget details. The Region used
suballowance holders as its accountability point for managing
the budget.
Region 8 tracked nonpersonnel resources at the program
element level. AOs did not permit expenditures of
nonpersonnel resources if the program element fund balance
was insufficient to cover the expenditure. AOs also
monitored workyear usage and investigated unusual charges to
ensure employees were charging time to the correct program
element. The Region tracked personnel resources at the
appropriation, rather than the program element level, during
the year.
REGION 8 GENERALLY USED
RESOURCES AS PLANNED
Region 8 assigned and used workyears as allocated by
National Program Managers and generally expended funds as
indicated in its operating plan. We compared fiscal 1995
initial workyear distribution with the Region 8 operating
plan and actual usage data and found no significant
differences. However, we found two examples of staff that
charged time to a program element that did not reflect their
job duties.
We found two examples of employees whose function did
not match the program element description to which their
personnel costs were charged. In the first case, the
Region's Safety and Occupational Health Specialist's
personnel costs were incorrectly charged to the air quality
management implementation program. In the second example,
Regional 'Counsel charged an employee's time to a water
program rather than a legal support program. The Region's
Water Division provided a workyear to Regional Counsel for a
lawyer to work exclusively on water issues. Rather than
reprogramming the workyear to reflect that the lawyer was
doing legal work, the lawyer charged time to the water
program element. Regional budget officials stated that
having a lawyer that worked exclusively on one media program
charge his time to that media program was permissible.
Because the water program element description does not
address legal work and the Regional Counsel program provided
funding for legal work, we believe the lawyer's personnel
costs should have been charged as a cost of the Regional
Counsel program.
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Although Region 8 representatives differ with our
opinion of what tasks are permitted under various program
elements, they were very cautious about accurately charging
personnel costs to the appropriate program. Budget officials
worked with senior managers to identify which program
elements should be assigned to each Division. Divisional AOs
worked with staff and supervisors,to determine which program
element most closely described the job duties of each staff
member. AOs monitored staff time charges and duties during
the year and corrected personnel charges as appropriate.
REGION 8 OVERSPENT PERSONNEL RESOURCES
AT THE PROGRAM LEVEL
Region 8 followed EPA reprogramming requirements for
nonpersonnel resources; however, it did not follow the
reprogramming requirements for personnel resources. Region 8
monitored personnel resources at the appropriation level
during the year rather than the program element level. This
practice resulted in the Region overspending personnel
resources in 15 program elements by amounts ranging from
$51,000 to $230,000. The Region then reprogrammed the
personnel funds at the end of the year to make the accounts
balance. EPA reprogramming procedures require that allowance
holders reprogram funds prior to obligating (spending) the
funds and require the assessment of program impact on both
the losing and receiving programs. The EPA procedures are
designed to prevent the Agency from violating congressional
reprogramming limitations which require the Agency to obtain
congressional preapproval of reprogrammings into or out of a
program element that exceed $500,000 at the Agency level.
The Region's practice of not monitoring personnel resources
at the program element level places the Agency at risk of
violating congressional intent for the use of program funds.
For example, if each of EPA's 10 regions reprogrammed
$200,000 into a program at the end of the year, the
cumulative $2,000,000 would violate congressional
requirements.
The Region explained that the reason they do not
reprogram personnel resources funds in advance is that,
although it would reduce the dollar value of yearend
reprogrammings, it would not reduce the number of programs
that required reprogrammings. Therefore, reprogramming
personnel resources in advance would require twice as much
work to accomplish the same result. However, the Region
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initially allocated personnel resources in the operating plan
using a Regional average for personnel cost per workyear. If
the Region allocated personnel resources in the operating
plan based on expected use rather than Regional averages,
overspending would be minimized and realigning personnel
costs would only require one reprogramming. Furthermore, the
Region would fulfill the intent of reprogramming--to inform
Agency managers and Congress where it intends to spend its
funds before it spends them.
REGION 8 GENERALLY USED THE
FINANCIAL MANAGEMENTSYSTEMS
FOR REGIONAL DECISIQNMAKING
Region 8 used EPA's IFMS for tracking expenditures and
ensuring the Region followed its operating plan. Region 8
allocated funds in IFMS to suballowance holders (i.e.,
divisions). The divisions had access to IFMS and were
responsible for monitoring expenditures and ensuring they did
not overobligate their programs. Divisional AOs checked the
status of funds in IFMS before approving an expenditure. AOs
who did not directly access IFMS relied on IFMS reports
prepared by budget and/or finance staff to approve or
disapprove expenditures.
However, AOs tracked time and accessed budget
information inconsistently. For example, some AOs obtained
budget information directly from IFMS while others depended
on periodic reports from Region 8's budget and finance
offices. If all AOs used IFMS, they would have immediate
access to data and reduce the budget staff's workload.
One AO did not charge staff time correctly. Rather than
spread a staff member's time worked in different programs
each pay period, she charged all of an employee's time to one
program element until that one "ran out of time," then
charged all the employee's time to the next program element.
Charging time in this manner distorts program costs during
the year. It also would result in one program being
overcharged and another undercharged if an employee leaves
during the year.
Region 8 budget staff have already begun to meet with
AOs to provide training that will include these issues.
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REGION 8 CONSIDERED THE BUDGETARY
IMPLICATIONS OF NEW INITIATIVES
Region 8 senior managers considered the budgetary impact
of new initiatives and Regional priorities on ongoing
environmental programs but did not reprogram workyears to
reflect changes in workyear usage. For example, when the
Region established a mining waste unit, it identified those
program elements that best described the duties the section-
would perform and provided workyears from those program
elements. As a result, mining waste section staff charged
their time to water, hazardous waste, and environmental
review--primary functions of the mining waste section. The
Region funded other cross-media initiatives such as a special
assistant for the Regional Administrator, a telecommuting
startup position, and a Total Quality Management coordinator
from workyears taken proportionally from all programs. As a
result, the personnel costs of these management and support
staff were charged to environmental programs rather than to
management and support programs. Although the Region's
methodology accurately identified which programs would
provide resources for a new position, it did not accurately
charge the personnel costs. In this example, these three
positions should be funded from management and support
activities.
BUDGETARY IMPACT OF REORGANIZATION
HAD NOT BEEN COMPLETED
Some Region 8 employees may be charging time to an
incorrect program element because Region 8 was unable to
complete- analysis of the impact of its reorganization before
the October 1, 1995, effective date. Regional
representatives interviewed each staff member during an
extensive workforce inventory prior to its reorganization.
They documented actual staff duties and matched, where
possible, individuals' duties in the old organization with
those in the new organization. About 75 percent of staff
duties transferred directly, and these staff are charging
their time to the same program element they charged before
reorganization. Budget division staff, using job
descriptions for positions in the new organization,
determined what program element was most appropriate and
assigned fixed account numbers for the remaining 25 percent,
or about 150 employees. Budget staff believe that until they
complete an audit of what programs these staff actually
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support, some staff will likely charge their time
incorrectly.
RECOMMENDATIONS
The Regional Administrator should:
1. Update the Region's internal controls for budget
execution.
2. Charge the Health and Safety Officer's time to the
correct program and consider charging all legal
support to the Regional Counsel program element.
3. Allocate personnel resources to program elements
based on expected use rather than a regional
average per workyear, monitor personnel costs
quarterly at the program element level, and
establish a personnel cost reprogramming threshold
to eliminate significant overspending.
4. Provide a mechanism to ensure AOs consistently
monitor their Division's budget, follow proper
employee time charging procedures, and use IFMS for
budget execution.
5. Complete analysis of staff duties in the new
organization to ensure staff time is charged to the
correct program element.
REGIONAL COMMENTS AND PIG EVALUATION
Region 8 generally agreed with most of our findings and
recommendations and has begun action to resolve the issues
raised in our report. As a result of actions taken or
planned by the Region, we modified one recommendation. Based
on the Region's comments on our draft report, we also made
other changes to ensure the report's accuracy.
The Region noted that internal controls for budget
execution existed but needed to be updated. It indicated
that, pending resolution of the fiscal 1996 budget situation,
it planned to have position management and funds control
internal controls updated by the start of fiscal 1997. We
agree that updating internal controls for budget execution
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will strengthen the Region's budget process and changed our
recommendation accordingly. We expect that updated budget
policies will stress the importance of charging time to the
proper program element and delineate the Regional
reprogramming policy for personnel funds.
The Region indicated that, due to the many factors that
affect personnel costs (over 7,500 personnel actions each
year), allocating resources based on expected use rather than
Regional averages would not alleviate the need to reprogram '
personnel resource funds during the year. It proposed to
monitor personnel costs quarterly, by program element, and
reprogram funds before overexpenditures become excessive.
While the Region's plan will avoid exceeding the
congressional limitation, it will not resolve the issue of
spending funds prior to reprogramming. As a result, we
believe the Region should allocate funds at the beginning of
the fiscal year based on the expected need in each program
element rather than a Regional average. In other words, we
believe the Region should compute average personnel costs
(e.g., salaries) for each program element at the beginning of
each fiscal year.
The Region also agreed that it needed to complete
analysis of staff duties in the new organization and plans to
complete its analysis by June 30, 1996. The Region plans to
use the recently completed Agency Activity Profile as a
starting point and work with AOs and program managers to
review program element assignments. The Region has already
corrected the Health and Safety Officer's and Regional
Council staff's program element.
Region 8's response also stated that staff did not
believe AOs inconsistently, tracking time resulted in
problems. While we agree that our limited sample of seven
employees did not find large scale problems, consistent
application of budget execution procedures and policies will
result in a more efficient operation. For example, if all
AOs accessed automated budget information themselves rather
than relying on budget staff to run reports for them it would
reduce the budget division's workload and provide immediate
access to budget information. The Region's plan to hold
regular meetings with AOs will foster consistent application
of budget execution procedures and help AOs become familiar
and comfortable using IFMS. Budget staff have already
provided operating procedures, policies, and guidance to AOs
and have begun AO training during regularly scheduled AO
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meetings. The budget office will distribute updated
procedures and policies to AOs when completed around the
beginning of fiscal 1997.
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APPENDIX I
Paqe I of
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
REGION VIII
999 18th STREET - SUITE 500
DENVER, COLORADO 80202-2466
12 1996
Ref: 8TMS-B
MEMORANDUM ....
SUBJECT: Regio^ 8's Comments on Budget Execution Process Draft
Reooxfc No. .El$toF5-08-OQ31
\>JA /TY-I/JW--
FROM: William P. Ye/llowtail/
zgional Administrate^
TO: Bennie S. Salem
Acting Divisional Inspector General for Audit
Overall, your review confirmed that Region 8's budget
execution process and implementation is exemplary. We follow
legal and policy requirements, we involve all levels of the
Region in budgeting issues, and we have a good system of internal
controls for budget execution. Our high level of accuracy in
budget execution indicates to me that we have an extraordinarily
competent, dedicated, and diligent budget staff in Region 8.
Your staff has worked in a very cooperative nature with my
staff to resolve issues with the January 25, 1996, draft that we
received. I understand that our concerns will be reflected in
changes made for the final report.
The revised recommendations, while addressing minor
problems, are valid and will strengthen our operations. Many of
the recommendations had been planned by our staff, prior to
release of this draft report.
I have attached specific comments on the findings and
recommendations. Debbie Janik and Bev Kahn are available to
answer any further questions you may have.
Attachment
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APPENDIX I
Page 2 of 4
ATTACHMENT
REGION 8'S BUDGET EXECUTION PROCESS
DRAFT REPORT NO. E1AMFS-08-0031
SPECIFIC COMMENTS
FINDINGS .
The following comments are specific to those draft findings that
we discussed further with your staff.
TITLE OF FINDING: Region 8 overspent personnel resources at the
program level. {page 9) The statement should use "program
element" rather than "program." In the budget arena' program and
program element refer to two different levels of detail. The
finding relates to program elements. I understand that this
minor change will be made.
Additionally, we disagree with the following statement: "If the
Region allocated personnel resources in the operating plan based
on expected use rather than Regional averages, overspending would
be minimized and realigning personnel costs would only require
one reprogramming." Realigning personnel charges by program
element will require continuous monitoring and reprogrammings
throughout the year. PC&3 charging and use by program element
changes, based on myriad actions that are not known in advance
(e.g., hires, terminations, promotions, changes in life and
health insurance, changes in thrift savings plan contributions,
details, transfers, awards, overtime) . Our Human Resources
office processes on average about 7,500 personnel actions each
fiscal year, the vast majority of which affect pay.' Allocating
personnel resources in the operating plan based on expected use
rather than regional average will not provide a more accurate
projection of expected use, only a different starting point from
which we will make changes, during the year. I understand that
your staff agreed to delete this part of your finding.
TITLE OF FINDING: AOs inconsistently tracked and charged time.
(page 11) While each AO has her own method of operations, the
results indicate close to 100% correct charging. Our conclusion
is that the differences in keeping timesheets do not result in
problems. However, we agree that the example in the second
paragraph under this finding resulted in incorrect charging. I
understand that your staff has agreed that the reference to
timesheet differences will be deleted from the final renort.
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APPENDIX I
Page 3 of 4
RECOMMENDATIONS
TITLE OF RECOMMENDATION: 1. Document the Kegrion's internal
controls for budget execution. Documentation does exist in the
form of operating procedures, policies on position allocations,
staffing plans, and funds control. We agree that all policies
and other documentation should be updated. The "recommendation
should read, "Update documentation of the Region's internal
controls for budget execution." Pending resolution of the FY96 '
budget situation, we plan to have policies for position
management and funds control updated by the start of FY97. I
understand that your staff agreed to make this change.
TITLE OF RECOMMENDATION: 2. Charge the Health and Safety-
Officer's time to the correct program and consider charging all
legal support to the Regional Counsel program element. Completed
as of October 1, 1995. This recommendation was completed as part
of the process followed in September, 1995, to assign fixed
account numbers for the start of FY96. At that time, we also
adjusted the fixed account number for the special assistant to
the Regional Administrator. Another charging problem that you
identified was in the area of telecommuting and total quality
management charging. The level of effort in support of
telecommuting and total quality management was reduced
significantly during the 1995 divestment exercise. The charging
of the entire Human Resources office at the start of FY96 was
changed to management accounts. We can provide documentation
verifying these changes if needed.
TITLE OF RECOMMENDATION: 3. Allocate personnel resources to
program elements based on expected use rather than a regional
average per vorkyear, monitor personnel costs at the program
level, and establish a personnel cost reprogramming threshold to
eliminate significant overspending. We agree with the second and
third clause. As discussed with your staff, we plan to monitor
personnel costs at the program element level on a quarterly
basis, by reviewing IFMS reports and assessing annual projections
versus annual plan (i.e., budget) at the program element level.
We expect that a MARS report will be able to be developed to
provide this information. If not, we will develop a LOTUS
spreadsheet to complete this review. We plan to reprogram
between program elements if we discover any program element
deficit that exceeds $10,000. These recommendations will be
implemented when we receive a final budget for FY96 and are able
to begin reprogrammings. Completion of these two steps will
resolve the issue, and not require allocating personnel resources
based on expected use at the time of operating plan development,
as you originally recommended. As a result, your staff agreed to
delete this part of your recommendation. (See the comments above
ur.der the finding titled "Region 8 overspent personnel, resources
at the program level.")
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APPENDIX I
Page 4 of 4
TITLE" OF RECOMMENDATION: 4. Complete analysis of staff duties
in. the new organization to ensure staff time is charged to the
correct program element. By September 30, 1995, budget staff
completed an analysis based on the current workload, as known at
the time. By the end of December, 1995, budget staff reviewed
charging to ensure that fixed account numbers were correct at the
appropriation level. Obviously, as new managers develop
workplans with their staff, adjustments to fixed account numbers
will need to occur. We plan to use the recent Agency Activity
Profile results as a starting point to work with Administrative
Officers and program managers to review program element
assignments. We expect that this review, and any resulting
adjustments, will be completed by""June 30, 1996.
TITLE OF RECOMMENDATION: 5. Provide a mechanism to ensure that
AOs consistently monitor their Division's budget and follow
proper employee time charging procedures. The mechanisms are
operating procedures, policies, guidance, and training. AOs were
trained as procedures and policies were issued. Updated
procedures and policies will be reviewed with AOs, once they are
complete, by the start of FY97. We hold periodic meetings and
training sessions with AOs to discuss issues and will continue to
do so.
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APPENDIX II
AO
EPA
IFMS
DIG
ABBREVIATIONS
Administrative Officer .
Environmental Protection Agency
Integrated Financial Management System
Office of Inspector General
18
E1AMB5-08-0031-6400042
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APPENDIX III
DISTRIBUTION
Office of Inspector General
Inspector General (2410)
Deputy Assistant Inspector General for .
Internal and Performance Audits (2421)
EPA Headquarters Office
Assistant Administrator for Administration
and Resources Management (3101)
Comptroller (3301)
Associate Administrator for Regional Operations and
State/Local Relations (1501)
Office of Congressional Liaison (1302)
Office of Public Affairs (1701)
Headquarters Library (3304)
Regional Offices
Regional Administrators
EPA Region 8
Assistant Regional Administrator
Office of Technical and Management Services
Regional Audit Liaison Coordinator
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