U.S. Environmental Protection Agency
                   Office of Inspector General

                   At  a   Glance
                                                              09-P-0086
                                                        January 26, 2009
                                                                   Catalyst for Improving the Environment
Why We Did This Review

The purpose of this audit was
to evaluate the U.S.
Environmental Protection
Agency's (EPA's) process for
reviewing unliquidated
interagency agreement (IA)
obligations, deobligating funds,
and closing lAs. The
objectives of our review were
to determine: (1) whether EPA
has adequate controls in place
to identify and deobligate
unneeded IA funds, and (2) the
amount of obligations under
lAs that could potentially be
deobligated.
Background
An IA is a written agreement
between federal agencies in
which one agency provides
goods or services to another
agency on a reimbursable basis.
It is EPA's policy to close all
lAs within 270 days after the
project period expires. As part
of close-out, unliquidated
obligations should be
deobligated so that the funds
can be used for other purposes.

For further information,
contact our Office of
Congressional, Public Affairs
and Management at
(202)566-2391.

To view the full report,
click on the following link:
www.epa.qov/oiq/reports/2009/
20090126-09-P-0086.pdf
EPA Should Strengthen Internal Controls over
Interagency Agreement Unliquidated Obligations

 What We Found
EPA has not closed out lAs that have at least $4.2 million of unneeded funds that
should be deobligated.  Further, EPA had deobligated an additional $2.3 million
between January 7, 2008, and April 25, 2008, as a result of our audit.  These funds
could be used for other environmental projects.

Controls for identifying funds for deobligations were not always effective.  We
found that EPA Project Officers, the Grants and Interagency Agreements
Management Division, and Grants Management Offices did not effectively monitor
lAs to ensure they were closed out timely and unneeded funds were deobligated.
The annual unliquidated obligation review was not effective and did not identify
funds that should have been deobligated and used for other environmental purposes.
Project Officers cited various reasons for untimely close-out of lAs, including
unfamiliarity with close-out procedures and difficulties working with other agencies.
 What We Recommend
We are making various recommendations to the Office of Administration and
Resources Management. They include:

 •   Deobligating the remaining $4.2 million in IA unliquidated obligations, and
    ensuring these lAs and those with $2.3 million already deobligated are closed
    out.
 •   Ensuring EPA Order 1610 is consistently followed.
 •   Ensuring program offices develop performance measures involving IA
    management for Project Officer performance standards.
 •   Ensure the IA data in the Grants Information and Control System and
    Integrated Grants Management System are reconciled.

We also recommend that the Chief Financial Officer reformat the unliquidated
obligation report and require forwarding of the report to Project Officers.

In general, the Agency agreed with the report's findings and recommendations and is
in the process of establishing procedures that, when implemented, should adequately
address the findings.

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