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EPA Office of Inspector General
Initial Plan for Oversight
of Recovery Act Funds
March 2009
OIG Objectives Regarding Recovery Act Oversight
The American Recovery and Reinvestment Act (Recovery Act) of 2009 provides the
EPA Office of Inspector General (OIG) $20 million through September 30, 2012, for
oversight and review. The OIG will assess whether EPA is using the $7.2 billion of
Recovery Act funds in accordance with its requirements and is meeting the accountability
objectives as defined by the Office of Management Budget. The objectives include
whether:
• Funds are awarded and distributed in a prompt, fair, and reasonable manner.
• The recipients and uses of all funds are transparent to the public, and the public
benefits of these funds are reported clearly, accurately, and in a timely manner.
• Funds are used for authorized purposes and instances of fraud, waste, error, and
abuse are mitigated.
• Projects funded under this Act avoid unnecessary delays and cost overruns.
• Program goals are achieved, including specific program outcomes and improved
results on broader economic indicators.
OIG Actions to Help the Agency Reduce Risk
As EPA prepares to award Recovery Act funds, the OIG is taking a number of actions to
alert Agency managers of risks and recommend cost effective controls to help prevent
fraud, waste, and abuse; and ensure program goals are achieved and stimulus funds are
accurately tracked and reported. As our auditors and evaluators identify risks, they will
provide Agency managers with flash reports with recommendations for ways to mitigate
these risks. Our investigators are developing an outreach strategy to educate EPA
employees, contractors, grant recipients, the law enforcement community, and the general
public of grant and contract fraud schemes and how to report suspected fraud. Our work
is being closely coordinated with the Recovery Accountability and Transparency Board,
as well as other audit and law enforcement organizations at the federal, State, and local
levels.
OIG Review Activities
After EPA awards the Recovery Act funds, the OIG will focus on auditing and
investigating EPA's management of the Recovery Act programs, how the funds are being
used, and the accuracy of the information being reported. The OIG will continue to take
proactive actions to prevent fraud, waste, abuse, and mismanagement of funds. Listed
below are some of the areas we plan to audit and investigate.
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Performance Audits
• Evaluate the process for awarding funds, particularly competitive awards.
• Determine whether funds are being awarded and spent timely.
• Determine whether the Agency has sufficient staff with the skills and knowledge
needed to manage the grants and contracts awarded with Recovery Act funds.
• Evaluate how the Agency is monitoring the use of the funds.
• Assess how performance is being measured and the process used for computing
jobs saved and created.
• Review the quality of data systems and information EPA uses for reporting
Recovery Act's requirements.
Financial Audits
• Conduct interim and final financial audits of Recovery Act fund recipients to
determine whether:
•S costs incurred met federal requirements;
•S funds were used as intended; and
-S funds were free of fraud, waste, abuse, and mismanagement.
• Work with EPA to update the Single Audit Compliance Supplements for the
Clean Water and Drinking Water State Revolving Funds.
• Review Single Audit reports on Recovery Act funds and ensure that corrective
action is taken.
• As part of the annual audit of EPA's overall consolidated financial statements:
S assess internal controls over the financial reporting of Recovery Act funds;
S examine transactions to determine whether they are properly authorized,
recorded, and reported;
•S examine compliance with Recovery Act provisions that could have a
material or direct effect on the financial statements; and
S assess the ability or effectiveness of capturing data for external reporting.
Investigations
• Investigate allegations raised by the public and others of fraud, waste, and abuse
committed against EPA involving Recovery Act funds.
• Contact State recipients to facilitate ongoing communications regarding EPA
Recovery Act funds distributed to local authorities.
• Through the review of EPA and State audits and evaluations, identify fraud
indicators, program weaknesses, and potential problems.
• Gather information on potential instances of fraud being perpetrated with EPA
Recovery Act funds from law enforcement officials, auditors, contractors,
suppliers, and vendors at the federal, State, and local levels.
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