U.S. Environmental Protection Agency
                   Office of Inspector General

                   At  a   Glance
                                                            09-1-0026
                                                     November 14, 2008
                                                                Catalyst for Improving the Environment
Why We Did This Audit

We performed this audit in
accordance with the
Government Management
Reform Act, which requires the
U.S. Environmental Protection
Agency (EPA) to prepare, and
the Office of Inspector General
to audit, the Agency's financial
statements each year.  Our
primary objectives were to
determine whether:

• EPA's consolidated financial
  statements were fairly stated
  in all material respects.
• EPA's internal controls over
  financial reporting were in
  place.
• EPA management complied
  with applicable laws and
  regulations.
Background
                     .
The requirement for audited
financial statements was
enacted to help bring about
improvements in agencies'
financial management
practices, systems, and controls
so that timely, reliable
information is available for
managing federal programs.
For further information, contact
our Office of Congressional and
Public Liaison at (202) 566-2391.

To view the full report,
click on the following link:
www.epa.qov/oiq/reports/2009/
20081114-09-1-0026.pdf
Audit of EPA's Fiscal 2008 and 2007
Consolidated Financial Statements
 EPA Receives Unqualified Opinion
 We rendered an unqualified, or clean, opinion on EPA's Consolidated Financial
 Statements for fiscal 2008 and 2007, meaning that they were fairly presented and
 free of material misstatement.
 Significant Deficiencies Noted
 We noted the following eight significant deficiencies:

 • EPA's oversight of payroll reconciliation needs improvement.
 • Accrual was not properly calculated for federal unbilled receivables.
 • EPA needs to reconcile Superfund State Contract funds and credits in the
   general ledger to subsidiary accounts.
 • EPA's review of unliquidated obligations for interagency agreements and
   Headquarters-funded grants was incomplete.
 • The Integrated Financial Management System Vendor Table was susceptible
   to unauthorized changes and changes were not adequately documented.
 • Improvement was needed in monitoring Superfund Special Account balances.
 • The lack of a system implementation process contributed to financial
   applications not complying with requirements.
 • EPA did not properly account for capitalized software and related
   accumulated depreciation.
 Noncompliances With Laws and Regulations Noted
 EPA was in noncompliance with regulations relating to:

 •  The Asbestos Loan Program (related to the Anti-Deficiency Act).
 •  Prompt payment of invoices (related to the Prompt Payment Act).
 •  Reconciling intragovernmental transactions (related to Treasury policy).
                               Agency Comments and Office of Inspector General Evaluation
 In a memorandum received on November 12, 2008, from the Chief Financial
 Officer, the Agency generally agreed with our findings and has implemented
 some of our recommendations. The Agency also stated it does not agree with our
 findings regarding the Asbestos Loan Anti-Deficiency Act violation, Prompt
 Payment Act violation, or systems implementation process. The Agency also
 believes it does adequate payroll reconciliations but agreed to work with the
 Office of Inspector General to develop reconciliations.

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