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U.S. Environmental Protection Agency
Office of Inspector General
At a Glance
Report No. 09-P-0203
August 6, 2009
Catalyst for Improving the Environment
Why We Did This Review
We conducted this review to
determine how the U.S.
Environmental Protection
Agency (EPA) develops
annual guidance under the
Federal Managers' Financial
Integrity Act (FMFIA). We
asked whether EPA offices
integrate FMFIA internal
control standards into
programmatic operations. We
also asked whether offices use
Government Accountability
Office (GAO) guidance to
develop and monitor internal
controls.
Background
FMFIA requires federal
agency managers to annually
evaluate and indicate whether
their agencies' internal
controls comply with
standards prescribed by GAO.
FMFIA requirements purport
to provide reasonable
assurance that agencies
maintain adequate internal
control systems to prevent
against fraud, waste, abuse,
and mismanagement.
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.gov/oig/reports/2009/
20090806-09-P-0203.pdf
EPA Should Use FMFIA to
Improve Programmatic Operations
What We Found
EPA has not implemented and used FMFIA to improve program operations, as
intended by federal and Agency guidance. Although EPA offices rely on annual
guidance that the Office of the Chief Financial Officer (OCFO) issues,
• EPA offices have not developed internal control review strategies that include
elements such as the Government Performance and Results Act (GPRA);
• OCFO's guidance and training have not provided staff and managers with
adequate awareness of GAO's internal control standards;
• OCFO's guidance, until recently, has not required offices to report on
compliance with all GAO standards; and
• OCFO did not devote needed resources to validate assurance letters.
Per Agency guidance, OCFO is responsible for ensuring and implementing a
strategy for validating EPA's compliance with FMFIA. However, OCFO relies on
Assistant and Regional Administrators to verify letters' program elements before
certifying them. EPA offices view FMFIA reporting as an administrative task,
rather than an opportunity to assess program results and identify risks toward
achieving goals. As a result, the Administrator has little assurance when signing
EPA's letter that offices reviewed program operations. Additional emphasis on
FMFIA's importance could result in more certain, documented assurance in the
Agency's Performance and Accountability Report that EPA programs annually
evaluate internal controls to comply with GAO's standards and deter fraud, waste,
and mismanagement.
What We Recommend
We recommended that EPA's Administrator support internal controls by
announcing the Fiscal Year (FY) 2010 FMFIA process and requiring that senior
managers attend training. We also recommended that the Chief Financial Officer
develop comprehensive, tiered FMFIA training for managers and staff; revise the
internal checklist used as part of the strategy for validating Agency-wide FMFIA
compliance; codify its validation strategy; and develop FY 2010 FMFIA guidance
that contains OCFO FY 2009 supplemental guidance. EPA initially agreed with
all but one of our recommendations. The Agency agreed when we revised that
recommendation's language to focus on OCFO's internal tool to validate letters.
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