U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
Catalyst for Improving the Environment
Audit Report
EPA Has Improved Efforts to
Reduce Unliquidated Obligations in
Superfund Cooperative Agreements,
But a Uniform Policy Is Needed
Report No. 09-P-0241
September 22, 2009
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Report Contributors: Paul Curtis
Meg Hiatt
Alfred Falciani
Carol Kwok
Kelly Bonnette
Phil Weihrouch
Robert Hairston
Abbreviations
EPA U.S. Environmental Protection Agency
FY Fiscal Year
OIG Office of Inspector General
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U.S. Environmental Protection Agency
Office of Inspector General
At a Glance
09-P-0241
September 22, 2009
Catalyst for Improving the Environment
Why We Did This Review
The purpose of this audit was
to determine whether the U.S.
Environmental Protection
Agency (EPA) has adequately
monitored obligations on
Superfund Cooperative
Agreements. Our objectives
were to determine the status of
obligations under Superfund
Cooperative Agreements for
selected States, and the
amount of unliquidated
obligations for these States
that could potentially be
deobligated.
Background
A Cooperative Agreement is a
legally binding obligating
document that provides
funding to a State to carry out
or assist with Superfund
removal and/or remedial
activities. Timely review and
deobligation of unneeded
funds allow these funds to be
used on other Superfund
priorities.
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/
20090922-09-P-0241 .pdf
EPA Has Improved Efforts to Reduce Unliquidated
Obligations in Superfund Cooperative Agreements,
But a Uniform Policy Is Needed
What We Found
The regions audited (Regions 3,5, and 8) have implemented effective procedures
to adequately monitor the status of obligations under Superfund Cooperative
Agreements. Those procedures should be used by all regions annually to identify
funds available for deobligation. Also, the Agency has reduced the total amount
of open obligations under Superfund Cooperative Agreements from December 4,
2006, to December 2, 2008.
We identified $331,802 of open obligations in Region 3 that needed to be
deobligated. During our audit, the Agency deobligated $330,370 of that amount.
The Agency deobligated $1,432 less than the amount originally identified for one
agreement because of a final drawdown; that agreement is now closed. The
unliquidated obligations on the remaining agreements for the States reviewed are
necessary for continuing project work. Because the practices for the regions
reviewed have been effective in monitoring obligations and identifying amounts
available for deobligation, we believe an Agency-wide uniform policy to review
unliquidated obligations under Superfund Cooperative Agreements would be
beneficial.
What We Recommended
We have identified several best practices used by Regions 3, 5 and 8, such as
(1) requiring that States submit detailed reports on the status of each Superfund
site twice a year, (2) requiring that budget officers solicit information from project
officers and other staff twice a year to identify potential funds for deobligations,
and (3) performing a deobligation exercise twice a year for Superfund Cooperative
Agreements. We recommend that EPA's Director, Office of Grants and
Debarment, incorporate these best practices into a uniform policy for reviewing
unliquidated obligations under Superfund Cooperative Agreements in all regions.
The Agency agreed to develop a uniform policy, and we consider its response
acceptable.
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
\ * WASHINGTON, D.C. 20460
OFFICE OF
INSPECTOR GENERAL
September 22, 2009
MEMORANDUM
SUBJECT: EPA Has Improved Efforts to Reduce Unliquidated Obligations in
Superfund Cooperative Agreements, But a Uniform Policy Is Needed
Report No. 09-P-0241
FROM: Paul C. Curtis
Director, Financial Statement Audits
TO: Howard Corcoran
Director
Office of Grants and Debarment
Mathy Stanislaus
Assistant Administrator
Office of Solid Waste and Emergency Response
This is a report conducted by the Office of Inspector General (OIG) of the U.S. Environmental
Protection Agency (EPA) on unliquidated obligations under Superfund Cooperative Agreements.
This report represents the opinion of the OIG and does not necessarily represent the final EPA
position. Final determination on matters in this report will be made by EPA managers in accordance
with established audit resolution procedures.
The estimated cost of this project - calculated by multiplying the project's staff days by the
applicable daily full cost billing rates in effect at the time - is $260,513.
Action Required
In accordance with EPA Manual 2750, you are required to provide a written response to this report
within 90 calendar days. You should include a formal corrective action plan for agreed upon actions,
including milestone dates. We have no objection to the further release of this report to the public.
This report will be available at http://www.epa.gov/oig.
If you or your staff have any questions regarding this report, please contact me at (202) 566-2523
or curtis.paul@epa.gov, or Meg Hiatt at (513) 487-2366 or hiatt.margaret@epa.gov.
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EPA Has Improved Efforts to Reduce Unliquidated Obligations in 09-P-0241
Superfund Cooperative Agreements, But a Uniform Policy Is Needed
Table of Contents
Purpose 1
Background 1
Noteworthy Achievements 2
Scope and Methodology 3
Results of Review 3
Recommendation 5
Agency Response and Office of Inspector General Evaluation 5
Status of Recommendations and Potential Monetary Benefits 6
Appendices
A Details on Scope and Methodology 7
B Distribution 9
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09-P-0241
Purpose
The purpose of this audit was to determine whether the U.S. Environmental Protection Agency
(EPA) has adequately monitored obligations on Superfund Cooperative Agreements. Our
objectives were to determine the status of obligations under Superfund Cooperative Agreements
for selected States, and the amount of unliquidated obligations for these States that could
potentially be deobligated.
Background
Superfund response actions may be managed by either EPA or a State. A Cooperative
Agreement is a legally binding obligating document that: provides funding to a State to carry out
or assist with Superfund removal and/or remedial activities, documents State and EPA
responsibilities and cost share requirements, and obtains State assurances. A Cooperative
Agreement is used when the State manages the response action and EPA provides assistance to
the State. Several EPA offices are involved in the administration and financial management of
the Cooperative Agreements:
• Grants Management Offices are the Headquarters and regional units principally
responsible for all business management aspects associated with the review and
negotiation of applications and the award and administration of funded projects through
audit resolution and final close-out.
• The Office of Grants and Debarment serves as the National Program Manager for
administrative grants management, and is responsible for assistance regulations, policy,
and guidance; and for assistance-related training. This Office also evaluates and provides
feedback on annual programmatic Post-Award Monitoring Plans and required Close-out
Strategies within 45 days of receipt. The Grants and Interagency Agreements
Management Division within the Office of Grants and Debarment is the Grants
Management Office responsible for administrative management from award to close-out
for all assistance programs administered by EPA Headquarters. The National Policy,
Training and Compliance Division provides advice and oversight to regional Grants
Management Offices for regionally-administered assistance programs.
• The Las Vegas Finance Center is responsible for cooperative agreement payments and
financial close-out of these agreements. The Headquarters or regional program office is
principally responsible for managing the technical/programmatic aspects of a program.
• EPA Project Officers are responsible for completing programmatic baseline monitoring
for all active awards and assigned programmatic advanced monitoring activities. Project
Officers complete technical close-out of awards and certify that all programmatic terms
and conditions are met. Project Officers assist and respond to the Grants Management
Office, Grant Specialist, and Finance Center in requests for assistance in monitoring,
close-out, and overall grants management. Project Officers are responsible for
forwarding any administrative or financial reports and requests to the appropriate office
and maintaining appropriate file documentation.
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09-P-0241
• EPA Grant Specialists are responsible for completing administrative baseline monitoring
for all active awards and assigned administrative advanced monitoring activities,
including conducting the review, preparing the report, and resolving findings. The
Grants Specialists complete administrative close-out of awards. The Grants Specialists
assist and respond to the Project Officer, program office, and Finance Center in requests
for assistance in monitoring, close-out and overall grants management. The Grants
Specialists are responsible for forwarding any technical or financial reports and requests
to the appropriate office and maintaining appropriate file documentation.
EPA's Policy on Compliance, Review and Monitoring of Grants and Cooperative Agreements
establishes Agency standards for the oversight, monitoring, and close-out of assistance
agreements. The policy states EPA officials monitor programmatic and administrative
components of the agreements, including determining whether expended and remaining funds
are reasonable.
Noteworthy Achievements
• Regions 3, 5, and 8 have implemented procedures to effectively and adequately monitor
the status of obligations under Superfund Cooperative Agreements and identify amounts
available for deobligation.
• Region 3 program officials perform at least three reviews of the unliquidated obligations.
They review the unliquidated obligations when: (1) the Office of Solid Waste and
Emergency Response's Office of Superfund Remediation and Technology Innovation
requires them, (2) they receive the annual report from the Grants and Interagency
Agreements Management Division, and (3) they receive the unliquidated obligations
report from Office of the Chief Financial Officer. The program office holds quarterly
meetings with the States and also works with the Office of Solid Waste and Emergency
Response and the Office of the Chief Financial Officer to identify potential deobligations
annually. During Fiscal Year (FY) 2009, Region 3 deobligated $1,094,301 under
Superfund Cooperative Agreements.
• Region 5 program officials require States to submit detailed reports on the status of each
Superfund site twice a year. The Region 5 Budget Coordinator solicits information from
Project Officers and other personnel to identify potential funds for deobligation. During
FY 2009, Region 5 deobligated $706,641 under Superfund Cooperative Agreements.
• Region 8's Superfund Remedial Branch performs a program support deobligation
exercise once a year for all open obligations. This review focuses on agreements 3 or
more years old. The Region obtains information from the Response Program Managers
to determine what obligations should be deobligated or recertified. The Region also
performs an outstanding obligation exercise on open obligations for each assistance
agreement by site twice a year to determine what funds are necessary. During FY 2009,
Region 8 deobligated $219,249 under Superfund Cooperative Agreements.
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09-P-0241
• The Agency has reduced the overall total amount of open obligations under Superfund
Cooperative Agreements. Based on information from the Grants Information Control
System, EPA reduced open obligations under Superfund Cooperative Agreements from
approximately $124 million as of December 4, 2006, to $92 million as of December 2,
2008.
Scope and Methodology
We conducted the audit in accordance with generally accepted government auditing standards,
issued by the Comptroller General of the United States. Those standards require that we plan
and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis of
our findings and conclusions based on our audit objectives. We believe that the evidence
obtained provides a reasonable basis for our conclusions based on our audit objectives.
We selected 13 Superfund Cooperative Agreements with the oldest award dates and largest
amount of unliquidated obligations on agreements with Delaware, Illinois, and Colorado. We
selected those States based on analyzing which States had the largest amount of total
unliquidated obligations and agreements with least activity (funds expended). We excluded New
York and New Jersey because those States had been audited in the last 4 years (see Table 3 for
prior reviews). The sample included Superfund Cooperative Agreements with $24 million in
unliquidated obligations as of February 2, 2009. We interviewed State officials in Delaware,
Illinois, and Colorado and EPA program officials from Superfund divisions in Region 3
(covering Delaware), Region 5 (covering Illinois), and Region 8 (covering Colorado). We also
reviewed project files obtained from EPA program officials and State officials. We performed
the audit from January 28, 2009, to August 12, 2009.
Appendix A contains further details on our scope and methodology.
Results of Review
Overall, we found that Regions 3, 5, and 8 have implemented procedures to effectively and
adequately monitor the status of obligations under Superfund Cooperative Agreements and
identify amounts available for deobligation. Because these regions' practices have been
effective in monitoring obligations and identifying amounts available for deobligation, we
believe an Agency-wide uniform policy to review unliquidated obligations under Superfund
Cooperative Agreements would be beneficial. Those procedures should be used by all regions
annually to identify funds available for deobligation.
Based on our review of the 13 Superfund Cooperative Agreements in Delaware, Illinois, and
Colorado, we identified $236,802 for Delaware that could be deobligated. EPA deobligated an
additional $95,000 on another three agreements with Delaware that were not part of our sample,
bringing the total that could be deobligated to $331,802. The remaining unliquidated obligations
in the sample for all three States are necessary for continuing project work. Table 1 provides a
summary for the 13 sampled agreements. A discussion of what we found for each State follows
the table.
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09-P-0241
Table 1: Sampled Superfund Cooperative Agreements
Superfund
Cooperative
Agreement
Number
V00343201
0000392101
0000392501
0099325501
0099317001
V96582701
V96565101
V96548001
V96544301
V998610010
V97810301
V998608010
V97814001
Total
Location
Delaware
Delaware
Delaware
Delaware
Delaware
Illinois
Illinois
Illinois
Illinois
Colorado
Colorado
Colorado
Colorado
Obligation
Amount
$246,287
94,726
94,726
97,200
94,625
2,762,870
4,000,000
18,200,000
984,745
6,701,329
8,732,248
12,648,010
9,906,396
$64,563,162
Unliquidated
Obligation
Amount as of
02/02/09
$94,576
23,155
74,592
48,030
48,360
635,112
2,728,691
9,604,422
410,531
238,934
829,187
2,369,353
7,071,071
$24,176,014
Amounts
Identified for
Deobligation
as of 02/27/09
$93,802
10,000
65,000
38,000
30,000
0
0
0
0
0
0
0
0
$236,802
Source: OIG analysis
Delaware - $331,802 Identified for Deobligation
We identified $331,802 of open obligations under Superfund Cooperative Agreements
that could be deobligated. That amount consists of $236,802 from the five Delaware
Superfund Cooperative Agreements we examined plus $95,000 that Region 3 and the
Delaware Department of Natural Resources and Environmental Conservation decided to
deobligate from three other Cooperative Agreements (99367701, V98367501, and
V98375801) based on our review. The five agreements we examined were awarded
between 1989 and 1995 and had project end dates in FY 2009. Region 3 and Delaware
initiated deobligating these funds during our review.
EPA Order 5700.6, 5.1.3 states: "In programmatic baseline monitoring, areas to be
reviewed may include: receipt of progress reports, identifying areas of concern cited in
the progress reports, whether expended and remaining funds are reasonable." According
to State officials, the Delaware Department of Natural Resources and Environmental
Conservation did not review unliquidated obligations under Superfund Cooperative
Agreements to determine whether dollars could be deobligated. As a result, Region 3
could not assess the financial status of the agreements, and funds remained obligated on
the Superfund Cooperative Agreements that could have been deobligated and used for
other purposes.
Region 3 notified us on July 15, 2009, that $330,370 of the amount identified for
deobligation was deobligated. The Agency deobligated $1,432 less for one agreement
than the amount originally identified because of a final drawdown. That agreement is
now closed. Region 3's procedures for monitoring the status of obligations under
Superfund Cooperative Agreements were effective in identifying amounts to deobligate.
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09-P-0241
Illinois - No Funds Identified for Deobligation
We did not identify any funds as available for deobligation from the four Illinois
Superfund Cooperative Agreements examined. The unliquidated obligations for the
selected agreements are necessary for continuing project work that could occur due to
unanticipated conditions, such as additional contamination and other issues causing
delays, based on information provided by Region 5 and the Illinois Environmental
Protection Agency. Region 5's procedures for monitoring the status of obligations under
Superfund Cooperative Agreements were effective in identifying amounts to deobligate.
Colorado - No Funds Identified for Deobligation
We did not identify any funds as available for deobligation from the four Colorado
Superfund Cooperative Agreements examined. The unliquidated obligation amounts are
necessary for project work based on information obtained from Region 8 and the
Colorado Department of Public Health and Environment. For two agreements
(V99860801 and V97814001), the percentage of obligations remaining appeared
excessive compared with the percentage of project period expired. However, the
unliquidated obligation amounts appear necessary because of identified spending needs
for projects, issues causing delays (such as start-up delays and land access), and possible
project period extensions. Region 8's procedures for monitoring the status of obligations
under Superfund Cooperative Agreements were effective in identifying amounts to
deobligate.
Recommendation
1. We have identified several best practices used by Regions 3, 5 and 8, such as
(1) requiring that States submit detailed reports on the status of each Superfund site
twice a year, (2) requiring that budget officers solicit information from project officers
and other staff twice a year to identify potential funds for deobligations, and
(3) performing a deobligation exercise twice a year for Superfund Cooperative
Agreements. We recommend that the Director, Office of Grants and Debarment,
incorporate these best practices into a uniform policy for reviewing unliquidated
obligations under Superfund Cooperative Agreements in all regions.
Agency Response and Office of Inspector General Evaluation
Region 3 deobligated $330,370 in unliquidated obligations as a result of our review. Regarding
our recommendation to develop a uniform policy, the Agency responded in an e-mail and agreed
to develop a uniform policy, and we consider its response acceptable.
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Status of Recommendations and
Potential Monetary Benefits
POTENTIAL MONETARY
RECOMMENDATIONS BENEFITS (in SOOOs)
Planned
Rec. Page Completion Claimed Agreed To
No. No. Subject Status1 Action Official Date Amount Amount
We have identified several best practices used by 0 Director, Office of
Regions 3, 5 and 8, such as (1) requiring that Grants and Debarment
States submit detailed reports on the status of each
Superfund site twice a year, (2) requiring that
budget officers solicit information from project
officers and other staff twice a year to identify
potential funds for deobligations, and
(3) performing a deobligation exercise twice a year
for Superfund Cooperative Agreements. We
recommend that the Director, Office of Grants and
Debarment, incorporate these best practices into a
uniform policy for reviewing unliquidated
obligations under Superfund Cooperative
Agreements in all regions.
NOTE: Region 3 deobligated $330,370 in C Assistant Administrator, 7/15/2009 $330.4 $330.4
unliquidated obligations as a result of our review. Region 3
0 = recommendation is open with agreed-to corrective actions pending
C = recommendation is closed with all agreed-to actions completed
U = recommendation is undecided with resolution efforts in progress
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09-P-0241
Appendix A
Details on Scope and Methodology
We reviewed laws and regulations pertaining to Superfund Cooperative Agreements, such as the
Comprehensive Environmental Response, Compensation, and Liability Act; Office of
Management and Budget Circular A-102, Grants and Cooperative Agreements with State and
Local Governments; and Title 40 Code of Federal Regulations Part 31, Grants Management
Common Rule. We reviewed EPA policies and guidance issued by the Office of the Chief
Financial Officer, such as Resources Management Directive System 2550D, Superfund
Cooperative Agreements and State Contracts; and EPA Order 5700.6, Policy on Compliance
Review and Monitoring.
We obtained a universe from EPA's Grants Information Control System under Catalog of
Federal Domestic Assistance Numbers 66.802 (Superfund State Site-Specific Cooperative
Agreement) and 66.809 (Superfund State and Indian Tribe Core Program Cooperative
Agreements). The universe consisted of 281 Superfund Cooperative Agreements with a total
award amount of $602,035,343 as of December 2, 2008. We also generated a report from EPA's
Financial Data Warehouse of open obligations as of December 2, 2008, for Superfund site-
specific Cooperative Agreements, and Superfund State and Indian Tribe core program
Cooperative Agreements. We combined the financial data included in the Financial Data
Warehouse Unliquidated Obligations Inquiry with the award data in the Grants Information
Control System. From that combined data, we removed agreements without open obligations.
The remaining population consisted of 245 agreements totaling $92,425,363 in open obligations.
From the remaining population, we selected agreements from Delaware, Illinois, and Colorado
with the largest unliquidated obligations or least activity as of December 2, 2008. We later
updated the information for the selected states as of February 2, 2009. From the three States, we
selected 13 agreements with the oldest award date and largest amount of open obligations. We
examined 18 percent of open obligations for Delaware, 96 percent for Illinois, and 69 percent for
Colorado from our population. See Table 2 for details.
Table 2: Superfund Cooperative Agreements for States Reviewed
State
Delaware
Illinois
Colorado
Total
No.
13
7
14
34
Population as
Award
Amount
$7,474,983
28,560,642
67,804,478
$103,840,103
of 02/02/09
Open
Obligations
$1,585,075
13,903,010
15,237,041
$30,725,126
Agreements Audited
No.
5
4
4
13
Award
Amount
$627,564
25,947,615
37,987,983
$64,563,162
as of 02/02/09
Open
Obligations
$288,713
13,378,756
10,508,545
$24,176,014
Source: OIG analysis
We developed a questionnaire to use in contacting EPA Project Officers and State officials. The
objectives of our questionnaire were to determine the status of obligations under Superfund
Cooperative Agreements and the amounts under the agreements that could potentially be
deobligated and applied to other purposes. We conducted interviews with EPA program officials
from Superfund divisions in Regions 3, 5, and 8. We also interviewed State officials at the
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09-P-0241
Delaware Department of Natural Resources and Environmental Conservation, Illinois
Environmental Protection Agency, and Colorado Department of Public Health and Environment.
We performed the audit from January 28, 2009, to August 12, 2009.
Prior Reviews
We researched prior EPA OIG and Government Accountability Office reports related to
Superfund Cooperative Agreements. We noted seven pertinent EPA OIG reports, as listed in
TableS:
Table 3: Prior EPA OIG Reports Related to Superfund Cooperative Agreements
Report No.
2004-4-00015
2004-4-00016
2006-P-00013
2007-2-00003
2005-4-00099
08-2-0099
09-1-0026
Title
New Mexico Environment Department Costs Claimed
Under Cooperative Agreement No. V986338-01
Idaho Superfund Credit Claim Under EPA Cooperative
Agreement V990431-01
EPA Can Better Manage Superfund Resources
Information Concerning Superfund Cooperative
Agreements with New York and New Jersey
California Department of Toxics and Substances Control
Reported Outlays under Cooperative Agreement
V99925204
Follow-up on Information Concerning Superfund
Cooperative Agreements with New York and New Jersey
Audit of EPA's Fiscal 2008 and 2007 Consolidated
Financial Statements
Date
March 31 , 2004
June 2, 2004
February 28, 2006
October 30, 2006
Septembers, 2005
March 4, 2008
November 14, 2008
Source: OIG analysis
Internal Control Structure
In planning and performing our audit, we reviewed management controls related to our audit
objectives. We examined EPA's FY 2008 Federal Managers' Financial Integrity Act Annual
Assurance Letters issued by the Regional Administrators and Assistant Administrators for the
various EPA program offices to identify any weaknesses pertaining to the unliquidated
obligations under Superfund Cooperative Agreements. In addition, we examined EPA's Office
of Management and Budget Circular A-123 review of internal controls to identify any
weaknesses related to unliquidated obligations under Superfund Cooperative Agreements. EPA
identified no material weaknesses in its Circular A-123 reviews related to Superfund Cooperative
Agreements. We did not review the internal controls over EPA's Financial Data Warehouse or
the Grants Information Control System from which we obtained data reports, but relied on the
review conducted during the audit of EPA's FY 2008 financial statements. That work concluded
that the application controls for these systems could be relied on to produce accurate data.
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Appendix B
Distribution
Office of the Administrator
Assistant Administrator, Office of Administration and Resources Management
Assistant Administrator, Office of Solid Waste and Emergency Response
Acting Regional Administrator, Region 3
Acting Regional Administrator, Region 5
Acting Regional Administrator, Region 8
Chief Financial Officer
Principal Deputy Assistant Administrator, Office of Administration and Resources Management
Director, Office of Grants and Debarment
Deputy Director, Office of Grants and Debarment
Director, Office of Superfund Remediation and Technology Innovation
Chief, Contracts Management Branch, Office of Superfund Remediation and
Technology Innovation
General Counsel
Agency Follow-up Official (the CFO)
Agency Follow-up Coordinator
Associate Administrator for Congressional and Intergovernmental Relations
Associate Administrator for Public Affairs
Audit Follow-up Coordinator, Office of Administration and Resources Management
Audit Follow-up Coordinator, Office of the Chief Financial Officer
Audit Follow-up Coordinator, Office of Solid Waste and Emergency Response
Audit Follow-up Coordinator, Office of Grants and Debarment
Audit Follow-up Coordinator, Region 3
Audit Follow-up Coordinator, Region 5
Audit Follow-up Coordinator, Region 8
Acting Inspector General
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