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                   U.S. Environmental Protection Agency
                   Office of Inspector General

                   At  a  Glance
                                                             09-P-0232
                                                     September 15, 2009
                                                                 Catalyst for Improving the Environment
Why We Did This Review

We conducted this audit to
determine whether the U.S.
Environmental Protection
Agency (EPA) Office of
Research and Development
(ORD) fully integrated the
Federal Managers' Financial
Integrity Act (FMFIA) into
program operations. We
asked whether ORD has a
systematic strategy to
establish, review, and monitor
internal controls, and what
ORD's strategy should contain
to account for risks in meeting
program goals.
Background

FMFIA requires federal
managers to improve the
accountability and
effectiveness of federal
programs by establishing,
assessing, correcting, and
reporting on internal control.
FMFIA also requires federal
managers to annually evaluate
their agencies' compliance
with Government
Accountability Office (GAO)
internal control standards.
EPA's Office of Research and Development Could
Better Use the Federal Managers' Financial Integrity
Act to Improve Operations
 What We Found
ORD's management integrity program is inconsistent with Agency FMFIA
guidance. ORD approaches FMFIA as an administrative reporting activity rather
than an opportunity to evaluate and report on research program performance. As
a result, ORD has not:

    •  Conducted a comprehensive risk assessment,
    •  Included National Program Directors in the FMFIA process,
    •  Developed and implemented a strategy to establish and evaluate the
       effectiveness of internal controls over research programs,
    •  Provided FMFIA training to managers and staff, and
    •  Included relevant risk and program performance information in assurance
       letters.

EPA Order 1000.24 requires all organizations to systematically review and assess
the effectiveness of internal controls consistent with GAO internal control
standards. The Order gives program managers flexibility in designing review
strategies. While ORD's largest lab, the National Health and Environmental
Effects Research Laboratory (NHEERL), informally identifies program risks,
neither ORD nor NHEERL conducts internal control risk assessments  on which to
base a program review strategy.  Applying FMFIA as intended would help EPA
achieve its mission and program results through improved accountability.

ORD's Administrative Efficiencies Project management integrity workgroup has
initiated actions that we believe will address our findings, such as developing a
draft multi-year review strategy. In developing its new strategy, ORD should
include programmatic elements, a training plan, pertinent results from peer
reviews, and best practices to ensure more effective  FMFIA implementation.
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/
20090915-09-P-0232.pdf
 What We Recommend
We recommend that ORD (1) conduct a risk assessment using GAO standards and
develop a comprehensive risk-based program review strategy; (2) develop
comprehensive, tiered FMFIA training for managers and staff; and (3) revise its
management integrity program to include programmatic operations. ORD agreed
with our recommendations and has initiated corrective actions that we believe
address the intent of our recommendations.

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