U.S. Environmental Protection Agency
                   Office of Inspector General

                   At   a  Glance
                                                           11-P-0362
                                                         July 19, 2011
                                                               Catalyst for Improving the Environment
Why We Did This Review

In November 2010, the Office
of Management and Budget
(OMB) required all agencies
to submit a payment recapture
audit plan describing current
payment recapture efforts. The
U.S. Environmental Protection
Agency (EPA), Office of
Inspector General (OIG), was
required to review the action
plan and provide feedback to
EPA.
Background

Each year the federal
government loses billions of
dollars on improper payments
to individuals, organizations,
and contractors. Therefore,
agencies are required to have a
cost-effective program of
internal controls to prevent,
detect, and recover
overpayments.
For further information,
contact our Office of
Congressional, Public Affairs
and Management at
(202)566-2391.

The full report is at:
www.epa.qov/oiq/reports/2011/
20110719-11-P-0362.pdf
EPA Needs to Reexamine How It Defines Its
Payment Recapture Audit Program
 What We Found
EPA makes numerous efforts to recapture improper payments, but does not
consider its activities to be a formal payment recapture audit program, as defined
by OMB guidance. A payment recapture audit program is an agency's overall plan
for risk analysis and the performance of payment recapture audits and recovery
activities. In its January 2011 submission to OMB, EPA stated that it did not have
a formal payment recapture audit program. However, based on the OMB guidance
issued in April 2011 and information EPA had previously submitted to OMB, we
determined that many of the activities EPA already conducts meet the definition of
a payment recapture audit program.

We reviewed EPA's improper payments methodology and found three areas
where all improper payment efforts were not quantified for the Improper Payments
Elimination and Recovery Act  submission to OMB and the fiscal year 2010
Agency Financial Report. These areas involved contract cost issues identified by
the Defense Contract Audit Agency, costs questioned identified during Agency
post-award grant reviews, and costs questioned in OIG and Single Audit reports.
EPA can use funds collected under a payment recapture audit program to
reimburse itself for payment recapture work and fund future financial
improvement programs.
 What We Recommend
We recommend that EPA report the results of all activities, including audits the
OIG and other audit organizations conduct, when reporting on its payment
recapture audit program in 2011. During a March 29,2011, meeting with EPA,
Agency staff agreed and stated that all sources of improper payment information
would be reported in compliance with OMB guidance. In response to the draft
report, EPA concurred with our recommendation and identified corrective actions
that will be completed by November 15, 2011. EPA's response adequately
addresses the report findings and recommendations.

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