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                   U.S. Environmental Protection Agency
                   Office of Inspector General

                   At  a   Glance
                                                             10-4-0003
                                                       October 13, 2009
                                                                 Catalyst for Improving the Environment
Why We Did This Review

The U.S. Environmental
Protection Agency (EPA)
Office of Inspector General
(OIG) conducts reviews of
earmarked grants known as
Special Appropriation Act
Projects issued to State and
tribal governments. The West
Rankin Utility Authority,
Flowood, Mississippi, was
selected for review.

Background

EPA Region 4 awarded Grant
No. XP97424901 (grant) on
August 24, 2001, to the West
Rankin Utility Authority
(grantee). The grant provided
federal assistance of
$1,932,200 for sewer system
evaluation, a water supply
feasibility study,
photogrammetric mapping,
Geographic Information
System development,
topographic mapping, and
sliplining of gravity sewer
interceptors. EPA funded
55 percent of the eligible
project costs and the grantee
funded 45 percent.

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/2010/
20091013-10-4-0003.pdf
Coste Claimed Under EPA Grant XP97424901 Awarded
to West Rankin Utility Authority, Flowood, Mississippi
 What We Found
The grantee did not meet the procurement and financial management
requirements of Title 40 Code of Federal Regulations (CFR) Part 31. As a result,
we questioned $1,745,457 in unsupported architectural and engineering (A&E)
costs claimed. The grantee will need to repay $663,321 of grant funds. The
grantee also did not comply with the requirements for monitoring operations of
grant activities. Due to these noncompliances and internal control weaknesses,
the grantee may not have the capability to manage future grant awards.
 What We Recommend
We recommend that the EPA Region 4 Regional Administrator:

1.   Require the grantee to provide the documentation demonstrating that it
    performed a cost analysis for the A&E contract at the time of negotiation. If
    the grantee is unable to do so, EPA should recover the federal share of
    questioned A&E costs of $663,321.

2.   Require the grantee to develop written policies and procedures on
    procurement in accordance with 40 CFR 31.36(b), and financial management
    procedures, including internal control and record keeping, in accordance with
    40CFR31.20(b).

3.   Require the grantee to develop written procedures for monitoring operations
    of grant activities and comply with 40 CFR 31.40(a).

4.   Review policies and procedures developed by the grantee to ensure they meet
    applicable federal requirements. If the grantee does not fully implement these
    recommendations, Region 4 should make a high-risk determination, in
    accordance with 40 CFR 31.12, before making additional awards to the
    grantee.

The grantee agreed to establish written policies and procedures for procurement,
financial management, and monitoring grant activities.  The grantee did not concur
with the questioned A&E costs, lack of a financial management system, grant
monitoring noncompliance, and the designation as a "high risk" grantee. The
grantee also disagreed with the audit finding on its record keeping.

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