U.S. Environmental Protection Agency
                   Office of Inspector General

                   At   a   Glance
                                                                       11-P-0687
                                                               September 21, 2011
                                                                 Catalyst for Improving the Environment
Why We Did This Review
We initiated this review to
evaluate how efficiently,
effectively, and timely the
U.S. Environmental Protection
Agency (EPA) resolves audits
under appeal. Our objectives
were to determine whether all of
the audits under appeal are
included in the Management
Audit Tracking System (MATS),
whether the applicable policies
and procedures are  complete and
relevant, and how efficiently and
effectively the audits under
appeal are being resolved.
Background

For purposes of this report, we
use the term "audits under
appeal" to describe situations in
which a grantee disagrees with a
Final Determination Letter
issued by the Agency sustaining
some or all of the questioned
costs identified in an audit of a
completed grant. The grantee
appeals the Final Determination
Letter with the Regional
Administrator or Assistant
Administrator of the  issuing
EPA office.

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/20117
20110921-11-P-0687.pdf
20117
            EPA Should Improve  Timeliness for Resolving
            Audits Under Appeal
             What We Found
            EPA's efforts to resolve over $55 million for audits under appeal in Regions 2
            and 5 are not efficient, effective, or timely. During our audit, we found that:

               •  Inadequate communications between audit followup coordinators and
                  EPA personnel responsible for resolving audits under appeal have
                  resulted in inaccurate information in MATS.
               •  Policies and procedures for addressing audits under appeal are not
                  complete and relevant; many of the policies for resolving audits under
                  appeal are inconsistent.
               •  EPA does not adhere to its policies for timely resolution of audits under
                  appeal; as of September 2010, 17 of 30 audits under appeal had been in
                  resolution for 10 to 21 years.

            EPA Manual 2750 and the Code of Federal Regulations (CFR), through
            40 CFR 31.70, require that appeals be fully and fairly considered and resolved
            in the earliest practicable timeframe, at the lowest level possible. Because
            appeals are not being resolved timely, at least $17.3 million is not available to
            the government. These funds could potentially be used to protect public health
            and the environment.
             What We Recommend
We recommend that the Office of the Chief Financial Officer ensure that the
in-process revisions to EPA Manual 2750 include a communication strategy to
ensure that EPA records current data on audits under appeal in MATS,
establishes a finite number of reconsideration requests, and provides for
consistency among policies for resolving audits under appeal. We also
recommend that the Assistant Administrator for Administration and Resources
Management reference revisions to EPA Manual 2750 in the Office of
Administration and Resources Management's in-process revisions to the
Agency's Assistance Administration Manual. The Agency generally agreed
with the report's findings and overall recommendation for EPA to provide
greater structure and consistency to the audit resolution process, but the Agency
proposed alternatives to the recommendations. Currently, the Office of
Inspector General considers the recommendations to be unresolved with
resolution efforts in progress.

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