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U.S. Environmental Protection Agency	15-P-0152
\ Office of Inspector General	May 1 2015
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At a Glance
Why We Did This Review
The Improper Payments
Elimination and Recovery Act
of 2010 (IPERA), as modified
by the Improper Payments
Elimination and Recovery
Improvement Act of 2012,
requires that each fiscal year
the Inspector General of each
agency determine whether the
agency is in compliance with
the law. In addition, Office of
Management and Budget
Memorandum M-15-02 requires
that the Office of Inspector
General (OIG) evaluate the
accuracy and completeness of
agency reporting and the
agency's performance in
reducing and recapturing
improper payments. Our audit
focused on the U.S.
Environmental Protection
Agency's (EPA's) compliance
with these requirements.
This report addresses the
following EPA goal or
cross-agency strategy:
• Embracing EPA as a high-
performing organization.
EPA Complied With Improper Payment Legislation,
But Opportunities for Improvement Exist
Send all inquiries to our public
affairs office at (202) 566-2391
or visit www.epa.gov/oiq.
The full report is at:
www.epa.aov/oia/reports/2015/
20150501-15-P-0152.pdf
The EPA can improve the
accuracy of its annual
report through changes
to its improper payment
identification and
reporting procedures.
What We Found
The EPA complied with improper payment
legislation when reporting improper payments in
fiscal year 2014. The EPA took substantial
corrective actions during 2014 to identify improper
payments and track the recovery of overpayments.
For example, the EPA improved its testing of the
State Revolving Fund program by testing a sample
of negative cash draws submitted by states. The EPA established a system for
tracking the recovery of State Revolving Fund improper payments. Through
these actions, the EPA improved both the identification and recovery of improper
payments.
We found areas in which the EPA can improve its process for identifying and
reporting improper payments. For example:
•	The EPA did not consider either an internal control assessment of the
EPA's payroll and travel payment streams—one created by the EPA itself,
or an OIG report on the EPA's purchase card program—when preparing its
qualitative risk assessments. Both reports highlighted areas where
compliance with existing controls needed improvement.
•	The EPA did not include improper payments made to a former EPA
employee who pleaded guilty to theft of government property in its estimate
of improper payments.
•	The EPA regional staff did not always complete required fields in
transaction testing worksheets, nor identify some required information in
program evaluation reports.
Recommendations and Planned Agency Corrective Actions
We recommend that the Chief Financial Officer and Assistant Administrator for
Administration and Resources Management ensure future qualitative risk
assessments incorporate all information available to the EPA at the time the risk
assessments are prepared. In addition, we recommend that the Chief Financial
Officer develop a procedure addressing when the EPA will recognize improper
payments stemming from criminal judicial proceedings. We also recommend that
the Assistant Administrator for Water provide feedback to regional offices on
improving the program evaluation reports and transaction testing worksheets.
The agency concurred with all of the recommendations and provided corrective
actions and estimated completion dates.

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