^tDS7-/)^	15-1-0021
* U.S. Environmental Protection Agency November 17,2014
	 \ Office of Inspector General
|
At a Glance
Why We Did This Review
We performed this audit in
accordance with the Government
Management Reform Act, which
requires the U.S. Environmental
Protection Agency (EPA) to
prepare, and the Office of
Inspector General to audit, the
agency's financial statements
each year. Our primary objectives
were to determine whether:
	EPA's consolidated financial
statements were fairly stated
in all material respects.
	EPA's internal controls over
financial reporting were in
place.
	EPA management complied
with applicable laws and
regulations.
The requirement for audited
financial statements was enacted
to help bring about improvements
in agencies' financial
management practices, systems
and controls so that timely,
reliable information is available
for managing federal programs.
This report addresses the
following EPA goal or
cross-agency strategy:
 Embracing EPA as a high-
performing organization.
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.qov/oiq/reports/2014/
20141117-15-1-0021.pdf
Audit of EPA's Fiscal Years 2014 and 2013
(Restated) Consolidated Financial Statements
Financial Statements Receive an Unmodified Opinion
We rendered an unmodified opinion on the
EPA's consolidated financial statements for
fiscal 2014 and 2013 (restated), meaning that
they were fairly presented and free of material
misstatement.
Internal Control Material Weakness and Significant Deficiencies Noted
We noted the following material weakness:
	Software costs were not capitalized, leading to the fiscal 2013 financial
statements needing to be restated.
We noted the following significant deficiencies:
	Lab renovation costs were not capitalized.
	Controls over accountable personnel inventory process need improving.
	The property management and accounting systems do not reconcile.
	The Cincinnati Finance Center should clear suspense transactions timely.
	A fiscal 2013 collection was recorded to an incorrect fund.
	Originating offices did not timely forward accounts receivable documents.
	Accounts receivable were not properly reconciled.
	Unliquidated funds were not deobligated timely.
	Restricted entry access to server rooms was not consistently enforced.
	Information technology assets need to be better monitored and secured.
	Information technology assets need to be better protected from threats.
	Server room cameras need to be reconfigured to fully monitor assets.
	Documentation is needed for approval of posting module changes.
Noncompliances With Laws and Regulations Noted
We noted the following instances of noncompliance with laws and regulations:
	Standards for recording interest were not sufficiently followed.
	EPA's 2014 Federal Managers' Financial Integrity Act Annual Assurance
Statement is inaccurate.
Recommendations and Planned Agency Corrective Actions
The agency generally agreed with our findings and recommendations. The
agency disagreed that the timely forwarding of receivables was an internal
control significant deficiency, and with certain details of its Federal Managers'
Financial Integrity Act Annual Assurance Statement material weakness.
We found the EPA's
financial statements to be
fairly presented and free
of material misstatement.

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