STA?.
*. U.S. Environmental Protection Agency	12-P-0388
?	^ Offira of Incinprinr fionoral	April 3,2012
^ (fcjl z Office of Inspector General
IS3Z2J
* At a Glance
Why We Did This Review
We performed this review to
determine whether the U.S.
Environmental Protection
Agency (EPA) effectively
manages contractor-held
property (CHP). Specifically,
we wanted to determine
whether EPA (1) effectively
oversees CHP, (2) accurately
reports CHP, and
(3) adequately addressed prior
recommendations on CHP.
Background
EPA's Office of Administration
and Resources Management
(OARM) is responsible for
developing and establishing an
effective and efficient property
and contract management
program. In November 2009,
EPA transferred the oversight
of CHP within OARM, from
the Office of Acquisition
Management to the Office of
Administration, Facilities
Management Services Division.
EPA Should Improve Controls for Managing
Contractor-Held Property
For further information, contact
our Office of Congressional and
Public Affairs at (202) 566-2391.
The full report is at:
www.epa.gov/oiq/reports/2012!
20120403-12-P-0388. pdf
What We Found
EPA does not have effective oversight of CHP, did not accurately report CHP in
its fiscal year (FY) 2010 financial statements, and did not fully implement
corrective actions from an Office of Inspector General 2006 audit report. EPA
does not have effective oversight of CHP in terms of property administration,
policies and procedures over the CHP management program, and modifications
to contracts with CHP. Further, EPA incorrectly recorded CHP and reported
property in the wrong funding appropriation. As a result, EPA overstated CHP by
$34.6 million in the FY 2010 financial statements. EPA did not fully implement
corrective actions to address recommendations from our FY 2006 report,
EPA Needs to Strengthen Oversight of Government Furnished Property. EPA
provided corrective actions, but only implemented one of two recommendations.
Without accurate CHP records and proper property administration at contractor
sites, the Agency has no safeguards over property and could inaccurately report
CHP in the financial statements. In FY 2011, EPA addressed the accuracy of
CHP and adjusted its FY 2011 financial statements for the overstatements.
What We Recommend
We recommend that the Assistant Administrator for Administration and
Resources Management quantify the universe of CHP and assign more resources
to the property administration function, designate CHP as a significant
deficiency, develop and implement policies and procedures for the property staff,
train property staff and contracting officers on current and any new
responsibilities over contracts with government property, and revise or update the
corrective action plan in the Agency's Management Audit Tracking System for
the 2006 audit report and reference any corrective actions.
We recommend that the Chief Financial Officer develop and implement internal
controls that require the financial staff to review the funding appropriations for
contracts with government property.
EPA agreed with our recommendations and proposed acceptable corrective
action plans to address them.

-------