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U.S. Environmental Protection Agency	12-1-0073
Office of Inspector General	November 15, 2011
At a Glance
Why We Did This Audit
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.
Background
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.
For further information, contact
our Office of Congressional and
Public Affairs at (202) 566-2391.
The full report is at:
www.epa.aov/oia/reports/2012/
20111115-12-1 -0073.pdf
Audit of EPA's Fiscal 2011 and 2010
Consolidated Financial Statements
EPA Receives an Unqualified Opinion
We rendered an unqualified opinion on EPA's Consolidated Financial
Statements for fiscal 2011 and 2010, meaning that they were fairly presented
and free of material misstatement.
Internal Control Significant Deficiencies Noted
We noted the following significant deficiencies:
•	Regions and headquarters did not timely provide accounts receivable
supporting documentation.
•	EPA did not timely bill other federal agencies for reimbursable costs.
•	EPA did not properly close general ledger accounts in its cancelling
Treasury symbols.
•	EPA double counted contractor-held property.
•	EPA headquarters could not account for 1,284 personal property items.
•	EPA needs to better secure marketable securities.
•	EPA recorded earned revenue without recognizing corresponding expenses.
•	EPA is withholding payments related to the BP Deepwater Horizon oil
spill.
Noncompliance With Laws and Regulations Noted
We noted a noncompliance issue involving EPA's Oil Spill Response Account
in relation to the BP Deepwater Horizon oil spill response. EPA violated the
Antideficiency Act in November 2010 because it made expenditures in excess
of funds available. Also, to avoid a second potential Antideficiency Act
violation, EPA delayed payments to vendors, resulting in the Agency being
required to make interest penalty payments to vendors as required by the
Prompt Payment Act.
Aqencv Comments and Office of Inspector General Evaluation
The Agency did not concur with our finding regarding cancelling Treasury
symbols causing inappropriate balances. The Agency believes that it is
following Treasury instructions and the balances are proper. While the amounts
are not material to the financial statements, by reversing the receivable, the
Agency has understated fiscal 2011 income and bad debt expense related to
cancelling the Treasury symbol. The Agency agreed with our other findings
and recommendations.

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