$ < 73 \ Mi) Šp.. .< PRO'S4- U.S. ENVIRONMENTAL PROTECTION AGENCY OFFICE OF INSPECTOR GENERAL Catalyst for Improving the Environment Special Report Recommendation to Strengthen Management Integrity Processes Affecting Recovery Act Activities Report No. 09-X-0145 April 27, 2009 RECOVERY. ------- Report Contributor: Rudolph M. Brevard Abbreviations EPA U.S. Environmental Protection Agency FY Fiscal Year OIG Office of Inspector General ------- ^tosr% i \ UNITED STATES ENVIRONMENTAL PROTECTION AGENCY | I WASHINGTON, D.C. 20460 "% ,& OFFICE OF PR0 INSPECTOR GENERAL April 27, 2009 MEMORANDUM SUBJECT: FROM: Recommendation to Strengthen Management Integrity Processes Affecting Recovery Act Activities Report No. 09-X-0145 ClLHjLCUjCLJ Patricia H. Hill v / Assistant Inspector General for Mission Systems TO: Craig Hooks Acting Assistant Administrator for Administration and Resources Management and Senior Accountable Official for Recovery Act Maryann Froehlich Acting Chief Financial Officer The Office of Inspector General (OIG) of the U.S. Environmental Protection Agency (EPA) has completed a review of the Agency's Fiscal Year (FY) 2009 Management Integrity guidance for reporting on internal control reviews and preparing the annual assurance letters sent to the Administrator. This review was not an audit conducted in accordance with the Government Auditing Standards. In accordance with the Office of Management and Budget's Recovery Act Implementation Guidance, dated April 3, 2009, EPA should review reporting and performance under the American Recovery and Reinvestment Act of 2009 (Recovery Act) across the Agency; establish and oversee development and implementation of Agency guidance to identify and mitigate risk; and ensure the correction of weaknesses relating to the Recovery Act. This memorandum provides the OIG's recommendation for issuing additional FY 2009 Management Integrity guidance to EPA offices receiving additional funding under the Recovery Act. Conducting oversight of spending to prevent fraud, waste, and abuse is an integral component for EPA to achieve the governance, risk management, and program integrity objectives outlined in the Recovery Act. In December 2008, the Agency issued its FY 2009 Management Integrity guidance that outlined requirements for conducting internal control reviews and preparing annual assurance statements 1 ------- forwarded to the EPA Administrator. EPA guidance specifically asks Senior Agency Officials to address the Information Security, Hiring Practices, Interagency Agreements, and Audit Follow-up areas of focus in their FY 2009 assurance letters. With the recent issuance of the updated implementation guidance for the Recovery Act, we believe it is imperative that EPA update its Management Integrity guidance to address Recovery Act activities. Specifically, the guidance should ensure EPA offices: Emphasize effective design and operation of key business processes that support Recovery Act activities and generate data for reporting purposes; Integrate Recovery Act internal control reviews into their multi-year strategies; and Certify how well internal controls are working in FY 2009 assurance statements to the EPA Administrator. The Recovery Act emphasizes that agencies should leverage existing organizations and entities to review, assess, and manage Recovery Act risk. We believe that updated guidance is essential for ensuring that programmatic operations of offices that receive Recovery Act funds have internal controls that are properly designed and operating as intended. Action Required We recommend that the Agency expedite action to update its Management Integrity guidance for EPA offices receiving Recovery Act funds. Please provide a response within 30 days describing the actions EPA is taking, or has taken, to address our recommendation. If you or your staff has any questions regarding this review, please contact me at (202) 566-0894 or hill.patricia@epa.gov; or Rudolph M. Brevard, Director for Information Resources Management Assessments, at (202) 566-0893 or brevard.rudv@epa.gov. 2 ------- Appendix A Distribution Office of the Administrator Acting Assistant Administrator for Administration and Resources Management Acting Chief Financial Officer Agency Follow-up Official (the CFO) Agency Follow-up Coordinator Acting General Counsel Acting Associate Administrator for Congressional and Intergovernmental Relations Acting Associate Administrator for Public Affairs Audit Follow-up Coordinator, Office of Administration and Resources Management Audit Follow-up Coordinator, Office of the Chief Financial Officer Acting Inspector General 3 ------- |