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• U.S. Environmental Protection Agency	13-P-0145

|	\ Office of Inspector General	February 13 2013
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At a Glance
Why We Did This Review
The U.S. Environmental
Protection Agency Office of
Inspector General conducted
this audit to determine whether
Region 5 is timely liquidating
grant, interagency agreement,
and contract obligations.
Prior OIG reports have
identified concerns with
obligations not being liquidated
when no longer needed. EPA
developed procedures to
strengthen internal controls
over unliquidated obligations.
In fiscal year 2011, the Office of
the Chief Financial Officer
instituted a database to
improve the consistency in
reviewing and managing ULOs.
Our review focused on whether
the corrective actions taken
were effective.
This report addresses the
following EPA Goal or
Cross-Cutting Strategy:
• Strengthening EPA's
workforce and capabilities
New Procedures Aided Region 5 in Reducing
Unliquidated Obligations
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/2013/
20130213-13-P-0145.pdf
What We Found
At the beginning of FY 2011, EPA's system for reviewing ULOs indicated that
Region 5 had over $1.7 billion in grant, contract, and interagency agreement
ULOs. During FY 2011, Region 5 liquidated over$1 billion in ULOs, leaving
about $645 million in ULOs remaining at the end of FY 2011. Our review found
an additional $402,445 that, in our opinion, could have been deobligated during
FY 2011. Region 5 deobligated the funds in FY 2012.
Several factors impacted Region 5's ability to liquidate funds, including obtaining
the documentation necessary to close out funding agreements. For three funding
agreements, valued at $616,976, delays in obtaining closeout documentation
delayed deobligation of funds by as many as 10 years. While two contracts were
deobligated, Region 5 is still working to obtain documentation from the other
recipient. Obligations can also remain unliquidated for many years because of
funding recipient delays in starting or completing projects. Some funding
agreements in our sample had been inactive for more than 4 years. However, in
each case, Region 5 provided evidence that the funds were still needed.
Recommendations and Planned Agency Corrective Actions
We recommend that the EPA Region 5 Administrator take action to deobligate
the funds for the remaining closed grant (Town of Scott). We also recommend
that the Chief Financial Officer and the Assistant Administrator for Administration
and Resources Management address issues related to funding agreements
where the obligation is inactive or open with no activity for more than 180 days.
Region 5 took action to close the Town of Scott grant in November 2012. EPA
agreed with the other recommendations.
Noteworthy Achievements
Region 5 deobligated over $1 billion in grants, contracts, and interagency
agreements in FY 2011. The region took action in FY 2012 to deobligate the
funds from agreements where the grant period had expired, with the exception of
one agreement where EPA is still working with the recipient to obtain
documentation to close the grant. During the course of our audit, Region 5 also
took action to remind staff of the procedures for elevating issues preventing
deobligation of funding agreements to managers' attention.
The Office of the Chief Financial Officer implemented the ULO database in
FY 2011 to improve consistency in reviewing and managing ULOs. The database
provides the capability to proactively monitor ULOs and eliminates the use of
manual spreadsheet reports. During interviews, users of the database stated that
it was an excellent replacement for the previous review process.

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