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U.S. Environmental Protection Agency	08-2-0039
December 5, 2007
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Office of Inspector General
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At a Glance
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Catalyst for Improving the Environment
Why We Did This Review
The U.S. Environmental
Protection Agency (EPA)
Office of Inspector General
(OIG) conducted a review of
earmarked grants known as
Special Appropriation Act
Projects issued to State and
tribal governments. The
Village of Laurelville, Ohio,
was selected for review.
Background
In 2002, the Village of
Laurelville received an EPA
Special Appropriation Act
Project grant, XP97579701.
The purpose of the grant was
to provide Federal assistance
of $376,000 to renovate the
Laurelville wastewater
treatment facility. The grantee
was required to provide local
matching funds equal to 45.75
percent of the EPA-awarded
funds.
Village of Laurelville, Ohio - Unallowable Costs
Claimed Under EPA Grant XP97579701
For further information,
contact our Office of
Congressional and Public
Liaison at (202) 566-2391.
To view the full report,
click on the following link:
www.epa.aov/oia/reports/2008/
20071205-08-2-0039. pdf
What We Found
The Village of Laurelville (grantee) did not maintain an acceptable financial
management system in accordance with Federal regulations to support drawdown
requests submitted to EPA for $278,448 in grant funds. In support of its
drawdowns, the grantee provided spreadsheets that its consultant prepared, along
with numerous invoices to support those spreadsheets. However, the invoices
provided either did not reconcile to the drawdown spreadsheets, or included costs
that were not allowable under cost principles, Agency guidance, and the grant
agreement. As a result, we were unable to determine total project costs or the
allocation of expenditures between the Federal grant and matching funds.
Therefore, we are questioning the entire $278,448 that the grantee has drawn
down.
The grantee claimed costs of $207,476 that were not allowable under Federal
regulations and grant conditions. These costs were associated with pre-award
expenses, repayment of a loan and interest, a garage extension, office and
maintenance equipment, and consultant fees. We are also questioning costs the
grantee claimed of $5,018 for an ultraviolet disinfection system that was not
installed as of August 2007.
What We Recommend
We recommend that the Regional Administrator, EPA Region 5:
1.	Require the Village of Laurelville to (a) repay the $207,476 in questioned
Federal funds drawn; (b) install the ultraviolet disinfection system or repay the
$5,018 of Federal costs claimed for the system; and (c) develop an adequate
accounting system to support the remaining $65,954 of Federal funds drawn.
If this cannot be accomplished, the Region should recover the funds.
2.	Provide documentation to support matching costs. If the grantee cannot
provide sufficient documentation, costs claimed will need to be revised.
3.	Classify the Village of Laurelville as a high risk grantee in accordance with
Title 40, Code of Federal Regulations, section 31.12, and apply special
conditions on all future awards.

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