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U.S. Environmental Protection Agency
Office of Inspector General
At a Glance
2006-4-00122
July 31, 2006
Why We Did This Review
We conducted this
examination to determine
whether the total costs
incurred for seven U.S.
Environmental Protection
Agency (EPA) assistance
agreements were fairly
presented, in all material
respects, and the incurred
costs were allowable in
accordance with the terms and
conditions of the agreements
and applicable regulations.
Background
EPA awarded seven assistance
agreements to the Association
of State and Interstate Water
Pollution Control
Administrators (Association)
to assist States, Tribes, and
territories in complying with
the Clean Water Act.
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/2006/
20060731-2006-4-00122.pdf
Catalyst for Improving the Environment
Association of State and Interstate Water
Pollution Control Administrators Incurred
Costs for Seven EPA Assistance Agreements
What We Found
The Association did not comply with the financial and program management
standards and the procurement standards promulgated in Title 40 Code of Federal
Regulations (CFR), Subchapter B, Part 30. Specifically, the Association (1) could
not provide support for any of its general journal entries; (2) included duplicate
recorded costs in its accounting system; (3) could not always trace grant draws to
the accounting records; (4) could not always support labor charged to the EPA
grants; (5) could not support the recorded indirect costs; (6) did not record all of
its program income; (7) did not have adequate written procedures for determining
reasonable, allocable, and allowable costs; (8) drew EPA grant funds in excess of
the funds needed; and (9) did not complete the required single audits for fiscal
years ended June 30, 2004, and June 30, 2005.
The Association's procurement system did not comply with the procurement
standards. The Association awarded contracts to the America's Clean Water
Foundation, contrary to the requirements of Title 40 CFR 30.42 and 30.45.
Because the Association did not adequately document its costs and did not
comply with the EPA regulations, we questioned $1,883,590 paid to the
Association.
What We Recommend
We recommend that EPA (1) recover $1,883,590 paid unless the Association is
able to reconstruct its accounting records to meet the minimum financial
management standards required in Title 40 CFR 30.21; (2) disallow contract costs
procured in violation of Title 40 CFR 30.42 and 30.45; (3) rescind provisional
indirect cost rates for the fiscal years ended June 30, 2005, and June 30, 2006;
(4) stop work on all active grants and do not award any new grants until EPA has
assurances that the Association meets minimum financial management
requirements; (5) keep the Association on the reimbursement payment method
until the Association meets minimum financial management requirements, settles
current Federal liabilities, and repays all disallowed costs; and (6) require the
Association to comply with single audit requirements for fiscal years ended
June 30, 2004 and June 30, 2005. The Association stated many improvements
have already been implemented and will continue to work to implement and
address any remaining concerns.

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