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U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
Agreed-Upon Procedures
Applied to EPA Grants
Awarded to Summit Lake
Paiute Tribe, Sparks,
Nevada
Report No. 12-2-0072	November 10, 2011
REDACTED VERSION FOR PUBLIC RELEASE
The full version of this report contained sensitive information. This is a
redacted version of that report, which means the sensitive information
has been removed. The redactions are clearly identified in the report.

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Report Contributors:
Jessica Knight
Lela Wong
Abbreviations
CFR
Code of Federal Regulations
EC
Environmental coordinator
EPA
U.S. Environmental Protection Agency
GAP
Indian Environmental General Assistance Program
OIG
Office of Inspector General
SLPT
Summit Lake Paiute Tribe
Hotline
To report fraud, waste, or abuse, contact us through one of the following methods:
e-mail: OIG Hotline@epa.gov	write: EPA Inspector General Hotline
phone: 1-888-546-8740	1200 Pennsylvania Avenue NW
fax:	202-566-2599	Mailcode 2431T
online:
http://www.epa.gov/oia/hotline.htm
Washington, DC 20460

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U.S. Environmental Protection Agency	12-2-0072
November 10, 2011
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At a Glance
Why We Performed These
Agreed-Upon Procedures
The U.S. Environmental
Protection Agency (EPA),
Region 9, requested assistance
from the Office of Inspector
General due to concerns with
the Summit Lake Paiute Tribe's
financial practices and internal
controls.
Background
The tribe receives financial
assistance from EPA under
three programs—the Indian
Environmental General
Assistance Program, Water
Pollution Control State and
Interstate Program Support, and
Nonpoint Source
Implementation.
Agreed-Upon Procedures Applied to EPA
Grants Awarded to Summit Lake Paiute Tribe,
Sparks, Nevada
What We Found
Although our transaction tests showed that labor costs claimed by the Summit
Lake Paiute Tribe under the EPA grants were generally supported by timesheets,
the following timekeeping issues warrant attention:
•	The timekeeping process for the Indian Environmental General
Assistance Program grants did not comply with Code of Federal
Regulations (CFR) requirements in 2 CFR Part 225.
•	A third party did not consistently verify the chairman's consent to use
his signature stamp fortimesheet approval.
•	The tribe charged indirect labor costs as direct costs, contrary to its
accounting policy.
•	The tribe did not have policies and procedures for leave allocation.
As a result of the above issues, we questioned labor costs of $96,615.
We found that the tribe was addressing some of the issues raised in the 2008 and
2009 single audits. However, additional work remains to be done on issues
relating to deferred revenues and updating policies and procedures.
What We Recommend
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/
20111110-12-2-0072.pdf
We recommend that the Regional Administrator, EPA Region 9, disallow and
recover unallowable costs of $96,615. We also recommend that the Regional
Administrator require the tribe to implement certain internal controls related to
timekeeping. Finally, we recommend that the Regional Administrator require the
tribe to update its policies and procedures to ensure that they address all
accounting issues and reflect the tribe's actual accounting practices.
The region agreed with our recommendations. The tribe disagreed with the
recommendation to disallow the $96,615 in labor costs.

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THE INSPECTOR GENERAL
November 10, 2011
MEMORANDUM
SUBJECT:
FROM:
Agreed-Upon Procedures Applied to EPA Grants Awarded to
Summit Lake Paiute Tribe, Sparks, Nevada
Report No. 12-2-0072
Arthur A. Elkins, Jr.
Inspector General

TO:
Jared Blumenfeld
Regional Administrator, Region 9
U.S. Environmental Protection Agency
The attached attestation report represents the results of the Office of Inspector General's (OIG's)
agreed-upon procedures engagement. This report is intended solely for your information and use,
and should not be used by those who have not agreed to the procedures or taken responsibility
for the sufficiency of the procedures for their purpose.
This report contains findings that the OIG identified and corrective actions the OIG recommends.
The report represents the opinion of the OIG and does not necessarily represent the final position
of the U.S. Environmental Protection Agency (EPA). EPA managers will make final
determinations on matters in this report.
Action Required
In accordance with EPA Manual 2750, you are required to provide a written response to this report
within 120 calendar days. You should include a corrective action plan for agreed-upon actions,
including milestone dates. Your response will be posted on the OIG's public website, along with
our memorandum commenting on your response. Your response should be provided as an Adobe
PDF file that complies with the accessibility requirements of Section 508 of the Rehabilitation
Act of 1973, as amended. The final response should not contain data that you do not want to be
released to the public; if your response contains such data, you should identify the data for
redaction or removal.

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This report will be available at http://www.epa.gov/oig. If you or your staff have any questions
regarding this report, please contact Robert Adachi, Director of Forensic Audits, at
(415) 947-4537 or adachi.robert@epa.gov; or Lela Wong, Project Manager, at (415) 947-4531 or
wong.lela@epa.gov.
Note: We have redacted information on page 13 of this report. Exemption (b)(6) of the Freedom
of Information Act permits the government to withhold names of individuals when disclosure of
such information "would constitute a clearly unwarranted invasion of personal privacy"
[5 U.S.C. § 552 (b)(6)]. The individual whose name is redacted was not a high level official nor
was the person's involvement materially significant to the concerns or matters addressed in this
report.

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Agreed-Upon Procedures Applied to EPA Grants
Awarded to Summit Lake Paiute Tribe, Sparks, Nevada
12-2-0072
Table of C
Introduction		1
Purpose		1
Background		1
Independent Auditor's Report on Applying Agreed-Upon Procedures		3
Results of Agreed-Upon Procedures Engagement		5
Timekeeping Process		5
Timekeeping Process Did Not Comply With Federal Requirements		5
Approval to Use Chairman's Signature Stamp Not Consistently Verified....	7
Indirect Labor Costs Charged as Direct Costs 		7
Tribe Did Not Have Leave Allocation Procedures		8
Single Audit Corrective Actions		8
Lack of Segregation of Duties in Financial Reporting		8
Untimely and Inaccurate Financial Status Reports		9
Deferred Revenue Balance 		9
Lack of Accounting Policies and Procedures 		9
Recommendations		10
Agency and Grantee Comments		10
OIG Response		10
Status of Recommendations and Potential Monetary Benefits		11
Appendices
A Region 9's Comments on the Draft Report		12
B Grantee's Comments on the Draft Report and OIG Evaluation		13
C Distribution		16

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Introduction
Purpose
On January 20, 2011, the U.S. Environmental Protection Agency (EPA),
Region 9, Communities and Ecosystems Division, requested assistance from the
Office of Inspector General (OIG) due to concerns with the Summit Lake Paiute
Tribe's financial practices and internal controls. After meeting with the region's
representatives, it was decided that an agreed-upon procedures engagement would
be performed to evaluate the tribe's timekeeping process for the EPA grants and
to identify the corrective actions taken by the tribe to address its outstanding 2008
and 2009 single audit issues.
Background
The tribe receives assistance from EPA under the following programs:
•	Indian Environmental General Assistance Program (GAP). The GAP
grants provide financial assistance to expand the tribe's environmental
program. Activities funded under this program include protection of
environmental resources, community outreach and education, and
coordination with federal agencies on environmental issues.
•	Water Pollution Control State and Interstate Program Support. The
water pollution control grants under this support are authorized under
Section 106 of the Clean Water Act. The grants provide financial
assistance to implement the tribe's water quality monitoring program
and further the professional development of staff.
•	Nonpoint Source Implementation. The nonpoint source
implementation grants are authorized under Section 319 of the Clean
Water Act. The grants provide financial assistance to implement the
tribe's nonpoint source program, which includes assessing the program
to identify new nonpoint source issues, assessing springs, repairing and
installing fences and cattle guards, and providing alternative water
sources for cattle to reduce nonpoint source pollution.
The tribe manages its EPA grants under two different departments. The GAP
grant is under the Environmental Protection Department and managed by the
environmental coordinator (EC), and the remaining grants are under the Natural
Resources Department headed by the natural resources director.
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On March 9, 2011, the OIG transmitted the tribe's 2008 and 2009 single audit
reports to EPA Region 9 for review and action. As a result of the single audit
findings, the OIG recommended that the region recover $291,097 and $301,113 in
questioned costs for 2008 and 2009, respectively. The outstanding 2008 and 2009
findings are summarized below:
1.	The tribe did not segregate duties with respect to financial reporting. One
person at the tribe controlled transactions and determined how the
transactions were entered into the financial records without the approval of
another individual.
2.	The tribe filed all quarterly SF-269 reports (Financial Status Reports) late
and did not reconcile the reports to the general ledger. Also, the tribe filed
the annual SF-272 (Federal Cash Transaction Report) and Minority
Business Enterprise/Women Business Enterprise Reports for the GAP
grant late.
3.	In prior years, the tribe drew down grant funds to cover deficits in other
funds. As a result, the single auditor questioned $1,070,651 in 2009 for
deferred revenue balance in excess of cash on hand. Of this amount,
$135,854 was attributable to EPA.
4.	The tribe's operating practices did not reflect the processes described in
the approved policies and procedures manual. The tribe's written policies
and procedures were also not current and did not adequately address all
areas of the tribe's accounting department.
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Independent Auditor's Report on
Applying Agreed-Upon Procedures
In response to the EPA Region 9 January 20, 2011, request, we applied the
agreed-upon procedures to the EPA grants awarded to the Summit Lake Paiute
Tribe.
We performed the procedures enumerated below, which were agreed to by the
OIG and the region on March 31, 2011. We performed these procedures solely to
assist the region in evaluating the tribe's timekeeping process for the EPA grants
for the period September 1, 2005, to April 30, 2011, and to identify corrective
actions taken by the tribe to address its outstanding 2008 and 2009 single audit
findings. By receiving the awards, the recipient has accepted responsibility for
complying with the requirements of the Code of Federal Regulations (CFR) in
2 CFR Part 225, 40 CFR Part 31, and 40 CFR Part 35 Subpart B; and the terms
and conditions of the grants.
We performed these agreed-upon procedures in accordance with the Government
Auditing Standards issued by the Comptroller General of the United States, and
the attestation standards established by the American Institute of Certified Public
Accountants. The sufficiency of these procedures is solely the responsibility of
Region 9. Consequently, we make no representation regarding the sufficiency of
the procedures described below either for the purpose for which this report has
been requested or for any other purpose.
We conducted our audit work from April 4 to August 23, 2011. We performed the
following procedures:
1.	Evaluated the tribe's timekeeping process for the period September 1,
2005, through April 30, 2011, to ensure compliance with grant terms
and conditions, and the requirements of 2 CFR Part 225 and 40 CFR
Part 31. Specifically, we performed a system walk-through to
document our understanding of the tribe's timekeeping processes for
all EPA grants. We also tested a judgmental sample of the payroll
transactions.
2.	Interviewed the tribe's employees and reviewed documentation to
identify the corrective actions the tribe has taken to address its
outstanding 2008 and 2009 single audit findings. These findings
include:
a.	Lack of segregation of duties in regard to financial
reporting
b.	Untimely and inaccurate financial status reports
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c.	Deferred revenue totaling $1,281,148, of which $135,854 is
attributable to EPA
d.	Lack of accounting policies and procedures
Results of these procedures are presented in the next section of this report.
We were not engaged to perform, and did not perform, an audit, the objective of
which would be the expression of an opinion on management's assertions.
Accordingly, we do not express such an opinion. Had we performed additional
procedures, other matters might have come to our attention that would have been
reported to you.
This report is intended solely for the use of the region in its evaluation of the
tribe's timekeeping process for EPA grants for September 1, 2005, through
April 30, 2011, and the tribe's corrective actions to address the 2008 and 2009
single audit findings and recommendations, and should not be used by those who
have not agreed to the procedures and taken responsibility for the sufficiency of
the procedures for their purposes.
(sC t V? AI • (/
Robert K. Adachi
Director of Forensic Audits
November 10, 2011
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Results of Agreed-Upon Procedures Engagement
Although our transaction tests showed that labor costs claimed by the Summit
Lake Paiute Tribe under the EPA grants were generally supported by timesheets,
we did note several timekeeping issues. Because of these issues, we questioned
labor costs of $96,615. We also found that the tribe was addressing some of the
issues raised in the 2008 and 2009 single audits, but additional work remains to be
done on issues relating to deferred revenues and updating policies and procedures.
Timekeeping Process
We evaluated the tribe's timekeeping process for the period September 1, 2005,
through April 30, 2011. Specifically, we performed a labor system walk-through
and judgmentally sampled 28 sets of payroll documentation.
Our test of the payroll sample showed that labor costs claimed under the EPA
grants were generally supported by timesheets. We identified three exceptions.
Two of the exceptions were immaterial rounding differences in the payroll
calculation. The third exception was a 4-hour variance between the timesheet and
payroll documentation attributed to the tribe's EC, which is explained below.
While the labor costs claimed under the EPA grants were generally supported by
timesheets, we identified the following timekeeping issues that warrant attention:
•	The timekeeping process for the GAP grants did not comply with
2 CFR Part 225 requirements.
•	A third party did not consistently verify the chairman's consent to use
his signature stamp for timesheet approval.
•	The tribe charged indirect labor costs as direct costs, contrary to its
accounting policy.
•	The tribe did not have policies and procedures for leave allocation.
As a result of the above issues, we questioned labor costs of $96,615, consisting
of EC labor costs of $92,696 and indirect labor costs of $3,919 inappropriately
charged as direct costs.
Timekeeping Process Did Not Comply With Federal Requirements
The tribe's timekeeping process under the GAP grant did not comply with federal
requirements. Specifically, the tribe's EC performed work under multiple cost
objectives without documenting his total labor activities, as required by 2 CFR
Part 225.
The EC managed the tribe's GAP grant and was compensated as a full-time
employee under the grant. Starting in February 2008, he also functioned as the
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tribe's acting chief administrative employee and was compensated for this work
under a Bureau of Indian Affairs contract. In addition, he performed work relating
to the tribe's Ruby Pipeline project. However, he did not track the hours he
worked under the Bureau of Indian Affairs contract in a timesheet or other
personnel activity report, as required by 2 CFR Part 225.
According to 2 CFR 225, Appendix B, 8.h.(4), when employees work on multiple
activities or cost objectives, a distribution of their salaries or wages will be
supported by personnel activity reports or equivalent documentation. Title 2 CFR
225, Appendix B, 8.h.(5), further states that personnel activity reports must
account for total activity for which each employee is compensated. Since the EC
did not track his acting chief administrative employee hours, he did not comply
with 2 CFR Part 225 requirements.
In addition, we found instances in which the EC appeared to have claimed work
hours and sick and annual leave time under the GAP grants, contrary to the
requirements of 2 CFR Part 225. In particular:
•	On April 27 and 28, 2010, the EC claimed 4 hours of sick leave from
5:00 a.m. to 9:00 a.m. before he attended a Bureau of Indian Affairs
training from 9:00 a.m. to 5:00 p.m.
•	On January 24, 2011, the EC charged 15 hours to the Ruby Pipeline
Project and 8 hours of annual leave to the GAP grant, totaling 23 hours for
the day. His use of annual leave was also not approved in advance, as
required under the tribe's policy.
•	On April 6, 2011, the OIG auditors were at the tribe's office conducting
the field work for this engagement. The auditors observed that the EC
came into work at 8:00 a.m. and left at 11:00 a.m., stating that he was
taking the rest of the day off as sick leave. However, the EC claimed
8 hours under the GAP for that day.
Title 2 CFR 225, Appendix B, 8.a.(l), states that compensation for personal
services are allowable to the extent that these costs for individual employees are
reasonable. The hours claimed in the above examples were not reasonable, and
therefore were not allowable under 2 CFR Part 225.
As a result of the above issues, we question $92,696 in labor costs claimed under
the GAP grants.
The questioned amount represents the EC's total labor costs claimed from
January 1, 2010, to April 30, 2011. The noncompliance with federal requirements
began in February 2008, when the EC started as the acting chief administrative
employee. The tribe claimed a total of $197,807 for the EC's labor costs from
February 2008 to April 30, 2011. However, costs claimed for 2008 and 2009 were
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already questioned by the OIG under the single audits; therefore, we question the
remaining labor costs and the applicable indirect costs in this report. Table 1
summarizes the costs claimed and questioned by calendar year.
Table 1: Summary of questioned costs
Calendar
year
Direct labor
costs claimed
Direct labor
costs questioned
Applicable
indirect costs
Total
2008
$59,889
$0
$0
$0
2009
61,586
0
0
0
2010
59,852
59,852
16,364
76,216
2011
16,480
16,480
a0
16,480
Total
$197,807
$76,332
$16,364
$92,696
Source: General ledger reports provided by the tribe.
a As of June 11, 2011, the tribe had not claimed indirect costs for 2011 under the GAP grant.
Approval to Use Chairman's Signature Stamp Not Consistently
Verified
The tribe did not consistently verify the chairman's consent to use his signature
stamp for approval of department directors' timesheets. The chairman did not live
or work in the same city as the tribe's administrative office. As a result, he was
generally not available to approve the timesheets in person. Each department
director e-mailed the chairman his or her timesheet for review. Upon receipt of an
e-mail approval from the chairman, the department director used the chairman's
signature stamp to sign the timesheets. The chairman's approval e-mail was not
consistently verified by a third person to ensure proper segregation of duties.
In the draft report response, the tribe did not comment on the third-party
verification, but stated that it is mandatory for proof of the chairman's approval to
be kept in a secured file. The tribe provided four examples of phone messages
authorizing the use of the chairman's stamp. The tribe did not provide evidence to
demonstrate that all approvals were independently verified; therefore, our position
on this issue remains unchanged.
Indirect Labor Costs Charged as Direct Costs
The tribe claimed indirect labor costs of $16,272 as a direct cost under the EPA
grants, contrary to the requirements of 2 CFR Part 225. Title 2 CFR 225,
Appendix A, Section C.l(f), states that for costs to be allowable under federal
awards, they must be accorded consistent treatment. A cost may not be assigned
to a federal award as a direct cost if any other cost incurred for the same purpose
in like circumstances had been allocated to the federal award as an indirect cost.
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The tribe claimed accountant labor costs of $16,272 as direct costs under the EPA
grants. According to the tribe's indirect cost proposal, salaries and fringe benefits
for administrative staff, including the accountants, are 100 percent indirect costs;
therefore, the tribe cannot claim administrative staff salaries as a direct cost under
the EPA grants. As a result, we question labor costs of $3,919 as unallowable
costs. The questioned amount excludes the portion of the accountant's labor costs
that were already questioned by the OIG under the 2008 and 2009 single audits.
Tribe Did Not Have Leave Allocation Procedures
The tribe did not have established procedures for allocating leave time, as
required by 2 CFR Part 225. According to 2 CFR 225, Appendix B, 8.d.(2), the
cost of fringe benefits in the form of regular compensation paid to employees
during periods of authorized absences from the job, such as for annual leave, sick
leave, holidays, court leave, military leave, and other similar benefits, are
allowable in part, if the costs are equitably allocated to all related activities,
including federal awards. According to the tribe's Natural Resources Department
director, for employees who work on multiple grants, the amount of leave time
charged to a grant was based a variety of factors, including budget as well as
actual work performed at the time the leave was earned, and when the leave was
used.
During our field work, we explained to the tribe that leave costs should be
consistently allocated among cost objectives based on actual related work
performed. On May 24, 2011, the Natural Resources Department director notified
the OIG that the tribe had updated its leave allocation procedures, and leave costs
are now charged to the grants based on actual related work performed. However,
we have neither reviewed the revised procedures nor verified the tribe's
implementation of the procedures.
Single Audit Corrective Actions
We interviewed the tribe's employees to identify corrective actions the tribe has
taken to address its outstanding 2008 and 2009 single audit findings. Our agreed-
upon procedures were limited to identifying and confirming corrective actions
taken. We did not evaluate the adequacy of the corrective actions.
Lack of Segregation of Duties in Financial Reporting
To address the lack of segregation of duties issue, the tribe has hired two Finance
Department staff to work with the accountant. According to the accountant, the
tribe has also instituted new systems and procedures to appropriately segregate
the Finance Department's activities.
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Untimely and Inaccurate Financial Status Reports
According to the tribe's accountant, hiring the two additional staff members in the
Finance Department has resulted in the tribe being more organized. Specifically,
the accountant stated that the tribe has improved its process for tracking due dates
for various financial reports.
Regarding the inaccurate financial status report issue, the accountant explained
that the tribe has updated its financial status report preparation procedures.
Previously, the tribe did not reconcile its general ledger on a monthly basis.
Therefore, any adjustment made after the financial status report preparation date
would result in discrepancies between the general ledger and financial status
report. The tribe's current procedures require all accounts to be reconciled before
financial status report preparation. The accountant stated that the tribe has
corrected all accounting errors and resubmitted revised financial status reports for
all of its grants.
Deferred Revenue Balance
According to the tribe's accountant, the tribe agrees that it has a deferred revenue
balance attributable to EPA. However, the tribe is of the opinion that the actual
amount is different from what was reported in the single audits. The tribe believes
that an error was made in the balance sheets of the earlier single audits and was
carried forward, since single audits for 2002 through 2007 were completed
concurrently. The tribe has hired an outside consultant to help quantify the actual
deferred revenue balance. The tribe's accountant showed us a copy of the draft
analysis to confirm that the tribe has been actively working on this issue.
The deferred revenue issue appears to have been due to the tribe not fully
recuperating its indirect costs from federal grants and contracts. According to the
tribe's accountant, the tribe did not collect any indirect costs for many years,
which resulted in the initial deferred revenue balance. The tribe's accountant
expressed concern that the tribe is still not collecting its full approved indirect
cost rate on current EPA grants. For example, the proposal for GAP 4, year 1,
included $29,940 in indirect costs, which is 29.92 percent of direct costs. The
tribe's approved indirect cost rate is 37.63 percent.
Lack of Accounting Policies and Procedures
We noted that the tribe has updated parts of its policies and procedures. However,
the tribe's personnel manual is still incomplete and out of date. We also found
that the financial management manual did not address all applicable issues. As
explained above, the tribe's policies and procedures did not address leave
allocation and did not require employees to record all hours worked. We also
found a discrepancy between the tribe's policies and its actual practices regarding
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overtime pay for professional service employees. According to the tribe's
chairman, the tribe updated its policies on a piecemeal basis as issues arose.
Recommendations
We recommend that the Regional Administrator, EPA Region 9:
1.	Disallow and recover unallowable costs of $96,615.
2.	Require the tribe to implement internal controls to ensure that:
a.	Employees document all hours worked in accordance with
2 CFR Part 225 requirements.
b.	The chairman's consent to use his signature stamp for
timesheet approval is independently verified.
c.	Leave allocation complies with 2 CFR Part 225 requirements.
3.	Require the tribe to update its policies and procedures to ensure that
they address all accounting issues and reflect the tribe's actual
accounting practices.
Agency and Grantee Comments
The OIG received comments on the draft report from EPA Region 9 on
September 15, 2011, and from the tribe on September 21, 2011. The tribe also
provided supplemental documentation as support for its comments.
Region 9 had no comments on the report's factual accuracy and concurred with
the recommendations. The region's complete written response is included in
appendix A.
The tribe disagreed with our recommendation to disallow labor costs of $96,615.
The tribe's complete written response, along with our comments, is included in
appendix B. The supplemental documentation provided by the tribe is not
included in the report due to its volume and is available upon request.
OIG Response
The tribe's comments and supporting documentation did not resolve any of the
issues identified. Therefore, our position on the findings and recommendations
remains unchanged.
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Status of Recommendations and
Potential Monetary Benefits
RECOMMENDATIONS
POTENTIAL MONETARY
BENEFITS (In $000s)
Rec.
No.
Page
No.
Subject
Status1
Action Official
Planned
Completion
Date
Claimed
Amount
Agreed To
Amount
10 Disallow and recover unallowable costs of $96,615 U
10 Require the tribe to implement internal controls to
ensure that:
a.	Employees document all hours worked in
accordance with 2 CFR Part 225
requirements.
b.	The chairman's consent to use his
signature stamp for timesheet approval is
independently verified.
c.	Leave allocation complies with 2 CFR Part
225 requirements.
10 Require the tribe to update its policies and
procedures to ensure that they address all
accounting issues and reflect the tribe's actual
accounting practices.
Regional Administrator,
Region 9
Regional Administrator,
Region 9
$97
Regional Administrator,
Region 9
1 0 = recommendation is open with agreed-to corrective actions pending
C = recommendation is closed with all agreed-to actions completed
U = recommendation is unresolved with resolution efforts in progress
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Appendix A
Region 9's Comments on the Draft Report
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
REGION 9
75 Hawthorne Street
San Francisco, CA 94105
SEP 15 2011
MEMORANDUM
SUBJECT: Draft Attestation Report:
Agreed-Upon Procedures
Applied to EPA Grants Awarded to Summit Lake Paiute Tribe
Sparks, Nevada
Project No. 2011-1745
FROM: Tom McCullough
Assistant Regional Administrator
Management and Technical Services Division (MTS-1)
TO:
Robert Adachi
Director of Forensic Audits
Thank you for the opportunity to review the Draft Attestation Report dated August 23,
2011. The Region has reviewed the report and has no significant comments on its factual
accuracy or recommendations. We agree with the recommendations and concur that the Region
(1) should recover unallowable costs of $96,615, (2) requires the Tribe to establish and
implement internal controls, and (3) requires the tribe to update its policies and procedures to
ensure that the Tribe addresses all accounting issues to reflect actual practices.
Per EPA Order 2750, please let me know within 15 calendar days whether you find this
response acceptable. Should you or your staff have any comments, questions, or concerns,
please contact Magdalen Mak, Regional Audit Follow-up Coordinator at (415) 972-3773.
cc: Warner Barlese, Chairman, Summit Lake Paiute Tribe
Frances Winn, Tribal Accountant, Summit Lake Paiute Tribe
Enrique Manzanilla, Director, Communities and Ecosystems Division, Region 9
Tim Wilhite, Program Officer, Region 9
Laura Mayo, Program Officer, Region 9
Fareed Ali, Grant Specialist, Region 9
Renee Chan, Grant Specialist, Region 9
Marie Ortesi, Accountant, Region 9
Magdalen Mak, Audit Follow-up Coordinator, Region 9
Lela Wong, Project Manager, OIG
Jessica Knight, Management Analyst, OIG
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Appendix B
Grantee's Comments on the Draft Report
and OIG Evaluation
The Summit Lake Paiute Tribal Council does not support your findings that wages paid to the
former Environmental Coordinator in the amount of $96,615.00 for calendar years 2010 and
2011.
Timekeeping process
The Summit Lake Paiute tribe's acting chief administrative employee was compensated for work
under a Bureau of Indian Affairs contract and was paid a salary. When employees work on
multiple activities or cost objectives, a portion of their salaries or wages is supported by
personnel activity reports. Monthly reports are given at the SLPT [Summit Lake Paiute Tribe]
council meetings. Such reports are in the meeting minutes. We do have procedures for making
sure that all timesheets are approved by a supervisor. Finance reviews any staff that have annual
or sick leave to make sure that they have enough leave time to pay employees who work on
multiple grants. The amount of leave time charged to a grant was based a variety of factors,
including budget as well as actual work performed at the time the leave was earned and when the
leave was used. The tribe had updated its leave allocation procedures and leave costs are now
charged to the grants based on actual related work performed.
OIG Response 1: According to 2 CFR 225, Appendix B, 8.h.(5), personnel activity reports or
equivalent documentation must account for the total activity for which each employee is
compensated. The tribe's EC did not track the hours he worked under the Bureau of Indian
Affairs contract in a timesheet or other personnel activity report. It is not sufficient for an
employee who works on multiple activities to document only a portion of his time. Therefore,
our position on this issue and the questioned labor costs remain unchanged.
As stated in the report, we acknowledge that the tribe has taken steps to correct its leave
allocation procedures.	
Third party verification
Department directors e-mail the chairman his or her timesheet for review. The chairman
approves or disapproves the time sheets via e-mail and only the Natural Resource department
director or the Acting Administrator can use the signature stamp. It is mandatory that proof of
this e-mail, text, or voice message approval left by the SLPT chairman is kept in a secure file.
The attached are examples of how the administration staff records my approvals for use of my
signature stamp. These examples are all from 2010. The person who wrote these messages was
who is no longer on the SLPT staff.
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OIG Response 2: The tribe's response did not comment on the third-party verification, but
stated that it is mandatory for proof of the chairman's approval to be kept in a secured file.
We acknowledge that the tribe provided some examples of the chairman's approval for the
signature stamp. However, the tribe did not demonstrate that all uses of the signature stamp
were approved via e-mail, text, or voice message, and that the approvals were verified by a
third person. Therefore, our position on this issue remains unchanged.	
Direct costs vs. indirect costs
My finance director is on vacation this week and I rely on her to explain why the tribe charged
indirect labor costs as direct costs. I will be able to address this issue when she is back at the
office.
Allocation procedures
My finance director will also need to explain the policies for leave allocation. The SLPT updates
its policies and procedures to ensure that the council address' all accounting issues and it reflect
the tribe's actual accounting practices. We do have personnel policies for employee leave and it
is attached. If it's a question on how the leave is entered in the accounting system, I will need
my finance director to assist me to thoroughly explain that process.
OIG Response 3: As stated in the report, we acknowledge that the tribe has updated portions
of its policies and procedures. However, the tribe's personnel manual is incomplete and out of
date, and the financial management manual does not address issues such as leave allocation or
the requirement that employees record all hours worked. We also found a discrepancy between
the tribe's policies and its actual practices regarding overtime pay for professional service
employees.	
Deferred Revenue
The council agrees that the SLPT has deferred revenue. However, the council has the opinion
that the actual amount is different from what was reported in the single audits. The council
believes that an error was made in the balance sheets of the earlier single audits and was carried
forward. Since single audits for 2002 through 2007 were completed concurrently, the council has
hired an outside consultant to help quantify the actual deferred revenue balance. The council
showed a copy of the draft analysis to confirm that the council has been actively working on this
issue. The deferred revenue issue appears to have been due to the SLPT not fully recuperating its
indirect costs from federal grants and contracts. According to the council, the SLPT did not
collect any indirect costs for many years, which resulted in the initial deferred revenue balance.
The council expressed concern that the SLPT is still not collecting its full approved indirect cost
rate on current EPA grants. This deferred revenue is almost settled and you will see it on this
next audit year.
OIG Response 4: The tribe acknowledged the deferred revenue issue and has taken some
steps to address the deferred revenue balance. However, as of the date of this report, the issue
has not been resolved. Our position remains unchanged.	
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I am in possession of supporting documents that will demonstrate the employee was performing
GAP duties during this time period. Copies of these documents will be sent via FedEx to you on
or before September 22, 2011.
OIG Response 5: We have reviewed the provided documentation and determined that it does
not support the questioned labor costs. The tribe provided documentation that attempts to
show some of the EC's GAP-related activities in 2010 and 2011. However, we questioned the
EC's labor costs because he did not track the hours worked as the tribe's acting chief
administrative employee under the Bureau of Indian Affairs contract. In addition, we found
that some of the EC's hours claimed under the GAP grant were not reasonable. The
documentation provided by the tribe does not address or rectify either of these issues. Our
position remains unchanged.
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Appendix C
Distribution
Regional Administrator, Region 9
Agency Follow-Up Official (the CFO)
Agency Follow-Up Coordinator
Assistant Regional Administrator, Region 9
Director, Office of Grants and Debarment, Office of Administration and Resources Management
Director, Grants and Interagency Agreements Management Division, Office of Administration
and Resources Management
Audit Follow-Up Coordinator, Region 9
Chairman, Summit Lake Paiute Tribe
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