*. U.S. Environmental Protection Agency	12-P-0071
i	\ Office of Inspector General	November 10, 2011
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At a Glance
Why We Did This Review
We conducted this audit to
determine whether the U.S.
Environmental Protection
Agency (EPA) has adequate
controls for resolving Defense
Contract Audit Agency
(DCAA) audit reports, and
whether EPA is resolving
DCAA audit reports timely.
Background
DCAA performs contract
audit services for EPA.
Typical DCAA audit services
include incurred cost audits,
contract audit closing
statements, and floor checks.
The EPA Office of the
Inspector General (OIG)
previously requested, tracked,
and reported DCAA audits
until resolution. Once
resolved, EPA tracked the
corrective actions until
implementation. On January 1,
2009, the OIG transferred its
requesting, tracking, and
reporting responsibilities to
EPA.
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-P-0071.pdf
EPA Should Improve Policies and Procedures to
Ensure Effective DCAA Audit Report Resolution
What We Found
EPA should improve its policies and procedures to ensure timely and accurate
tracking and reporting of the resolution of DCAA reports. When EPA is the
cognizant agency, i.e., responsible for resolving the audit recommendations, it is
generally resolving DCAA reports within 6 months, as required by Office of
Management and Budget Circular A-50. However, EPA is not always:
•	Reporting the status of unresolved DCAA audits to the Administrator
•	Accurately recording the management decision dates for DCAA reports,
which are used to evaluate the timeliness of resolution and
implementation of corrective action
•	Resolving DCAA reports within 6 months when EPA is not the cognizant
agency
•	Accurately defining when DCAA audits are resolved
All of these conditions contribute to the Administrator receiving inaccurate
information on the status of resolution of DCAA audit reports. If audits are
resolved timely, EPA may be able to deobligate funds on Agency contracts,
thereby making funds available for other priorities.
What We Recommend
We recommend that EPA develop and/or revise and implement policies and
procedures to ensure that unresolved DCAA audit reports are reported on a
semiannual basis to the EPA Administrator, to record management decision and
final action dates for DCAA audit reports, and to define the resolution point for
the various types of DCAA audits. We also recommend that EPA revise EPA
Manual 2750 to reflect current Agency processes for requesting, tracking, and
reporting unresolved DCAA reports that impact EPA contracts; reexamine audits
that we identify herein as already resolved and provide the OIG an adequate
management decision where appropriate; and develop a plan to accelerate audit
resolution when not receiving adequate audit support from DCAA. EPA agreed
with all of our recommendations and provided milestone dates for each
recommendation.

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