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U.S. Environmental Protection Agency	11-1-0069
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|	\ Office of Inspector General	January 19 2011
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At a Glance
Why We Did This Review
We performed this review to
evaluate the U.S. Environmental
Protection Agency's (EPA's) fiscal
year (FY) 2009 Office of
Management and Budget (OMB)
Circular A-123 reviews of internal
controls over the unliquidated
obligation (ULO) review process.
Our objectives were to determine
whether EPA's regions and program
offices (1) complied with guidance
for conducting the FY 2009 A-123
reviews of the ULO review process;
and (2) reported their A-123 review
methodology, findings, and
corrective actions in their FY 2009
management integrity assurance
letters.
Background
The Federal Managers' Financial
Integrity Act (FMFIA) requires
federal agencies to report annually to
the President and Congress on the
effectiveness of internal controls.
OMB Circular A-123 guidance for
implementing FMFIA requires
federal agencies to assess internal
controls over financial reporting. In
prior audits, we reported on
problems EPA had in deobligating
funds no longer needed. In FY 2009,
EPA expanded its internal control
reviews to include ULOs.
For further information,
contact our Office of Congressional,
Public Affairs and Management at
(202) 566-2391.
The full report is at:
www.epa.qov/oiq/reports/2011/
20110119-11-1-0069.pdf
Catalyst for Improving the Environment\
EPA Did Not Fully Comply With Guidance
Regarding OMB Circular A-123 Unliquidated
Obligation Reviews
What We Found
Seventeen of 22 EPA regions and program offices did not fully comply
with the guidance for conducting and reporting on their FY 2009 OMB
Circular A-123 reviews of internal controls over the ULO process.
OMB A-123 guidance requires agencies to assess the effectiveness of
internal controls over financial reporting. The Office of the Chief
Financial Officer (OCFO) requested offices to conduct a thorough
internal control review of their ULO review process. The following
factors contributed to EPA's noncompliance:
•	Some regions and program offices did not properly plan and
staff the reviews.
•	EPA's OCFO did not closely monitor the reviews.
•	Neither the OCFO nor the Assistant Administrators and
Regional Administrators held the review teams accountable for
performing the reviews.
EPA benefits from internal control reviews by identifying control
deficiencies and corrective actions for improvement. The reviews also
provide support for the Administrator's assurance statement on the
effectiveness of EPA's internal controls.
What We Recommend
We recommend that the Chief Financial Officer:
•	Develop and implement procedures to oversee the regional and
program office A-123 ULO internal control reviews.
•	Require regions and program offices to develop plans that
address staffing A-123 ULO reviews and training reviewers.
•	Develop an A-123 ULO review guide to assist those
conducting the reviews.
•	Implement standard performance measures to assess assurance
letter completeness and timeliness.
The Agency concurred with our findings and recommendations.

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