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*. U.S. Environmental Protection Agency	12-4-0224

|	\ Office of Inspector General	January23 2012
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At a Glance
Why We Did This
Examination
The U.S. Environmental
Protection Agency (EPA)
requested assistance from the
Office of Inspector General
(OIG) due to concerns relating
to project and funding
management exercised by a
cooperative agreement
recipient, as well as the
recipient's cash draw practices.
Background
EPA competitively awarded
Cooperative Agreement
X7-83325501 on October 26,
2006, to Kathleen S. Hill
(recipient), an individual, to
support the creation and
administration of a national
tribal water program council.
The council is intended to raise
awareness of water-related
issues pertaining to the health
of tribal communities and the
quality of tribal aquatic
resources and watersheds.
EPA's contribution to the
project was 100 percent of
approved costs up to $800,000.
For further information, contact
our Office of Congressional and
Public Affairs at (202) 566-2391.
Examination of Costs Claimed Under
Cooperative Agreement X7-83325501 Awarded to
Kathleen S. Hill, Chiloquin, Oregon
What We Found
Kathleen S. Hill did not have a financial management system that met federal
standards. We identified the following material weaknesses concerning the
recipient's internal controls and compliance with federal requirements:
•	The recipient did not have adequate controls to ensure that costs claimed
were in accordance with Code of Federal Regulations (CFR)
requirements under 2 CFR Part 230.
•	The recipient's cash draws did not comply with 40 CFR Part 30
requirements or the terms and conditions of the cooperative agreement.
As a result, we questioned $80,721 of the $726,587 claimed under the
cooperative agreement. Questioned costs included ineligible fringe benefit, travel
and per diem, supplies, and contractual costs.
What We Recommend
We recommend that the Director, Office of Grants and Debarment, disallow and
recover $80,721 in questioned costs. We also recommend that the director verify
that the recipient has an adequate financial management system in place prior to
any future award. Further, we recommend that the director verify that the
recipient's final financial status report is properly supported by accounting
system records.
EPA did not comment on the recommendations, but generally agreed with the
findings, with the exception of fringe benefits. The recipient generally disagreed
with the findings and recommendations, and said they were based on inaccurate
and incomplete data. However, the recipient's comments and supporting
documentation did not change our findings and recommendations.
The full report is at:
www.epa.qov/oiq/reports/2012/
20120123-12-4-0224.pdf

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