$ < 73 \ ^t0ST4% & O PRO'S4- U.S. ENVIRONMENTAL PROTECTION AGENCY OFFICE OF INSPECTOR GENERAL Catalyst for Improving the Environment Audit Report EPA Submitted Accurate and Timely Recovery Act Financial Reports Report No. 10-R-0151 June 22, 2010 RECOVERY.GOV ------- Report Contributors: Paul Curtis Arthur Budelier Sheree James Demetrios Papakonstantinou Javier Negron Abbreviations EPA U.S. Environmental Protection Agency FACTS II Federal Agency Centralized Trial-Balance System II IFMS Integrated Financial Management System OCFO Office of the Chief Financial Officer OEI Office of Environmental Information OIG Office of Inspector General OMB Office of Management and Budget RAT Recovery Accountability and Transparency TAFS Treasury Appropriation Fund Symbol ------- vi£D sr^ U.S. Environmental Protection Agency 10-R-0151 s? T> ~-r June 22,2010 I® I X *1 PRO"*^ 0* U ¦ O • L. I I V11 Ul IIIICI I Lul a I UlCvl \ Office of Inspector General At a Glance Catalyst for Improving the Environment\ Why We Did This Review We performed this review to determine whether (1) the U.S. Environmental Protection Agency's (EPA's) financial reporting for the American Recovery and Reinvestment Act of 2009 complied with Office of Management and Budget (OMB) guidance and Recovery Act requirements; (2) the amounts EPA reported to OMB reconciled to EPA's financial system; and (3) EPA submitted the reports in a timely manner. Background The Recovery Act provided EPA with $7.22 billion for specific programs. OMB issued guidance on how federal agencies should manage and report on Recovery Act activities. OMB's guidance requires EPA to report, on a weekly basis, the cumulative Recovery Act funds obligated and expended. OMB provides for Recovery Act funds transparency and accountability by requiring that EPA's reports be posted on the Internet for public access. EPA Submitted Accurate and Timely Recovery Act Financial Reports What We Found EPA complied with OMB guidance and Recovery Act requirements in its weekly financial activity reporting. EPA submitted accurate and timely financial reports. EPA ensured its financial reporting was transparent to the public by posting data to the EPA Recovery Act Website and submitting data to the Recovery and Accountability Transparency Board for posting to the government-wide Website. Our review assures EPA and the public that EPA's weekly Recovery Act financial activity reports are accurate, timely, and transparent. For further information, contact our Office of Congressional, Public Affairs and Management at (202) 566-2391. To view the full report, click on the following link: www.epa.qov/oiq/reports/2010/ 20100622-10-R-0151.pdf ------- UNITED STATES ENVIRONMENTAL PROTECTION AGENCY WASHINGTON, D.C. 20460 OFFICE OF INSPECTOR GENERAL June 22, 2010 MEMORANDUM SUBJECT: EPA Submitted Accurate and Timely Recovery Act Financial Reports Report No. 10-R-0151 V/\Vv\ FROM: Melissa M. Heist Assistant Inspector General for Audit TO: Barbara J. Bennett This is our report on the American Recovery and Reinvestment Act of 2009 financial reporting review conducted by the Office of Inspector General of the U.S. Environmental Protection Agency. The estimated cost of this report - calculated by multiplying the project's staff days by the applicable daily full cost billing rates in effect at the time - is $104,776. Action Required We made no recommendations; therefore, no action is required. We will close out the report in our tracking system upon issuance. We have no objections to the further release of this report to the public. This report will be available at http://www.epa.gov/oig. Chief Financial Officer If you have any questions, please do not hesitate to contact me at 202-566-2523 or curtis.paul@epa.gov. or Arthur Budelier at 312-353-9529 or budelier.arthur@epa.gov. ------- EPA Submitted Accurate and Timely Recovery Act Financial Reports 10-R-0151 Table of C Purpose 1 Background 1 Scope and Methodology 1 Results of Review 2 EPA Complied with OMB Guidance and Recovery Act Requirements 2 EPA Submitted Accurate Financial Reports 3 EPA Submitted Timely Financial Reports 3 Agency Comments and OIG Evaluation 3 Status of Recommendations and Potential Monetary Benefits 4 Appendix A Distribution 5 ------- 10-R-0151 Purpose The Office of Inspector General (OIG) performed this review to determine whether the U.S. Environmental Protection Agency's (EPA's) financial reporting for the American Recovery and Reinvestment Act of 2009 complied with Office of Management and Budget (OMB) guidance and was accurate and timely. The objectives of our review were to determine whether: • EPA's financial reports complied with OMB guidance and Recovery Act requirements; • Amounts EPA reported to OMB reconciled to EPA's financial system; and • EPA submitted the Recovery Act reports in a timely manner. Background The purpose of the Recovery Act is to create and save jobs and spur economic activity and investment in long-term growth. The Recovery Act provided EPA $7.22 billion for specific programs. The Recovery Act requires stringent accountability for performance and results, as well as unprecedented transparency. The Recovery Accountability and Transparency (RAT) Board provides transparency in the use of Recovery Act-related funds. OMB memoranda M-09-10, dated February 18, 2009, and M-09-15, dated April 3, 2009, published guidance to federal agencies for implementing Recovery Act programs and activities. The guidance requires agencies to report to the RAT Board, on a weekly basis, all cumulative Recovery Act obligations and gross outlays (expenditures) in a standard reporting format. The financial information that agencies report must use the same U.S. standard general ledger account balances that they report to the Federal Agency Centralized Trial-Balance System II (FACTS II). OMB Bulletin 09-02, dated February 25, 2009, requires agencies to use separate Treasury Appropriation Fund Symbols (TAFSs) to track and report Recovery Act obligations and disbursements. Federal agencies report the cumulative activity through Friday and submit their weekly reports the following Tuesday before 5:30 p.m. The weekly reports include a list of the major Recovery Act actions completed to date and the major planned actions. Senior accountable officials clear these communications before their release. Several EPA offices coordinate to prepare and submit EPA's weekly reports. EPA's Office of the Chief Financial Officer (OCFO) prepares the financial section of the reports. The Office of Environmental Information (OEI) prepares the "Major Actions Completed" and "Major Actions Planned" sections. The Recovery Act Accountable Official in the Office of Administration and Resources Management reviews and approves the weekly reports. OEI transmits the reports, and the RAT Board posts the reports to www.recovery.gov and provides them to OMB. Scope and Methodology We conducted this audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate 1 ------- 10-R-0151 evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. We conducted our audit from January 25 to June 2, 2010. We reviewed EPA's weekly Recovery Act financial reports and the process for preparing them. We tested the compliance and accuracy of EPA's weekly financial activity reports by comparing them to reports that we independently generated from the Integrated Financial Management System (IFMS). We tested 5 reports from a universe of 49 reports dated from March 3, 2009, through February 2, 2010. We selected report dates that provided representative audit coverage for the entire reporting period. We tested the timeliness of reporting by examining e-mail confirmations of report submissions, and we traced report postings to www.recovery.gov. We examined the EPA senior accountable official's written approval of the reports. We assessed EPA's internal controls related to the weekly financial activity reporting. We gained an understanding of the reporting process and internal controls through interviews of OCFO and OEI personnel and examination of OCFO's report preparation instructions. We did not review the internal controls over IFMS from which we obtained data reports, but relied on the review conducted during the audit of EPA's Fiscal Year 2009 financial statements. We found no prior OIG or U.S. Government Accountability Office reports with findings or recommendations related to EPA's Recovery Act financial reporting. Results of Review EPA submitted accurate and timely Recovery Act financial reports in compliance with OMB guidance and Recovery Act requirements. EPA Complied with OMB Guidance and Recovery Act Requirements EPA complied with OMB guidance and Recovery Act requirements for submitting its financial activity reports by: • Submitting weekly reports of its cumulative Recovery Act obligations and gross outlays in the prescribed format. • Using separate TAFSs for Recovery Act funds. • Using the same U.S. standard general ledger accounts that it reported to FACTS II. • Including in the weekly reports a list of the major Recovery Act actions completed to date and the major planned actions. • Obtaining approval of the EPA senior accountable official to release the communications. • Ensuring Recovery Act financial reporting is transparent to the public by posting data to the EPA Recovery Act Website and submitting data to the RAT Board for posting to the government-wide Website. 2 ------- 10-R-0151 EPA Submitted Accurate Financial Reports We found that EPA submitted accurate weekly reports of cumulative Recovery Act obligations and gross outlays. We verified the accuracy of EPA's reports by matching them to reports that we independently developed. We generated data from EPA's IFMS accounting system and tested five EPA reports. All five reports were accurate. However, OCFO's written instructions for preparing the weekly financial reports contained a misstatement about reporting Recovery Act funds transfers within EPA. The instructions stated that vendor code type 9 transactions representing funds transfers within EPA should be excluded from the weekly financial reports. However, OMB guidance states that weekly reports should include transfers within an agency from one TAFS account to another. Because EPA's reports correctly included transfers within EPA, there was no inaccurate accounting, only a misstatement in the written instructions. OCFO provided us corrected internal instructions on April 7, 2010. EPA Submitted Timely Financial Reports We found that EPA submitted timely financial reports to the RAT Board. The reports include obligation and gross outlay activity through the prior Friday. EPA transmits the weekly reports to the RAT Board through an e-mail to a General Services Administration feed. OMB requires federal agencies to transmit the reports each Tuesday by 5:30 p.m., but will allow an extension until 10:00 a.m. Wednesday. The RAT Board includes, in its weekly posting to www.recovery.gov. the reports of agencies transmitted by 10:00 a.m. Wednesday. Of the five reports reviewed, EPA submitted one report to the RAT Board after the deadline, on Tuesday, February 2, 2010, at 10:48 p.m. However, the RAT Board included the posting to www.recovery.gov due to its extension policy. EPA's late transmission had no effect on the timely posting of Recovery Act activity for public access. Agency Comments and OIG Evaluation In an e-mail dated June 11, 2010, the Agency stated it had no comments on our report. 3 ------- 10-R-0151 Status of Recommendations and Potential Monetary Benefits RECOMMENDATIONS POTENTIAL MONETARY BENEFITS (In $000s) Rec. No. Page No. Subject Status1 Action Official Planned Completion Date No recommendations Claimed Amount Agreed To Amount 1 O = recommendation is open with agreed-to corrective actions pending C = recommendation is closed with all agreed-to actions completed U = recommendation is undecided with resolution efforts in progress 4 ------- 10-R-0151 Appendix A Distribution Office of the Administrator Chief Financial Officer Deputy Assistant Administrator for Environmental Information and Deputy Chief Information Officer Assistant Administrator for Administration and Resources Management Agency Follow-up Coordinator General Counsel Associate Administrator for Congressional and Intergovernmental Relations Associate Administrator for Public Affairs Audit Follow-up Coordinator, Office of the Chief Financial Officer Audit Follow-up Coordinator, Office of Environmental Information Acting Inspector General 5 ------- |