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U.S. Environmental Protection Agency	20-P-0167
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\ Office of Inspector General
At a Glance
Why We Did This Project
The Improper Payments
Elimination and Recovery Act
of 2010, as modified by the
Improper Payments Elimination
and Recovery Improvement Act
of 2012, requires that each
fiscal year, inspectors general
determine whether their
respective agency complied
with the law. Known as IPERA,
the Act requires agencies to
annually estimate and report
improper payments for
programs and activities that are
deemed susceptible to
significant improper payments.
In addition, Office of
Management and Budget
Circular A-123, Appendix C,
states that the Office of
Inspector General should
evaluate the accuracy and
completeness of agency
reporting.
Our audit focused on the
U.S. Environmental Protection
Agency's compliance with
these requirements.
This report addresses the
following:
	Compliance with the law.
This project addresses a key
EPA management challenge:
	Improve fulfillment of reporting
requirements.
Address inquiries to our public
affairs office at (202) 566-2391 or
OIG WEBCOMMENTS@epa.gov.
List of OIG reports.
EPA Complied with Improper Payments Legislation,
but Internal Controls Need Substantial Improvement
to Ensure More Accurate Reporting
What We Found
The EPA complied with all six IPERA
requirements for fiscal year 2019. However, the
EPA needs to improve the accuracy and
completeness of improper payments reporting
for the grant payment stream.
Improvement to processes
for preventing and detecting
improper payments will
result in better use of funds
for environmental and
supporting programs.
The EPA's estimated improper payments and
the improper payment error rate were understated for FY 2019. In the FY 2019
Agency Financial Report, the EPA reported $22.49 million in estimated improper
payments. However, our review of 20 of the 225 payments that the EPA tested
identified an additional $571,469.19 in improper payments due to insufficient or a
lack of supporting documentation. We found that EPA reviewers were not
adhering to the Agency's improper-payment-review policies and that they were
not sufficiently trained in grant cost regulations and the Agency's improper
payment review process.
Improved review methods for grant funds will aid the Agency in more accurately
identifying estimated improper payments and potentially lead to better use of
funds for environmental programs.
Recommendations and Planned Agency Corrective Actions
We recommend that the chief financial officer revisit the previous
recommendation in EPA OIG Report No. 19-P-0163, EPA Complied with
Improper Payments Legislation but Stronger Internal Controls Are Needed, to
implement internal controls for training reviewers and annually verifying that
reviewers are knowledgeable and proficient in the identification and reporting of
improper payments, and verify all corrective actions are completed.
The EPA agreed with our recommendation and stated that the corrective action
that was recommended in our prior report was completed in April 2019. The
Office of the Chief Financial Officer stated that it updated the IPERA Standard
Operating Procedures to include an annual training requirement for all IPERA
grant reviewers on the Grants Improper Payment Review SOP checklist and the
Office of Mission Support Grants Specialist Module. Completion of this training
must be certified in writing to the IPERA grant review lead prior to receiving
sample recipient folders for review. However, we have not evaluated the updated
Grants Improper Payment Review SOP, nor will we be able to determine whether
reviewers are knowledgeable and proficient in the identification and reporting of
improper payments until we conduct our next IPERA audit. Therefore, we
consider the recommendation not implemented.

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