tffcD STAf
U.S. Environmental Protection Agency	09-P-0242
f	\ Office of Inspector General	September 23,2009
5 V|V "
4t PRO"*4-
At a Glance
Catalyst for Improving the Environment
Why We Did This Review
We conducted this review to
determine whether U.S.
Environmental Protection
Agency (EPA) controls ensure
that invoiced contractor costs
are properly supported and
allowable in accordance with
the Federal Acquisition
Regulation.
Background
In 2008, EPA paid
contractors $1.3 billion. To
safeguard EPA funds, invoices
must be reviewed to determine
whether the submitted costs
are allowable, allocable, and
reasonable.
Contractor Invoice Internal Controls
Need Improvement
What We Found
EPA should improve its invoice review procedures to ensure costs are allowable
and supported in accordance with the Federal Acquisition Regulation. During our
review, we found (1) invoice reviews were not always documented as required by
the Contracts Management Manual (CMM), (2) Project Officer reviews were
based on incomplete information, (3) monthly progress reports did not always
contain the information needed to evaluate invoices, and (4) Agency staff did not
perform required rate verifications and math checks. Some responsible for invoice
reviews were unaware of the guidance and checklists in the CMM, did not
understand the level of documentation needed to review invoices, or did not
adhere to the guidance.
EPA's Office of Acquisition Management (OAM) Financial Monitoring Reviews
(FMRs) have identified repetitive findings related to contractor invoices. The
FMRs continue to find errors in invoices that should have been identified when
EPA employees reviewed the invoices prior to approval for payment. EPA did not
develop a corrective action plan to address invoice review internal control
weaknesses identified in FMR findings that were applicable across multiple
contracts. Instead, FMR findings are resolved on a case-by-case basis.
By not using information on trends identified in the FMR process to improve its
policy and procedures, and without adequate controls over the invoice review
process, the Agency is vulnerable to fraud, waste, abuse, and mismanagement of
the funds that it has a fiduciary responsibility to safeguard.
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.aov/oia/reports/2009/
20090923-09-P-0242.pdf
What We Recommend
We recommend that the Assistant Administrator for Administration and Resources
Management require OAM to modify the CMM to require use of the checklist for
invoice reviews, and have Contracting Officers verify compliance with the policy
during invoice reviews. Further, OAM should take corrective actions in response
to the trends identified in the FMR reviews. EPA agreed with the findings and
provided corrective action plans for addressing all but one of the recommendations
in the report.

-------