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U.S. Environmental Protection Agency
Office of Inspector General

At a Glance

09-P-0086
January 26, 2009

Catalyst for Improving the Environment

Why We Did This Review

The purpose of this audit was
to evaluate the U.S.
Environmental Protection
Agency's (EPA's) process for
reviewing unliquidated
interagency agreement (IA)
obligations, deobligating funds,
and closing IAs. The
objectives of our review were
to determine: (1) whether EPA
has adequate controls in place
to identify and deobligate
unneeded IA funds, and (2) the
amount of obligations under
IAs that could potentially be
deobligated.

Background

An IA is a written agreement
between federal agencies in
which one agency provides
goods or services to another
agency on a reimbursable basis.
It is EPA's policy to close all
IAs within 270 days after the
project period expires. As part
of close-out, unliquidated
obligations should be
deobligated so that the funds
can be used for other purposes.

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/
20090126-09-P-0086.pdf

EPA Should Strengthen Internal Controls over
Interagency Agreement Unliquidated Obligations

What We Found

EPA has not closed out IAs that have at least $4.2 million of unneeded funds that
should be deobligated. Further, EPA had deobligated an additional $2.3 million
between January 7, 2008, and April 25, 2008, as a result of our audit. These funds
could be used for other environmental projects.

Controls for identifying funds for deobligations were not always effective. We
found that EPA Project Officers, the Grants and Interagency Agreements
Management Division, and Grants Management Offices did not effectively monitor
IAs to ensure they were closed out timely and unneeded funds were deobligated.
The annual unliquidated obligation review was not effective and did not identify
funds that should have been deobligated and used for other environmental purposes.
Project Officers cited various reasons for untimely close-out of IAs, including
unfamiliarity with close-out procedures and difficulties working with other agencies.

What We Recommend

We are making various recommendations to the Office of Administration and
Resources Management. They include:

•	Deobligating the remaining $4.2 million in IA unliquidated obligations, and
ensuring these IAs and those with $2.3 million already deobligated are closed
out.

•	Ensuring EPA Order 1610 is consistently followed.

•	Ensuring program offices develop performance measures involving IA
management for Project Officer performance standards.

•	Ensure the IA data in the Grants Information and Control System and
Integrated Grants Management System are reconciled.

We also recommend that the Chief Financial Officer reformat the unliquidated
obligation report and require forwarding of the report to Project Officers.

In general, the Agency agreed with the report's findings and recommendations and is
in the process of establishing procedures that, when implemented, should adequately
address the findings.

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