U.S. Department of Energy 

Office of Inspector General 

Office of Audit Services 

Audit Report
 


Selected Aspects of the 

Commonwealth of Pennsylvania's 

Efforts to Implement the American 

Recovery and Reinvestment Act 

Weatherization Assistance Program 

OAS-RA-11-02 November 2010
 

 

 

 

 

 

 

 

Department of Energy 

Washington, DC 20585 

November 1, 2010 

MEMORANDUM FOR THE ASSISTANT SECRETARY FOR ENERGY EFFICIENCY AND 

RENEWABLE ENERGY 

FROM: George W. Collard 

Assistant Inspector General 

for National Security and Energy Audits 

Office of Inspector General 

SUBJECT: INFORMATION: Report on "Selected Aspects of the Commonwealth of 

Pennsylvania's Efforts to Implement the American Recovery and 

Reinvestment Act Weatherization Assistance Program" 

BACKGROUND 

The Department of Energy's (Department) Weatherization Assistance Program (Weatherization 

Program) received $5 billion under the American Recovery and Reinvestment Act of 2009 

(Recovery Act) to improve the energy efficiency of residences owned or occupied by low 

income persons. Subsequently, the Department awarded a 3 year Weatherization Program grant 

of $252 million to the Commonwealth of Pennsylvania (Pennsylvania). This grant provided 

about a 10 fold increase over the $25.4 million in funds available to Pennsylvania for 

weatherization in Fiscal Year (FY) 2009. 

Pennsylvania's Department of Community and Economic Development (DCED) administers the 

Recovery Act grant through 43 local agencies. These agencies are responsible for determining 

applicant eligibility, assessing and weatherizing homes, and conducting inspections. 

Pennsylvania plans to use its funding to weatherize about 34,000 units over the life of the grant, 

and to prioritize weatherization services for low income, high energy users. 

Given the significant increase in funding and the demands associated with weatherizing 

thousands of homes, we initiated this audit to determine if Pennsylvania had adequate safeguards 

in place to ensure that the Weatherization Program was managed efficiently and effectively. 

During the course of our audit, we adjusted the scope of our work as a result of other ongoing 

audits, most notably, those performed by the Government Accountability Office. Accordingly, 

we focused our efforts on Pennsylvania's prioritization of weatherization services and 

management of Recovery Act funds. 

CONCLUSIONS AND OBSERVATIONS 

We identified several opportunities to increase the likelihood that Pennsylvania's Weatherization 

Program will satisfy its objectives and fully comply with Federal requirements. Specifically, we 

found that Pennsylvania had not always: 
 

 

 

 

 

 

Ensured that high energy users were given priority over lower energy users as called for in 

its Recovery Act State Plan approved by the Department on August 25, 2009. We 

identified lower energy users that received weatherization assistance before high energy 

users were assisted at the two local agencies we visited; and, 

Limited advances to its local agencies to amounts needed for immediate cash needs or 

ensured that advances were deposited in interest bearing accounts. In fact, the 43 local 

agencies involved in Pennsylvania's program had not expended $15.8 million of the $42.7 

million in advances that they received from DCED for periods ranging from 3 to 6 months. 

Local agencies, in some cases, also had not deposited advances in interest bearing 

accounts. 

A misunderstanding between DCED and local agencies concerning the State's prioritization 

guidance resulted in local agencies weatherizing lower energy users before high energy users. 

Pennsylvania did not detect this issue because DCED had not monitored local agencies 

performance in prioritizing high energy users and its weatherization tracking system was not 

reliable for determining whether high energy users were being prioritized for assistance. Finally, 

Pennsylvania officials were not fully aware of the issues related to the advances because they 

had not reviewed, as required, financial activity at the local agency level. 

Prioritization of Weatherization Applicants 

Pennsylvania had not always ensured that high energy users were given priority over lower 

energy users for weatherization assistance, as called for in its approved Weatherization Plan. 

Specifically, we found instances at two of the local agencies where lower energy users were 

provided weatherization assistance before households that qualified as high energy users under 

the State's criteria. At one local agency we identified 27 lower energy users that were provided 

weatherization assistance despite the fact that the agency had over 90 income eligible applicants 

classified as high energy users on its waiting list that had not been provided services. We 

identified eight additional lower energy users that received weatherization assistance at a second 

local agency. 

To meet its objective of maximizing energy savings, DCED requested energy providers to 

submit lists of high energy users that were also receiving benefits through the U.S. Department 

of Health and Human Services' Low Income Home Energy Assistance Program (LIHEAP). The 

State provided the LIHEAP lists to the local agencies and required that the agencies use the lists 

as the basis for selecting recipients of weatherization services. State officials informed local 

agencies through a program guidance letter that the agencies were required to weatherize homes 

of high-energy users first, prior to providing service to other clients. Officials at each agency 

told us that they provided assistance to interested households that were on the LIHEAP lists 

regardless of whether they were high energy users. The lists of households receiving LIHEAP 

services, in some cases, contained both high and lower energy users. Specifically, the lists, in 

the aggregate, contained 43 percent high energy users and 57 percent lower energy users. 

2 
 

 

 

 

A misunderstanding between DCED and local agencies, lack of State monitoring and poor data 

quality contributed to low energy users receiving weatherization assistance before high energy 

users. DCED officials told us that they were aware certain LIHEAP lists contained both high 

and lower energy users. As such, they expected the local agencies to use the lists to identify and 

prioritize the high energy users. Local agency officials however, told us that in addition to the 

guidance to prioritize high-energy users for weatherization assistance, they also understood the 

State wanted them to exhaust all of the households on the lists, regardless of their energy 

consumption, before considering other applicants for assistance. 

According to local agency officials, other weatherization efforts were put on hold while they 

pursued individuals on the lists of LIHEAP recipients. Local agency officials indicated that they 

were required by DCED to contact potential applicants at least twice. The local agencies we 

visited told us that they actually contacted individuals three times before deleting them from their 

list of potential weatherization applicants and that the response rate from households on the State 

developed lists was low. As of February 2010, only 8,700, of the approximately 88,000 

households on the lists provided to the local agencies had applied for weatherization services. 

DCED officials had neither monitored nor verified that local agencies were concentrating on 

providing weatherization services to high energy users. Instead, DCED focused its attention on 

ensuring that production goals for weatherizing homes were met. Even if they had been 

monitoring the activities of the local agencies, the information on the type of energy-users that 

received weatherization services was not reliable. Specifically, we found that the weatherization 

tracking system used by DCED was not reliable for determining whether high energy users were 

being prioritized. We found that although one local agency had properly entered data into the 

system indicating that 22 recipients met the criteria for high energy users, the weatherization 

tracking system recorded them as lower energy users. The local agency was not aware of the 

cause of the system error. 

Management of Recovery Act Funding 

Pennsylvania had not minimized the time it held advances and had not earned interest on 

advance balances as required by grant provisions and Federal regulations. Based on requests 

from local agencies, DCED drew down from its total grant award far more money than was 

actually needed to cover near term expenses. In fact, in November 2009, Pennsylvania requested 

$42.7 million in Recovery Act funds from the Department and then advanced these funds to 42 

of its 43 agencies. Six months later, $10.5 million, or about 25 percent, of the funds advanced by 

Pennsylvania to 42 local agencies had not been expended. Similarly, the remaining local agency 

had not spent any of the $5.3 million in advances that it had received in February 2010, for at 

least 3 months. Further, 13 of the 43 local agencies had enough of their initial advance to cover 

the costs of weatherizing homes for approximately 4 to 9 additional months, based on the 

agencies' average monthly expenditures for the six month period beginning in November 2009. 

In accordance with the Code of Federal Regulations, 10 CFR 600.221, Pennsylvania was 

permitted to receive a working capital advance provided it established procedures to minimize 

the time elapsed between the transfer of funds and their actual disbursement. After an initial 

advance, the Department required grant recipients to limit additional draw down amounts to 

reimbursement for actual expenditures. We found, however, that Pennsylvania had not validated 

3 
 

 

 

 

	 

	 

	 

	 

 

the expenditure needs of local agencies to support the amount of funds that it initially drew down 

from its grant awards. In response to our audit, Pennsylvania officials told us that they plan to 

discontinue advances and institute a monthly reimbursement and reconciliation process using the 

weatherization program tracking system. 

In addition, we found that 8 of Pennsylvania's 43 local agencies had not deposited advances in 

interest bearing accounts, as required by their agreements with Pennsylvania. For example, one 

local agency reported that it had received an advance of about $3.8 million on November 3, 

2009. However, the agency had not deposited any of that amount in an interest bearing account 

until it had expended approximately $3 million of its advance. As a result, the agency had 

earned less than one dollar in interest on the remaining $800,000 as of the time of our audit. 

According to Federal regulations, advances must be deposited in interest bearing accounts. 

Interest greater than $100 for state and local governments, or $250 for nonprofit agencies must 

be promptly, or at least quarterly, returned to the U.S. Treasury through the Department. 

Pennsylvania's agreements with its local agencies, however, did not reflect the Federal 

requirement to return interest earnings to the U.S. Treasury. Pennsylvania only required interest 

exceeding $50 to be remitted to them at the end of the three year grant period, not on a quarterly 

basis. As a result of our audit, Pennsylvania informed all local agencies on April 28, 2010, that 

advances should be placed in interest bearing accounts. 

DCED was not fully aware of the financial issues we identified because it had not reviewed, as 

required, financial activity at the local agency level. DCED became responsible for monitoring 

the financial and operational activities of local weatherization agencies in May 2009, after the 

Program was transferred to it from the Pennsylvania Office of the Budget. However, as of July 

2010, DCED had not conducted any of its planned financial reviews. Under the terms of its 

grant, DCED is required to conduct a comprehensive on-site monitoring review of each local 

agency at least once a year. Pennsylvania officials cited staffing shortages as the cause of 

inadequate financial monitoring. To address the shortcomings identified in our report, officials 

reported that they have added staff and developed a financial monitoring schedule. 

RECOMMENDATIONS 

To achieve the objectives of the Recovery Act, we recommend that the Assistant Secretary for 

Energy Efficiency and Renewable Energy ensure that Pennsylvania: 

1.	 Meets its Weatherization Program goal of providing assistance to low-income, high 

energy users; 

2.	 Reviews and validates the accuracy of data contained in and output from the 

weatherization tracking system; 

3.	 Advances funds in accordance with regulations; and, 

4.	 Monitors local agency financial activities in accordance with regulations. 

4 
 

 

 

 

 

 

	 

 

MANAGEMENT AND AUDITOR COMMENTS 

The Department's Office of Energy Efficiency and Renewable Energy provided a response to our 

report that expressed agreement with our recommendations and provided planned and ongoing 

actions to address the issues identified. Specifically, management indicated that the Project 

Officer will work with Pennsylvania Weatherization Assistance Program officials to ensure that 

all potential applicants that are eligible and meet the definition of a high energy use household in 

Pennsylvania are afforded the same opportunity to apply for and obtain weatherization services, 

regardless of whether or not they are on a LIHEAP listing. The Project Officer will also work 

with Pennsylvania officials to ensure that data in the Pennsylvania weatherization tracking 

system is reviewed and validated for accuracy. Further, regarding the advancement of funds and 

interest earned on these advances, both the Project and Contract Officers will monitor the 

situation until the issue is resolved. The Department's Project Officer also identified the lack of 

financial monitoring in a report issued May 2010. The Project Officer will continue to review 

this issue and ensure that the Pennsylvania Weatherization Assistance Program completes the 

required financial monitoring of its sub-grantees. 

The Department's response and planned corrective actions are responsive to our 

recommendations. Management's comments are provided in their entirety in Attachment 2. 

Attachments 

cc:	 Deputy Secretary 

Acting Under Secretary of Energy 

Chief of Staff 

5 
 

 

 

 

 

 

 

Attachment 1 

OBJECTIVE, SCOPE, AND METHODOLOGY 

OBJECTIVE 

The objective of this audit was to determine whether the Commonwealth of Pennsylvania 

(Pennsylvania) had adequate safeguards in place to ensure that the Weatherization Assistance 

Program (Weatherization Program) was managed efficiently and effectively. 

SCOPE 

This report contains the results of an audit performed between December 2009 and September 

2010, at Pennsylvania's Department of Community and Economic Development located in 

Harrisburg, Pennsylvania. We visited to two local agencies, one in Erie and the other in 

Greensburg and observed weatherization work at three homes at each agency. Due to other 

ongoing audits, most notably by the Government Accountability Office, we focused our efforts 

on Pennsylvania's prioritization of weatherization services and management of the Reinvestment 

and Recovery Act of 2009 (Recovery Act) funds. 

METHODOLOGY 

To accomplish the audit objective, we: 

Reviewed applicable laws, regulations, and guidance pertaining to the Weatherization 

Program under the Recovery Act; as well as policies, procedures, and guidance applicable 

to Pennsylvania's Weatherization Program; 

Interviewed State of Pennsylvania, Department of Energy (Department), and National 

Energy Technology Laboratory officials to discuss current and ongoing efforts to 

implement the requirements of the Weatherization Program under the Recovery Act; 

Analyzed the number of homes weatherized to determine the number of high energy and 

lower energy units being reported; 

Analyzed the LIHEAP listings Pennsylvania provided to local agencies for energy 

consumption data; 

Selected random samples and reviewed weatherization tracking system information; and, 

Analyzed the use of Recovery Act funds advanced to the State to determine disbursement 

patterns and compliance with Federal laws and regulations. 

We conducted this performance audit in accordance with generally accepted government 

auditing standards. Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our finding and conclusions 

based on our audit objective. We believe that the evidence obtained provides a reasonable basis 

for our finding and conclusions based on our audit objective. We assessed performance 

6 
 

 

 

Attachment 1 (continued) 

measures in accordance with the Government Performance and Results Act of 1993 and 

determined that performance measures were established for the Weatherization Assistance 

Program. Because our review was limited, it would not necessarily have disclosed all internal 

control deficiencies that may have existed at the time of our audit. We were unable to rely on 

computer processed data since our tests results raised serious questions about the validity of high 

energy data. Accordingly, we used alternative procedures to achieve our audit objectives. 

We held an exit conference with Department officials on November 1, 2010. 

7 
 

MEMORANDUM FOR: 

FROM: 

SUBJECT: 

Department of Energy 

Washington, DC 20585 

ri· 

.~2 8 21110, 

GEORGE W. COLLARD 

ASSISTANT INSPECTOR GENERAL 

FOR NATIONAL SECURITY AND ENERGY AUDITS 

DEPUTY 

KATHLE~ SI CRETARY 

FOR ENE EFFICIENCY 

--

OFFICE OF TECHNOLOGY DEVELOPMENT 

ENERGY EFFICIENCY AND RENEWABLE ENERGY 

Response to Office of inspector General Draft Audit Report 

on "Selected Aspects of the Commonwealth of 

Pennsylvania's Efforts to Implement the American 

Recovery and Reinvestment Act Weatherization Assistance 

Program" 

The Office of Energy Efficiency and Renewable Energy (EERE) appreciates the 

opportunity to review the Office of inspector General Draft Audit Report on "Selected 

Aspects of the Commonwealth of Pennsylvania's Efforts to Implement the American 

Recovery and Reinvestment Act Weatherization Assistance Program," 

The Weatherization Assistance Program has received regular communications and 

information requests throughout the Inspector General's investigation period for 

Pennsylvania and thoroughly understands and agrees with the facts presented, 

conclusions reached, and appropriateness of the recommendations. 

Should you have any questions, please contact Robert Adams at 202-287-1 591, 

Attachment 

* Pnnled with ooy ink on recyd~d paper 

Attachment 2 

MANAGEMENT COMMENTS 

8 
 

Response to Inspector General Audit Report on 

"Selected Aspects of the Commonwealth of Pennsylvania's 

Efforts to Implement the American Recovery and Reinvestment Act 

Weatherization Assistance Program 

Recommendation 1 

Meet its Weatherization Program goal of providing assistance to low-income, high 

energy users. 

Response 

Concur 

The Project Officer will work with the Grantee to ensure that all potential households that 

are eligible for the W AP are afforded the opportunity to apply. In addition, the Project 

Officer will work with the Grantee to ensure consistent and reliable application of the 

stated priority of serving high-energy households. The issue is the Grantee is prioritizing 

LIHEAP high energy users. Due to the fact that it is a LIHEAP high energy user, DOE 

applicants who are high energy users by Pennsylvania's definition are not served, or are 

served after all LIHEAP households including DOE households that are high energy 

users. If Pennsylvania's intention is to serve high energy users, then the definition of 

high energy usage should be consistently applied to all applicants, regardless if they are 

served with LIHEAP funds or DOE funds, and all eligible households are afforded the 

same opportunity for service. 

Estimated Completion Date: on-going 

Recommendation 2 

Reviews and validates the accuracy of data contained in and output from the 

weatherization tracking system. 

Response 

Concur 

Grantee will be expected to review and validate the accuracy of data contained in the 

weatherization tracking system. The Project Officer is aware of current efforts of the 

Grantee to ensure data quality and the Project Officer will request that these efforts and 

validation reviews continue as Pennsylvania implements its data tracking system. The 

Project Officer will request Hancock Energy Software (HES) reports from the Grantee to 

compare monthly production and expenditure information reported by the Grantee. HES 

data quality issue will be discussed with the Grantee during weekly conference calls. 

Estimated Completion Date: on-going 

Recommendation 3 

Attachment 2 (continued) 

9 
 

Advances funds in accordance with regulations. 

Response 

Concur 

Routine monitoring by the Project Officer discovered the Cost Principles issues regarding 

the advancement of funds. Pennsylvania provided a tracking spreadsheet to the Project 

Officer on August 27, 2010, that outlined interest earned on the large advances by 

subgrantee and the status of the return of funds. The Project Officer will monitor this 

issue in cooperation with the Contract Officer until the issue is resolved. The Grantee~s 

change in procedures to take effect in January 2011 should eliminate this issue in the 

future. 

Estimated Completion Date: on-going 

Recommendation 4 

Monitors local agency fmancial activities in accordance with regulations. 

Response 

eanew 

The Project Officer identified the Grantee's lack of financial monitoring in monitoring 

reports issued in May of 20 I O. Pennsylvania provided a schedule to complete financial 

monitoring of all subgrantees by the end of Program Year 2010 to the Project Officer on 

September 20, 2010. The Project Officer will continue to review this issue and ensure 

that the Grantee completes the required financial monitoring of subgrantees. 

Estimated Completion Date: on-going 

Attachment 2 (continued) 

10 
 

 

 

 

	 

	 

	 

	 

	 

	 

IG Report No. OAS-RA-11-02 

CUSTOMER RESPONSE FORM 

The Office of Inspector General has a continuing interest in improving the usefulness of its 

products. We wish to make our reports as responsive as possible to our customers' requirements, 

and, therefore, ask that you consider sharing your thoughts with us. On the back of this form, 

you may suggest improvements to enhance the effectiveness of future reports. Please include 

answers to the following questions if they are applicable to you: 

1.	 What additional background information about the selection, scheduling, scope, or 

procedures of the inspection would have been helpful to the reader in understanding this 

report? 

2.	 What additional information related to findings and recommendations could have been 

included in the report to assist management in implementing corrective actions? 

3.	 What format, stylistic, or organizational changes might have made this report's overall 

message more clear to the reader? 

4.	 What additional actions could the Office of Inspector General have taken on the issues 

discussed in this report which would have been helpful? 

5.	 Please include your name and telephone number so that we may contact you should we have 

any questions about your comments. 

Name Date 

Telephone	 Organization 

When you have completed this form, you may telefax it to the Office of Inspector General at 

(202) 586-0948, or you may mail it to: 

Office of Inspector General (IG-1) 

Department of Energy 

Washington, DC 20585 

ATTN: Customer Relations 

If you wish to discuss this report or your comments with a staff member of the Office of 

Inspector General, please contact Felicia Jones at (202) 253-2162. 
 

The Office of Inspector General wants to make the distribution of its reports as customer friendly and cost 

effective as possible. Therefore, this report will be available electronically through the Internet at the 

following address: 

U.S. Department of Energy Office of Inspector General Home Page 

http://www.ig.energy.gov 

Your comments would be appreciated and can be provided on the Customer Response Form.