OFFICE OF INSPECTOR GENERAL 

Catalyst for Improving the Environment 

Evaluation Report 

EPA Can Improve Its 

Oversight of Audit Followup 

 Report No. 2007-P-00025 

 May 24, 2007
Report Contributors: Susan Barvenik 

 Laura Tam

 Ira Brass

 Dan Engelberg 

 Linda Fuller

 Renee McGhee-Lenart 

 Dan Cox

 Tim Roach 

Abbreviations 

AFC Audit Followup Coordinator 

AFO Audit Followup Official 

AMO Audit Management Official 

AO Action Official 

CFO Chief Financial Officer 

EPA U.S. Environmental Protection Agency 

IGOR Inspector General Operations and Reporting System 

MATS Management Audit Tracking System 

OCFO Office of the Chief Financial Officer 

OECA Office of Enforcement and Compliance Assurance 

OIG Office of Inspector General 

OMB Office of Management and Budget 

OW Office of Water 

WET Whole Effluent Toxicity 
 2007-P-00025 

U.S. Environmental Protection Agency May 24, 2007 

Office of Inspector General 

At a Glance


Catalyst for Improving the Environment 

Why We Did This Review 

The Office of Inspector 

General (OIG) undertook this 

review to determine (1) the 

status of corrective actions 

responding to OIG report 

recommendations for selected 

water reports, and (2) how 

complete and up-to-date is the 

Management Audit Tracking 

System (MATS) report 

information for selected OIG 

water reports. 

Background 

Audit followup is essential to 

good management and is a 

shared responsibility of 

agency managers and audit 

organizations. The U.S. 

Environmental Protection 

Agency (EPA) has audit 

followup procedures and 

designated officials who 

manage this process. EPA is 

required to report to Congress 

on audit followup, including 

any reasons for delays in 

taking corrective actions that 

have not been implemented 

within 1 year of issuing an 

audit report. 

For further information, 

contact our Office of 

Congressional and Public 

Liaison at (202) 566-2391. 

To view the full report, 

click on the following link: 

www.epa.gov/oig/reports/2007/ 

20070524-2007-P-00025.pdf 

EPA Can Improve Its Oversight of 

Audit Followup 

What We Found 

EPA is generally undertaking actions for the nine water-related reports in our 

review— seven directed to the Office of Water (OW) and two directed to the 

Office of Enforcement and Compliance Assurance (OECA). However, several 

actions in response to individual recommendations were delayed past milestone 

dates agreed to by the OIG. 

Both program offices and the Office of the Chief Financial Officer (OCFO), in its 

oversight role, can do more to monitor the audit followup process and ensure that 

timely and appropriate corrective actions are taking place. OCFO’s annual audit 

followup reporting to Congress did not present required information on specific 

audit recommendations or reasons for delays in taking corrective actions. The 

Agency’s audit tracking system, MATS, was also incomplete and contained 

mistakes. While OW’s official files were generally complete, OECA did not have 

files for OIG reports prior to January 2006, including the two reports we reviewed. 

Both OW and OECA did not follow the processes specified in EPA Order 2750 

for certifying the completion of implementing corrective actions. The OIG will 

also improve its followup on audit and evaluation reports. 

What We Recommend 

We recommend that OW and OECA implement EPA Order 2750 and biannually 

review audit management information for accuracy and completeness. We also 

recommend that OW and OECA follow the certification process for closing out 

reports, maintain a list of corrective actions taken, and obtain OIG approval for 

significant changes to corrective action plans. 

We recommend that the Chief Financial Officer take several steps, including: 

• Monitoring EPA Order 2750 compliance throughout the Agency. 

• Reporting to Congress the report names and reasons for delay past 365 

days for completing corrective actions as required under EPA Order 2750 

and the IG Act. 

• Ensuring the validity and reliability of data in MATS by documenting a 

quality assurance plan, issuing necessary guidance, and providing 

refresher training to Audit Followup Coordinators. 

The Agency generally concurred with all of our recommendations. 
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

WASHINGTON, D.C. 20460 

OFFICE OF 

INSPECTOR GENERAL 

May 24, 2007 

MEMORANDUM 

SUBJECT: EPA Can Improve Its Oversight of Audit Followup 

 Report No. 2007-P-00025 

FROM: Wade T. Najjum

 Assistant Inspector General, Office of Program Evaluation 

TO: Lyons Gray 

Chief Financial Officer 

 Benjamin Grumbles 

Assistant Administrator, Office of Water 

 Granta Nakayama 

Assistant Administrator, Office of Enforcement and Compliance Assurance 

This is our report on the subject evaluation conducted by the Office of Inspector General (OIG) 

of the U.S. Environmental Protection Agency (EPA). This report contains findings that describe 

the problems the OIG has identified and corrective actions the OIG recommends. This report 

represents the opinion of the OIG and does not necessarily represent the final EPA position. 

Final determinations on matters in this report will be made by EPA managers in accordance with 

established audit resolution procedures. 

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 $104,602. 

Action Required 

In accordance with EPA Manual 2750, you are required to provide a written response to this 

report within 90 calendar days. You should include a corrective actions plan for agreed upon 

actions, including milestone dates. 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. 

If you or your staff have any questions, please contact me at 202-566-0827 or 

najjum.wade@epa.gov; or Dan Engelberg, Director for Program Evaluation, Water Issues, at 

202-566-0830 or engelberg.dan@epa.gov. 
EPA Can Improve Its Oversight of Audit Followup 

Table of Contents

Purpose.................................................................................................................................. 1 

Background .......................................................................................................................... 1 

Noteworthy Achievements .................................................................................................. 3

Scope and Methodology ........................................................................................................ 4 

EPA Is Taking Action on OIG Recommendations.................................................................. 4 

Many Corrective Actions Were Delayed More Than 1 Year.................................... 5 

EPA Tracking of Audit Reports Is Incomplete........................................................................ 6 

Audit Followup Reporting Is Incomplete.................................................................. 6 

Audit Records Are Inconsistent............................................................................... 7 

Certification Memos Are Missing............................................................................. 8 

OIG Can Improve Followup on Audits and Evaluations......................................................... 9 

Conclusion ....................................................................................................................... 10 

Recommendations ................................................................................................................. 10 

Agency Comments and OIG Evaluation ............................................................................... 11 

Status of Recommendations and Potential Monetary Benefits.............................................. 12 

Appendices 

A Reports Included in Review..................................................................................... 13 

B Response by the Office of the Chief Financial Officer............................................. 14 

C Response by the Office of Water ............................................................................ 17 

D Response by the Office of Enforcement and Compliance Assurance .................... 20 

E Distribution .............................................................................................................. 23
Purpose 

The purpose of this project was to evaluate the status of corrective actions taken 

by the U.S. Environmental Protection Agency (EPA) in response to selected 

Office of Inspector General (OIG) water reports. Our objectives were to 

determine: 

1. What is the status of corrective actions responding to OIG report 

recommendations, for selected reports? 

2. How complete and up-to-date is the Management Audit Tracking System 

(MATS) report information for selected OIG reports? 

Our review also revealed audit followup issues outside of MATS that are 

appropriate for Agency management to review at this time, concerning annual 

reporting and other required elements. 

Background 

The Inspector General Act of 1978 established OIGs in Federal agencies to 

conduct independent audits and investigations of agency programs and operations, 

and make recommendations to improve their efficiency and effectiveness. 

Amendments to the Act added in 1988 directed agencies to report to Congress 

semiannually on the status of followup on OIG audit report recommendations. 

Audit followup is essential to good management and to improving the efficiency 

and effectiveness of EPA programs and operations. Audit followup is also a 

shared responsibility of agency managers and audit organizations.1 The EPA 

OIG’s commitment to followup is reflected in the 2004-2008 Strategic Plan, with 

the aim of improving accountability for actions leading to environmental 

improvements. 

EPA’s policy and procedures on the audit followup process are contained in EPA 

Order 2750, most recently revised in 1998. EPA Order 2750 implements the 

policies and procedures of OMB Circular A-50, which specifies certain 

timeframes for audit resolution, and requires agencies to develop systems to 

ensure prompt implementation of recommendations. The Order also specifies a 

chain of responsibility for the audit management process, starting with the Chief 

Financial Officer (CFO) as the Agency’s designated Audit Followup Official 

(AFO). According to EPA Order 2750, the AFO has “personal responsibility” for 

Agency-wide audit resolution and ensuring that corrective actions are 

implemented. Other duties in the audit management chain are also described in 

Table 1. 

1

 According to the Office of Management and Budget’s (OMB’s) Circular A-50 on audit followup, available at 

http://www.whitehouse.gov/omb/circulars/a050/a050.html . 

1
Table 1. Selected position responsibilities in the audit management chain 

Title Duties 

Audit Followup 

Official (AFO) 

• Ensures Agency-wide audit resolution and 

 that systems for audit followup are in place 

• Ensures corrective actions are actually 

 implemented 

• Designates an Agency-wide Audit Followup 

 Coordinator, who maintains and conducts

 quality assurance and analysis of the 

 Agency audit tracking system and data, and 

 prepares reports to Congress 

Action Officials (AO) • Responsible for implementing the audited 

 program (commonly the Regional or

 Assistant Administrator to whom the report is 

 addressed) 

• Ensures that corrective actions are 

 documented, tracked, and implemented 

• Certifies (or designates a certifying official) 

 that corrective actions are complete 

Audit Management 

Officials (AMO) 

• Is designated in each regional and national 

 program office 

• Develops and maintains office-specific 

 procedures for audit followup and resolution 

• Designates office-specific Audit Followup 

 Coordinators 

• Ensures managers and staff within their 

 office understand the audit management 

 process, and take timely and appropriate 

 corrective actions 

Audit Followup 

Coordinators (AFCs) 

• Serves as a contact point for OIG 

• Provides guidance and ensures that 

 responses to OIG reports are complete and 

timely 

• Maintains official files containing the record 

 of management decisions and certifications

 of completed corrective actions 

• Provides status reports to the Agency-wide 

 AFC on corrective actions, audit resolution, 

 and tracks reasons for delay 

Source: EPA Order 2750, Chapter 2. 

OIG reports usually contain recommendations for Agency action officials to take 

corrective actions to address the findings and conclusions of the report. The 

Agency and the OIG agree on the corrective actions and document them in the 

Management Decision letter. EPA Order 2750 requires actions to be completed 

within 365 days of the management decision, or otherwise explain reasons for 

delay. OIG is responsible for maintaining a tracking system for audit reports and 

providing data to Agency AFCs. It is also responsible for compiling audit 

statistics and other information for the OIG’s semiannual reports to Congress. 

2
The Office of the Chief Financial Officer (OCFO), responsible as the Audit 

Followup Official, maintains and operates the Management Audit Tracking 

System (MATS) to track audit followup, report, and resolution dates; and 

corrective actions Agency-wide. MATS receives basic report data, such as the 

report title and issue date, from the Inspector General Operations and Reporting 

System (IGOR).2 AFCs use MATS to track deadlines, such as the 180-day 

deadline for agreeing upon corrective actions in response to final report 

recommendations, and the 365-day deadline for implementing corrective actions. 

AFCs are responsible for quality assurance and analysis of tracking system data. 

When corrective actions for an audit report are complete and certified, the Agency 

may inactivate that report’s MATS file, meaning it no longer must be actively 

tracked by the AFC. OCFO uses MATS data to compile annual performance and 

accountability reports to Congress. However, OCFO only requires limited 

information to be entered into MATS, including milestone dates, financial 

information if applicable, and explanations for missed deadlines. Further details 

on the status and actions taken to implement corrective actions must be 

documented by the Action Official’s office. This information is essential for the 

Agency to assess and certify that agreed-on actions are completed. 

AFCs are also required to maintain official files, which contain records of audit 

reports, management decisions, and certifications of completed corrective actions. 

According to EPA Order 2750, official files are required to include seven major 

elements: 

• Names of Action Official and other parties responsible for implementing, 

tracking, following-up, and reporting on corrective actions; 

• Draft reports; 

• Response to draft reports; 

• Final reports; 

• Approved Management Decisions; 

• OIG Management Decision acceptance memoranda; and 

• All pertinent documentation and certification information. 

Together, MATS and official files document an audit’s history, as well as the 

actions taken by the Agency to address recommendations and correct deficiencies. 

Noteworthy Achievements 

OCFO has committed to working cooperatively with the OIG to strengthen the 

audit followup process and improve oversight. Both the Office of Water (OW) 

and the Office of Enforcement and Compliance Assurance (OECA) initiated 

corrective actions and commited to others while our review was in process. These 

2

 At this time, report recommendations are not stored in IGOR and therefore are not part of the data automatically 

transferred by the OIG to MATS for audit reports. 

3
positive steps were taken to build on the shared audit followup responsibility of 

Agency managers and the OIG. 

Scope and Methodology 

We conducted our review from July 2006 to December 2006. We selected final 

reports of the OIG Office of Program Evaluation Water Product Line, issued 

between Fiscal Years 2001 and 2005, for which OIG did not have information 

sufficient to conclude that corrective actions were complete for all 

recommendations (see Appendix A). We reviewed recommendations and 

corrective actions agreed to by the Agency for seven reports with OW as the 

Action Official, and two reports with OECA as the Action Official. The scope of 

this project is limited to these nine reports and two Offices. We developed 

questions regarding the status of corrective actions, and requested updates on 

these actions from the program offices. Our questions covered 50 agreed-upon 

recommendations: 31 addressed to OW, and 19 addressed to OECA. We used 

this information to assess the timeliness and completeness of Agency actions on 

our reports. We relied on the Agency's responses to our specific followup 

questions on each of the nine reports in our scope to determine the status of 

implementing of corrective actions reported by OW and OECA. We did not 

assess the Agency's corrective actions. 

We reviewed June and July 2006 MATS files for report completeness and 

October 2006 MATS files for semiannual updates in the status of activities as 

reported by the program offices. We did not review the entire MATS system or 

MATS files for OIG reports other than the nine in our scope. We interviewed 

officials in OW, OECA, and OCFO on their followup processes and procedures, 

including maintaining official files and using certifications for inactivating reports 

in MATS. We reviewed audit followup guidance issued by EPA and OMB, 

including EPA Order 2750, and other provisions of the Inspector General Act and 

Reports Consolidation Act. 

We performed this review according to Government Auditing Standards issued by 

the Comptroller General of the United States. We reviewed those internal 

controls relevant to our objectives. 

EPA Is Taking Action on OIG Recommendations 

We found that, in general, the Agency is taking actions in response to the nine 

OIG reports that we followed up on. EPA provided evidence that many 

corrective actions were completed or ongoing, although we did not assess the 

effectiveness of these actions. For example, OW and OECA provided copies of 

guidance, Websites, meeting notes, and presentations to show that they had 

implemented corrective actions. 

4
More specifically, we found: 

• OW is taking actions for all seven of the reports with OW as the Action 

Official.3 We followed up on 31 recommendations, some of which had 

multiple parts. We found that the agreed-upon actions for 9 

recommendations could be considered complete, 21 could be considered 

ongoing, and 1 had not been acted upon. We did not assess how effective 

these corrective actions were at meeting the goals of the 

recommendations. 

• For the two reports with OECA as the Action Official, we followed up on 

19 agreed-upon recommendations. We found that OECA has completed 

its agreements for eight of these recommendations, nine were ongoing, 

and two were not acted upon. Again, we did not assess how effective 

these corrective actions were at meeting the goals of the 

recommendations. 

Many Corrective Actions Were Delayed More Than 1 Year 

All of the reports we reviewed contained corrective actions that extended beyond 

365 days from the management decision. We found that it has taken program 

offices over 3 years from the management decision date to implement agreedupon actions in response to some recommendations. For 10 recommendations, 

OECA has taken over 4 years to complete corrective actions agreed to by the 

OIG. For example: 

• In response to our September 2003 drinking water capacity report,4 OW 

agreed to develop a national capacity development strategy by December 

2005. OIG later agreed to a revised due date of April 2006. OW said the 

report would be completed and sent to OIG in October 2006, but had not 

provided the report as of March 2007. The Agency did not provide any 

reasons for delay in the two reporting periods we reviewed in MATS. 

• Based on OIG’s August 2004 effluent guidelines report,5

 OW agreed to 

provide two studies on the effectiveness of several effluent guidelines by 

May 2005. OIG did not receive these studies until October 2006, and no 

reasons for delay were provided in the two reporting periods we reviewed 

in MATS. 

3 For our report on effluent guidelines (Effectiveness of Effluent Guidelines Program for Reducing Pollutant

Discharges Uncertain, Report No. 2004-P-00025, August 24, 2004), OW and OIG reached a management decision

in November 2006, and all corrective actions are now considered complete. 4 Impact of EPA and State Drinking Water Capacity Development Efforts Uncertain, Report No. 20003-P-00018, 

September 30, 2003, http://www.epa.gov/oig/reports/2003/2003-p-00018-20030930.pdf . 5 Effectiveness of Effluent Guidelines Program for Reducing Pollutant Discharges Uncertain, Report No. 2004-P00025, August 24, 2004, http://www.epa.gov/oig/reports/2004/20040824-2004-P-00025.pdf . 

5
• In the 2001 report on State water enforcement,6

 OIG recommended that 

OECA issue guidance specifying that Whole Effluent Toxicity (WET) 

violations may be considered significant noncompliance, and should be 

reported on the quarterly noncompliance report. OECA never issued 

additional guidance, and is relying on the Office of Wastewater 

Management in OW to develop WET implementation guidance for 

National Pollutant Discharge Elimination System permits. This guidance 

was still in draft in 2006, while this report’s MATS file is no longer 

active.7 

Completing corrective actions may take longer than the 365 days required by EPA 

Order 2750; the Agency may encounter unexpected delays in meeting milestone 

dates. However, corrective actions and agreed-upon dates should not be 

significantly revised or extended without concurrence from OIG. EPA Order 

2750 requires OIG approval for “significant changes” to the corrective action 

plan, including “modifying a corrective action” or deferring “critical milestone 

dates that would delay completing the corrective action plan for 6 months or 

more.” When delays occur, timely communication and documented reasons for 

delays are necessary for both OIG and EPA to meet reporting requirements to 

Congress. 

EPA Tracking of Audit Reports Is Incomplete 

Both program offices and OCFO, in its oversight role, can do more to monitor the 

audit followup process, and ensure that timely and appropriate corrective actions 

are taking place. For example, we found that OCFO’s annual audit followup 

reporting to Congress did not present required information on specific audit 

recommendations or reasons for delays in taking corrective actions. For the 

selected reports we reviewed, OW’s official files were generally complete. 

However, OECA's official files were not consistently maintained and some 

MATS files in both OW and OECA were incomplete and contained mistakes. 

Both OW and OECA did not follow the process specified in EPA Order 2750 for 

closing out reports and certifying completing and implementing corrective 

actions. 

Audit Followup Reporting Is Incomplete 

EPA began reporting audit followup information with other performance 

information on an annual basis, based on passage of the Reports Consolidation 

6 Water Enforcement: State Enforcement of Clean Water Act Dischargers Can Be More Effective, Report No. 2001-

P-00013, August 14, 2001, http://www.epa.gov/oig/reports/2001/finalenfor.pdf . 7 OECA believed previously issued guidance was sufficient for this recommendation; however, in the corrective 

action plan, OECA agreed to issue new guidance in 2003, and did not obtain approval from the OIG to deviate from 

this plan as required by EPA Order 2750. 

6
Act of 2000.8

 While the consolidation process reduced the reporting frequency, 

it did not change the information the Agency was required to report. OCFO’s 

practice of omitting information on EPA’s responsiveness to audit reports impairs 

its oversight of corrective actions, and limits public and congressional visibility 

over EPA’s correcting deficiencies. It also increases the Agency’s vulnerability 

to identified weaknesses when it does not implement corrective actions. 

OCFO’s annual Performance and Accountability reports to Congress were 

incomplete. The reports did not present a complete accounting of EPA’s audit 

followup activities or the status of corrective actions. Beginning in 2003, the 

Agency’s annual reports have not included specific information on outstanding 

audit reports. These omissions include audit titles, dates issued, and explanations 

for delays in taking agreed-upon corrective actions. The Agency’s reports only 

present information on the number of open recommendations, completed actions, 

and the dollar value of funds put to better use. 

Since 2003, OCFO’s annual Performance and Accountability reports to Congress 

have been inaccurate due to their reliance on erroneous data in MATS. The OIG 

report on State water enforcement issues, issued in August 2001, was inactivated 

in MATS in August 2003.9 By OCFO’s method of accounting for audit reports 

with final corrective action taken, this report was listed as an Agency 

accomplishment in EPA’s Fiscal Year 2003 annual report, and was no longer 

tracked or reported as ongoing. However, in response to our project questions, 

OECA stated that corrective actions were still ongoing and incomplete for at least 

eight recommendations as of October 2006. OCFO should have continued to 

report this evaluation as “Final Corrective Action Not Taken Beyond One Year,” 

and provided reasons for delay in its annual reports to date. 

Audit Records Are Inconsistent 

Both OW and OECA were inconsistently using MATS. While OW’s official files 

were generally complete, OECA did not have official files prior to January 2006. 

Errors and poor internal controls over the audit records system resulted in 

inaccurate reporting for one report, and made it difficult to ascertain the status of 

corrective actions. OW and OECA have committed to improving the 

completeness and accuracy of their audit records. 

OW's official files were generally complete for the seven reports we reviewed. 

While some of the required elements for the seven areas were not in the labeled 

tabs of the official files, most of the information was available elsewhere in the 

official files or in MATS. OECA has not maintained official files for OIG reports 

prior to January 2006. Therefore, OECA did not have any official files for the 

8

 EPA’s OCFO continues to work with OIG semiannually to prepare the OIG’s semiannual reports to Congress,

which Congress still requires. 9 Water Enforcement: State Enforcement of Clean Water Act Dischargers Can Be More Effective, Report No. 2001-

P-00013, August 14, 2001, http://www.epa.gov/oig/reports/2001/finalenfor.pdf . 

7
two reports included in our review. OECA said that program offices have 

documentation on the activities performed in response to a promised corrective 

action, but these are not kept in a central file and are not readily available. 

MATS, the Agency’s electronic audit tracking system, was incomplete and 

contained errors (see Appendix A for the list of reports).10 For seven reports 

issued to OW, MATS files showed inconsistent usage of the system as well as 

data quality issues. Two MATS files did not show recommendations. Another 

file showed recommendations for a different report, a mistake which may have 

occurred because both reports had similar names. Four reports for which 

corrective actions had not been taken within 1 year did not have any explanations 

for the delay, despite OCFO’s requirement to maintain this management 

information in MATS. Instead, the Past Due Notes section often contained 

milestone dates or a schedule of activities. Based on our review, OW reported 

that it has corrected errors and updated its MATS files. 

For two reports issued to OECA,11 one report’s MATS file was incorrectly shown 

as being in “inactive” status as of 2003. The program office had inactivated this 

file in 2003 but told us during this project work that corrective actions were not 

complete as of 2006. Based on this information, OECA should not have 

inactivated the report in MATS, which resulted in OCFO reporting inaccurate 

information to Congress. OECA acknowledged that this report was coded 

inactive prior to all corrective actions being completed, but believed this coding 

was an error not indicative of its regular followup activities. OECA reported that 

it will review all OIG reports in the MATS system inactivated in the past 5 years. 

OECA also planned to return the improperly inactivated report to active status. 

Because the program offices maintain the documentation of corrective action 

implementation, AFCs do not have all documentation that the corrective actions 

are actually taken. Official files containing the listed information are important to 

properly manage audit report followup and to ensure continuity of followup if 

staff turnover occurs. The lack of official files or full MATS utilization may 

make reporting requirements even more time-consuming and burdensome because 

documentation is so decentralized. Poor tracking of audit followup may adversely 

affect the completeness and accuracy of the Agency's annual reporting process 

and reports to Congress. 

Certification Memos Are Missing 

OW and OECA did not comply with the Agency’s requirement for certifying 

closures of OIG reports, although EPA Order 2750 establishes a process for 

certifying that corrective actions are complete and have been implemented. An 

Action Official (AO) is responsible for maintaining documentation of corrective 

actions. For each action, the designated AO is also required to certify “in writing 

10 One report was not in MATS due to an error in the IGOR system. 11 One report was not in MATS. 

8
that the corrective actions are complete.” The AFC is then required to keep this 

certification in the official file. A report should not be placed in inactive status in 

MATS until this step has occurred. OCFO believes it is the AFC’s responsibility 

to have the certification memo in-hand before inputting the final action date. 

Entry of a final action date by an AFC automatically triggers MATS to inactivate 

the report without further verification by OCFO. As a result, reports may be 

inactivated from the audit tracking system before the corrective actions are 

complete. For at least one report, this premature inactivation led to the Agency 

sending incorrect information to Congress on audit followup status. 

We requested a certification for two reports in “inactive” status in MATS, one 

from OW and one from OECA. However, neither OECA nor OW had 

certifications on file.12 OECA did not have certifications for any inactivated 

reports, and believed that certification could “take different forms.” OW 

confirmed that it did not follow the required formal certification procedures for 

this or other reports, although it plans to develop guidance to implement the 

process. 

OCFO does not provide additional guidance on the certification format, such as 

listing the actions being certified. OCFO also does not have effective internal 

controls in place to ensure that MATS files are not inactivated until a certification 

memo has been signed by the Action Official or designee. 

All three Offices are taking steps to remedy this problem. OECA is considering 

developing Standard Operating Procedures for use in its Administration and 

Resource Management Support Staff office that have the potential to address the 

certification issue. OECA reported that its review of inactivated OIG reports in 

the MATS system will also include obtaining documentation on all corrective 

actions, and securing the required certifications of completion. OW is planning 

on issuing a memo to Office Directors describing the audit process and will be 

requesting a formal memo certifying completion of corrective actions. OCFO 

plans to develop a model certification letter for program offices to use and obtain 

AMO signatures, along with instructions for entering certification information in 

MATS. 

OIG Can Improve Followup on Audits and Evaluations 

As part of our evaluation, we reviewed internal followup processes and 

procedures within the OIG. We found several opportunities for OIG to improve 

oversight of the audit process. We briefed OIG management on the opportunities. 

Generally, the OIG can improve the followup process by: 

12 In OECA, Water Enforcement: State Enforcement of Clean Water Act Dischargers Can Be More Effective, Report 

No. 2001-P-00013, August 14, 2001, http://www.epa.gov/oig/reports/2001/finalenfor.pdf and in OW, States Making 

Progress on Source Water Assessments, But Effectiveness Still to Be Determined, Report No. 2004-P-00019, May 

27, 2004, http://www.epa.gov/oig/reports/2004/20040527-2004-P-00019.pdf . 

9
• Performing regular periodic reviews of MATS 

• Improving tracking of milestone dates for agreed-upon corrective actions 

• Standardizing internal implementation procedures for internal followup policy 

• Establishing a systematic process and procedures to review the Agency’s 

corrective actions, and 

• Improving the clarity of report recommendations 

The Acting IG is committed to working cooperatively with OCFO to improve the 

follow-up process and the clarity of OIG reports. 

Conclusion 

We concluded that EPA can better manage the audit followup process in several 

areas, including the record-keeping system and certifications of completed 

actions. OCFO has not ensured that its annual reporting to Congress and the 

public is fully accurate or complete. For the reports we reviewed, EPA Offices’ 

noncompliance with Order 2750 has prevented the Agency from accurately 

monitoring and reporting the extent to which it has implemented audit 

recommendations. OW and OECA did not appear to be efficiently utilizing 

MATS or maintaining all of the key elements of the Agency’s guidance on audit 

followup. As a result, the value of audit reports and recommendations to EPA 

may be diminished. OW and OECA have informed us that they have both begun 

taking corrective actions and committed to further future improvements. We 

encourage OECA to continue its efforts to improve its audit followup process. 

Based partly on this review, OCFO and OIG have committed to working 

collaboratively to improve oversight and strengthen the audit followup process. 

Recommendations 

We recommend that the Assistant Administrators for OW and OECA: 

1. Require AMOs and AFCs to implement EPA Order 2750, and biannually 

review audit management information including official files, to ensure 

completeness and accuracy. 

2. Obtain OIG approval for any significant changes to corrective action 

plans, involving the deferral of milestone dates for 6 months or more. 

3. Require AMOs and AFCs to certify in MATS the date of the certification 

letter and signing official's name and title, before the Final Action Date is 

entered, and the report moved to Inactive status. 

4. Require AFCs to maintain a list of corrective actions taken by the program 

office either in MATS or in the official files. 

10
We recommend that the Chief Financial Officer: 

5. Monitor EPA Order 2750 compliance throughout the Agency. 

6. Report to Congress as required under EPA Order 2750 and the Inspector 

General Act, as amended, including the report names and reasons for 

delay past 365 days for completion of corrective actions. 

7. Issue guidance to AMOs and AFCs defining information that should be in 

the Past Due Notes section of MATS. 

8. Document OCFO's quality assurance plan for MATS, including periodic 

spot checks, to ensure the quality of data in the system. 

9. In addition to the training OCFO currently provides on an as-needed basis, 

prior to the semiannual reporting, provide refresher training to AFCs on 

populating the required data fields and the final action requirements of 

MATS and EPA Order 2750, including certifications, necessary for report 

inactivation. 

Agency Comments and OIG Evaluation 

All three program offices generally concurred with the recommendations 

presented in our draft report. EPA’s detailed responses are in Appendices B, C, 

and D. OW concurred with our findings, and reported that their AFC would 

biannually review all audit information including official files. OW will also 

obtain certification letters for three reports with corrective actions known to be 

complete. OECA provided a corrective action plan to address the report 

recommendations. OECA has assigned its Administration and Resources 

Management Support Staff to work with senior managers across OECA to 

develop a set of Standard Operating Procedures, which will address compliance 

with Order 2750. 

OCFO reiterated its commitment to overseeing audit followup, and agreed with 

our recommendations with a few considerations. OCFO proposed to issue a 

memorandum to EPA national program managers and other senior leaders 

reiterating the need for accurate and timely record-keeping. OCFO also proposed 

to reinstate detailed information on audit followup in its reports to Congress, 

along with a link on its website for additional information. We slightly modified 

Recommendations 6 and 9 in response to OCFO’s comments. We left 

Recommendation 5 unchanged because we do not have sufficient evidence to 

support modifying it at this time. We anticipate receiving more details on 

OCFO’s proposed memorandum, compliance monitoring, and quality assurance 

plan for MATS in the Agency’s 90-day response. 

11
Status of Recommendations and 

Potential Monetary Benefits 

POTENTIAL MONETARY 

RECOMMENDATIONS BENEFITS (in $000s) 

Planned 

Rec. Page Completion Claimed Agreed To 

No. No. Subject Status1 Action Official Date Amount Amount 

1 10 Require AMOs and AFCs to implement EPA Order O

2750, and biannually review audit management 

information including official files, to ensure 

completeness and accuracy. 

2 10 Obtain OIG approval for any significant changes to O

corrective action plans, involving the deferral of 

milestone dates for 6 months or more. 

3 10 Require AMOs and AFCs to certify in MATS the O 

date of the certification letter and signing official's 

name and title, before the Final Action Date is 

entered, and the report moved to Inactive status. 

4 10 Require AFCs to maintain a list of corrective O 

actions taken by the program office either in MATS 

or in the official files. 

5 11 Monitor EPA Order 2750 compliance throughout O 

the Agency. 

6 11 Report to Congress as required under EPA Order O 

2750 and the Inspector General Act, as amended, 

including the report names and reasons for delay 

past 365 days for completion of corrective actions. 

7 11 Issue guidance to AMOs and AFCs defining O 

information that should be in the Past Due Notes 

section of MATS. 

8 11 Document OCFO's quality assurance plan for O 

MATS, including periodic spot checks, to ensure 

the quality of data in the system. 

9 11 In addition to the training OCFO currently provides O 

on an as-needed basis, prior to the semiannual 

reporting, provide refresher training to AFCs on 

populating the required data fields and the final 

action requirements of MATS and EPA Order 2750, 

including certifications, necessary for report 

inactivation. 

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 

Assistant Administrators for

OW and OECA 

Assistant Administrators for

OW and OECA 

Assistant Administrators for

OW and OECA 

Assistant Administrators for

OW and OECA 

Chief Financial Officer 

Chief Financial Officer 

Chief Financial Officer 

Chief Financial Officer 

Chief Financial Officer 

12
Appendix A 

Reports Included in Review 

We followed up on two OIG reports for which the Action Official is the Assistant Administrator 

for OECA: 

1. Water Enforcement: State Enforcement of Clean Water Act Dischargers Can Be More 

Effective, Report No. 2001-P-00013, August 14, 2001. 

2. EPA Should Take Further Steps to Address Funding Shortfalls and Time Slippages in 

Permit Compliance System Modernization Effort, Report No. 2003-M-00014, May 20, 

2003. 

We followed up on seven OIG reports for which the Action Official is the Assistant 

Administrator for OW: 

1. Wastewater Management: Controlling and Abating Combined Sewer Overflows, Report 

No. 2002-P-00012, August 26, 2002. 

2. Impact of EPA and State Drinking Water Capacity Development Efforts Uncertain, 

Report No. 2003-P-00018, September 30, 2003. 

3. Effectiveness of Effluent Guidelines Program for Reducing Pollutant Discharges 

Uncertain, Report No. 2004-P-00025, August 24, 2004. 

4. EPA Needs to Reinforce Its National Pretreatment Program, Report No. 2004-P-00030, 

September 28, 2004. 

5. Source Water Assessment and Protection Programs Show Initial Promise, But Obstacles 

Remain, Report No. 2005-P-00013, March 28, 2005. 

6. Efforts to Manage Backlog of Water Discharge Permits Need to Be Accompanied by 

Greater Program Integration, Report No. 2005-P-00018, June 13, 2005. 

7. Progress Report on Drinking Water Protection Efforts, Report No. 2005-P-00021, 

August 22, 2005 

13
Appendix B 

Response by the Office of the Chief Financial Officer 

MEMORANDUM 

SUBJECT: Office of the Chief Financial Officer Response to the Office of Inspector General 

Draft Audit Evaluation Report, “EPA Can Improve Its Oversight of Audit 

Follow-up,” April 5, 2007, No. 2006-1508 

FROM: Lyons Gray 

 Chief Financial Officer 

TO: Dan Engelberg 

 Director for Program Evaluation, Water Issues 

Office of Inspector General 

We appreciate the opportunity to provide written comments on the above-referenced draft 

audit evaluation report. Audit follow-up is essential to good management, and the Office of the 

Chief Financial Officer (OCFO) takes its responsibilities for overseeing EPA’s audit follow-up 

process very seriously. We are fully committed to maintaining and strengthening the Agency’s 

audit management process and to ensuring that timely and appropriate corrective actions are 

taking place, are duly and accurately entered into the Agency’s audit tracking system, and are 

fully and appropriately reported to the Congress. We look forward to continuing our work with 

the OIG to strengthen audit follow-up within EPA, thereby helping improve the effectiveness 

and efficiency of the Agency’s programs and achieve better environmental results. 

I am attaching our response to the recommendations presented in OIG’s draft evaluation 

report. Should you or your staff have questions about these comments or require any additional 

information, please contact Debbie Rutherford of OCFO’s Office of Planning, Analysis, and 

Accountability at 202-564-1913. 

Attachment 

cc: Benjamin Grumbles, Assistant Administrator, OW 

 Granta Nakayama, Assistant Administrator, OECA 

Maryann Froehlich, Deputy Chief Financial Officer 

Joshua Baylson, Associate Chief Financial Officer 

Kathy Sedlak O’Brien, Director, Office of Planning, Analysis, and Accountability 

14
OCFO’s Response to the Recommendations for OCFO Action 

Contained in OIG’s Draft Audit Evaluation Report: 

“EPA Can Improve Its Oversight of Audit Follow-up” 

April 5, 2007, Assignment No. 2006-1508

The Office of the Chief Financial Officer (OCFO) acknowledges the consideration that 

the Office of the Inspector General (OIG) has given to our observations on the preliminary 

discussion draft of this report. We appreciate the ways in which OIG has addressed our 

comments and concerns in this latest draft. We believe that this draft report reflects more 

accurately OCFO’s ongoing oversight efforts under EPA Order 2750 and our reliance on the 

Agency’s audit follow-up coordinators. We largely support all of OIG’s recommendations, 

although in some cases we would like to raise some further considerations or clarifications. We 

have provided our response to each specific recommendation below. OCFO looks forward to 

working closely with OIG to implement these recommendations and strengthen EPA’s audit 

management process. 

OIG Recommendation # 5: Monitor EPA Order 2750 compliance throughout the Agency. 

 Agree, with considerations. To better characterize our continuing efforts in support of 

Agency compliance with EPA Order 2750, we suggest that Recommendation # 5 read: 

“Continue to monitor EPA Order 2750 compliance. . . .” 

OCFO has been committed to ensuring Agency compliance with EPA Order 2750 and a 

sound audit follow-up process since the Inspector General Act Amendments of 1988 authorized 

federal departments and agencies to provide information to the Congress on their decisions and 

plans to follow up OIG audit report recommendations. The Agency’s Audit Follow-up 

Coordinator (AFC) within OCFO works with Agency staff on a daily basis, providing technical 

assistance and training and verifying data entered into the Management Audit Tracking System 

(MATS). 

To reinforce audit follow-up within the Agency, the Chief Financial Officer, as EPA’s 

Audit Follow-up Official, will issue a memorandum to all EPA national program managers, 

regional administrators, and other senior leaders reiterating the need for accurate and timely 

record-keeping and reporting and the importance of complete cooperation and full support of 

Agency personnel in implementing the requirements of Order 2750. We are committed to 

working with OIG to improve oversight and strengthen the audit follow-up process. 

OIG Recommendation #6: Report to Congress as required under EPA Order 2750 and the 

IG Act, including the report[ing of] names and reasons for delay past 365 days for 

completion of corrective actions. 

 Agree, with considerations. OCFO concurs with the need to fully report to the Congress 

on the completion of corrective actions, and we will reinstitute our previous practice (FY 2001 

and FY 2002) of listing audit titles, audit numbers, and the responsible office, beginning with our 

FY 2007 Performance and Accountability Report (PAR). We propose to include a link to 

15
OCFO’s website, where the public will be able to find reasons for delays in completing 

corrective actions, along with the Agency AFC’s name, telephone number, and e-mail address 

for further information. In addition, we would suggest that this recommendation and the draft 

report make clear that, in some cases, agreed-upon corrective actions may require more than 365 

days (sometimes several years). Therefore, final actions delayed beyond 365 days do not 

necessarily indicate that corrective action is not on track. We also suggest that the citation of the 

Inspector General Act in this recommendation be revised to “the Inspector General Act 

Amendments of 1988,” which directed agency and department heads to report to Congress semiannually on the status of follow-up on OIG audit report recommendations. 

OIG Recommendation # 7: Issue guidance to AMOs and AFCs defining information that 

should be in the Past Due Notes section of MATS (Management Audit Tracking System). 

Agree. OCFO recognizes the need for guidance to specify the information that AFCs 

should enter into MATS mandatory information fields, particularly in the “Past Due Comments” 

section. Reassignment, retirement, and separation from the Agency, among other actions, have 

contributed to the need to reinforce for new AFCs expectations about the manner and content of 

data entry. The CFO memorandum discussed under Recommendation #5 above will provide this 

guidance, and instructions will also be included in the training OCFO provides periodically to 

AFCs and in the “refresher” training discussed under Recommendation #9. 

OIG Recommendation # 8: Document OCFO’s quality assurance plan for MATS, 

including periodic spot checks, to ensure the quality of data in the system. 

Agree. OCFO recognizes the need for a written plan to routinely assure the quality and 

completeness of data in MATS. Such a plan would include guidelines for reviewing MATS 

entries—particularly mandatory data fields, such as listings of corrective actions—for 

completeness and ensuring that certification documents are provided for all final actions 

reported. OCFO will work with OIG to develop a workable and effective quality action plan, 

and we will issue the plan to Agency AFCs and monitor compliance. 

OIG Recommendation # 9: In addition to the training OCFO currently provides on an asneeded basis, prior to the semiannual reporting, provide refresher training to AFCs on 

populating the required data fields and the report inactivation requirements of MATS and 

EPA Order 2750. 

Agree, with considerations. While OCFO has been training individual AFCs on an asneeded basis, we concur that providing refresher training for all AFCs would help strengthen the 

Agency’s audit follow-up process. We propose to work with OIG to develop and conduct 

training prior to the FY 2007 end-of-the-year reporting period and provide additional training 

sessions on an as-needed basis. With respect to the phrase, “...and the report inactivation 

requirements of MATS...,” in the above recommendation, we believe this may be confusing as 

inactivation is more of an OCFO than an AFC responsibility. We recommend replacing this 

phrase with: “...and completing final action requirements, including certification.” 

16
Appendix C 

Response by the Office of Water 

MEMORANDUM 

SUBJECT: Office of Water Response to Draft Evaluation Report: EPA Can Improve Its 

Oversight of Audit Followup, Assignment No. 2006-1508 

FROM: Benjamin Grumbles, 

Assistant Administrator, Office of Water 

TO: Dan Engelberg, 

 Director for Program Evaluation, Water Issues 

Office of Program Evaluation 

Office of Inspector General 

Thank you for the opportunity to comment on your Office’s draft report, “EPA Can 

Improve Its Oversight of Audit Followup” (No. 2006-1508). The Office of Water (OW) 

appreciates the attention that the Office of Inspector General (OIG) has brought to the issue of 

Agency oversight of audit followup actions. OW takes its audit follow-up responsibilities very 

seriously and plans to make the necessary effort to oversee and close out all corrective actions 

related to all past audits. We also appreciate the extent the OIG acknowledged the comments 

OW provided to the January 12th discussion draft evaluation report. 

We concur with the findings described in the draft report related to EPA’s responsibilities 

for maintaining effective oversight of audit followup action. We concur with the four 

recommendations addressed to the Office of Water and the Office of Enforcement and 

Compliance Assurance on page 10 of the draft report. Additional comments on when and how 

we plan to address each of the recommendations is provided in the attachment. 

Thank you again for the opportunity to comment on the draft report. If you have 

questions regard my comments, please contact Michael Mason, Resource Management Staff, at 

564-0572. 

Attachment 

cc: Mike Shapiro, OW 

Tim Fontaine, OW 

Michael Mason, OW 

Bill Roderick, OIG 

Wade Najjum, OIG 

Elizabeth Grossman, OIG 

Eileen McMahon, OIG 

17
Kathy O’Brien, OCFO 

Rita Smith, OCFO 

Debbie Rutherford, OCFO 

Sharon Tant, OCFO 

Barbara Freggens, OCFO 

Gwen Spriggs, OECA 

18 
Attachment 1 

Recommendation 1: Require AMOs and AFCs to implement EPA Order 2750, and 

biannually review audit management information including official files, to ensure 

completeness and accuracy. 

OW concurs with this recommendation. The OW Audit Followup Coordinator (AFC) 

will continue to review all audit management information including official files on a biannual 

basis. These reviews will be conducted every March and September to coincide with the 

Agency’s requirement under EPA Order 2750 and the IG Act to report to Congress on the status 

of completing corrective actions. Every effort will be made to maintain the completeness and 

accuracy of the information. 

Recommendation 2: Obtain OIG approval for any significant changes to corrective 

action plans, involving the deferral of milestones dates for 6 months or more. 

OW concurs with this recommendation. The OW AFC will notify the OIG and seek its 

approval for any significant changes to corrective action plans. 

Recommendation 3: Require AMOs and AFCs to certify in MATS the date of the 

certification letter and signing official’s name and title, before the Final Action Date is 

entered, and the report moved to Inactive status. 

 OW concurs with this recommendation. The OW AFC has notified the Action 

Officials, or their designates, for three of the OIG water program studies discussed in the draft 

report that they are required to provide a certification letter to the AFC when all corrective 

actions are completed. All corrective actions for these studies are considered to be completed 

and a certification letter will be included in the file. Once the certifications letters are received, 

the AFC will enter the necessary information into MATS so OCFO can provide the Final Action 

Date and move the report to Inactive status. 

Recommendation 4: Require AFCs to maintain a list of corrective action taken by 

the program office either in MATS or in the official files. 

OW concurs with this recommendation. The AFC will continue to maintain a brief 

description of the corrective actions taken by the Action Official in MATS and the official file. 

19
Appendix D 

Response by the Office of Enforcement and 

Compliance Assurance 

MEMORANDUM 

SUBJECT: OECA Comments on Draft Report, “EPA Can Improve Its Oversight of 

Audit Followup,” Assignment Number 2006-1508, dated April 5, 2007 

FROM: Catherine R. McCabe 

Principal Deputy Assistant Administrator 

TO: Dan Engelberg 

Office of Inspector General 

 Director for Program Evaluation, Water Issues 

Thank you for the opportunity to review and comment on the Draft Report, “EPA Can 

Improve Its Oversight of Audit Followup,” Asssignment Number 2006-1508, dated April 5, 

2007. The Office of Enforcement and Compliance Assurance (OECA) has completed its review 

of the report and affirms its commitment to fully implement the requirements of the Agency’s 

guidance, EPA Order 2750, “EPA’s Audit Management Process.” OECA’s Administration and 

Resources Management Support Staff (ARMSS), which has the primary responsibility of 

interfacing with our internal program offices, Office fo the Chief Financial Officer and the OIG 

staff, has been assigned the lead responsibility to work with senior managers across OECA to 

develop a set of standard operating procedures which will enhance our compliance with EPA 

Order 2750, including a biannual review audit, enhances reporting and recordkeeping, 

development and tracking of corrective action plans, and closure certification and documentation 

procedures. The corrective action plan and schedule are attached. 

Finally, as noted in the report, OECA has corrected the administrative error in the 

Management Audit Tracking System (MATS) file and returned the State Water Enforcement 

Report to active status. 

20
CORRECTIVE ACTION PLAN 

“EPA CAN IMPROVE ITS OVERSIGHT OF AUDIT FOLLOWUP” 

Number Recommendation Planned Corrective Action Planned 

Completion 

1 Require AMO’s and AFCs to 

implement EPA Order 2750, 

and biannually review audit 

management information 

including official files, to 

ensure completeness and 

accuracy. 

Conduct an assessment of the 

current system to ensure 

accuracy and documentation. 

Develop an OECA SOP which 

fully addresses the AFCs 

responsibility to perform 

biannual reviews and ansure a 

file is complete and accurate. 

Within 90 days 

Within 6 

months of the 

issuance of the 

OIG’s Final 

Report 

2 Obtain OIG approval for any 

significant changes to 

corrective action plans, 

involving the deferral of 

milestone dates for six 

months or more. 

Following the assessment 

described above. 

Within 90 days 

3 Require AMOs and AFCs to 

certify in MATS the date of 

the certification letter and 

signing official’s name and 

title, before the Final Action 

Date is entered, and the 

report moved to Inactive 

status. 

Documentation will be verified 

for inactive status cases from 

the last five years and the 

procedures will be included in 

the SOP referenced above. 

Documentation 

to be verified 

for current 

inactive reports 

within 90 days 

SOP to be 

completed 

within 6 months 

4 Require AFCs to maintain a 

list of corrective actions 

taken by the program office 

either in MATS or in the 

official file. 

Corrective action plans will be 

developed where needed and 

the proposed OECA SOP will 

fully address the AFC’s 

responsibility to maintain 

certain data in MATS 

Within 90 days 

for current 

active cases. 

21
OECA appreciates the opportunity to review and provide comments on this draft report. We 

look forward to working with your office to finalize this review. If you have any future 

questions or concerns, you may contact OECA’s Audit Follow-Up Coordinator, Gwendolyn 

Spriggs, on 202-564-2439. 

cc: Lyn Buhl, OECA/DAA 

Margaret Schneider, OECA/IO 

David Swack, OECA/ARMSS 

 Lisa Lund, OECA/OC 

Richard Albores, OECA 

Will Anderson, OCFO 

Sharon Tant, OCFO 

22
Appendix E 

Distribution 

Office of the Administrator 

Chief Financial Officer 

Agency Followup Coordinator 

Assistant Administrator for Water 

Assistant Administrator for Enforcement and Compliance Assurance 

General Counsel 

Associate Administrator for Congressional and Intergovernmental Relations 

Associate Administrator for Public Affairs 

Audit Followup Coordinator, Office of the Chief Financial Officer 

Audit Followup Coordinator, Office of Enforcement and Compliance Assurance 

Audit Followup Coordinator, Office of Water 

Acting Inspector General 

23