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EPA Complied With

Improper Payment Legislation, 

But Opportunities for 

Improvement Exist 

Report No. 15-P-0152 May 1, 2015

U.S. ENVIRONMENTAL PROTECTION AGENCY

OFFICE OF INSPECTOR GENERAL

Financial Management
Report Contributors: Janet Kasper 

Doug LaTessa 

Patrick McIntyre

Mary Anne Strasser

Abbreviations

AFR Agency Financial Report

EPA U.S. Environmental Protection Agency

FY Fiscal Year

IPERA Improper Payments Elimination and Recovery Act of 2010

OIG Office of Inspector General

OMB Office of Management and Budget

PER Program Evaluation Report

SRF State Revolving Fund

Are you aware of fraud, waste or abuse in an

EPA program?

EPA Inspector General Hotline 

1200 Pennsylvania Avenue, NW (2431T)

Washington, DC 20460

(888) 546-8740

(202) 566-2599 (fax)

OIG_Hotline@epa.gov

More information at www.epa.gov/oig/hotline.html.

EPA Office of Inspector General

1200 Pennsylvania Avenue, NW (2410T)

Washington, DC 20460

(202) 566-2391

www.epa.gov/oig

Subscribe to our Email Updates

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Send us your Project Suggestions
 

 15-P-0152

May 1, 2015

Why We Did This Review

The Improper Payments 

Elimination and Recovery Act 

of 2010 (IPERA), as modified 

by the Improper Payments 

Elimination and Recovery 

Improvement Act of 2012, 

requires that each fiscal year

the Inspector General of each 

agency determine whether the 

agency is in compliance with 

the law. In addition, Office of 

Management and Budget

Memorandum M-15-02 requires

that the Office of Inspector 

General (OIG) evaluate the 

accuracy and completeness of 

agency reporting and the 

agency’s performance in 

reducing and recapturing 

improper payments. Our audit 

focused on the U.S. 

Environmental Protection 

Agency’s (EPA’s) compliance 

with these requirements. 

This report addresses the 

following EPA goal or 

cross-agency strategy:

 Embracing EPA as a highperforming organization.

Send all inquiries to our public

affairs office at (202) 566-2391

or visit www.epa.gov/oig.

The full report is at:

www.epa.gov/oig/reports/2015/ 

20150501-15-P-0152.pdf

EPA Complied With Improper Payment Legislation, 

But Opportunities for Improvement Exist 

 What We Found

The EPA complied with improper payment 

legislation when reporting improper payments in 

fiscal year 2014. The EPA took substantial 

corrective actions during 2014 to identify improper 

payments and track the recovery of overpayments. 

For example, the EPA improved its testing of the 

State Revolving Fund program by testing a sample 

of negative cash draws submitted by states. The EPA established a system for 

tracking the recovery of State Revolving Fund improper payments. Through 

these actions, the EPA improved both the identification and recovery of improper 

payments. 

We found areas in which the EPA can improve its process for identifying and 

reporting improper payments. For example:

 The EPA did not consider either an internal control assessment of the 

EPA’s payroll and travel payment streams—one created by the EPA itself, 

or an OIG report on the EPA’s purchase card program—when preparing its 

qualitative risk assessments. Both reports highlighted areas where 

compliance with existing controls needed improvement.

 The EPA did not include improper payments made to a former EPA 

employee who pleaded guilty to theft of government property in its estimate 

of improper payments. 

 The EPA regional staff did not always complete required fields in 

transaction testing worksheets, nor identify some required information in 

program evaluation reports.

 Recommendations and Planned Agency Corrective Actions

We recommend that the Chief Financial Officer and Assistant Administrator for

Administration and Resources Management ensure future qualitative risk 

assessments incorporate all information available to the EPA at the time the risk 

assessments are prepared. In addition, we recommend that the Chief Financial 

Officer develop a procedure addressing when the EPA will recognize improper 

payments stemming from criminal judicial proceedings. We also recommend that 

the Assistant Administrator for Water provide feedback to regional offices on 

improving the program evaluation reports and transaction testing worksheets. 

The agency concurred with all of the recommendations and provided corrective 

actions and estimated completion dates.

U.S. Environmental Protection Agency

Office of Inspector General

At a Glance

The EPA can improve the 

accuracy of its annual 

report through changes 

to its improper payment 

identification and 

reporting procedures.
May 1, 2015

MEMORANDUM

SUBJECT: EPA Complied With Improper Payment Legislation, 

But Opportunities for Improvement Exist 

Report No. 15-P-0152

FROM: Arthur A. Elkins Jr.

TO: David Bloom, Acting Chief Financial Officer

Ken Kopocis, Deputy Assistant Administrator

Office of Water

Karl Brooks, Deputy Assistant Administrator

Office of Administration and Resources Management

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

U.S. Environmental Protection Agency. This report contains findings that describe the problems the OIG 

has identified and corrective actions the OIG recommends.

The offices responsible for the implementation of the audit recommendations include the Office of 

Financial Management within the Office of the Chief Financial Officer; the Office of Ground Water and 

Drinking Water and Office of Wastewater Management within the Office of Water; and the Office of 

Acquisition Management within the Office of Administration and Resources Management. 

Action Required

In responding to the draft report, the agency provided a corrective action plan for addressing the 

recommendations with milestone dates. Therefore, a response to the final report is not required. The 

agency should track corrective actions not implemented in the Management Audit Tracking System. 

This report will be available at http://www.epa.gov/oig. 

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

WASHINGTON, D.C. 20460

THE INSPECTOR GENERAL
EPA Complied With Improper Payment Legislation, 15-P-0152

But Opportunities for Improvement Exist

- continued -

Table of Contents

Chapters

1 Introduction ...................................................................................................... 1

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

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

Responsible Offices ................................................................................... 2

Noteworthy Achievements ......................................................................... 2

Scope and Methodology ............................................................................ 2

2 Qualitative Risk Assessments Can Be Improved........................................... 4

OMB Requires an Evaluation to Determine Susceptibility to 

Significant Improper Payments............................................................. 4

Qualitative Risk Assessments Did Not Consider All 

Available Information............................................................................ 4

Qualitative Risk Assessments Tied to the Same Period Used to 

Identify Improper Payments ................................................................. 5

Accurate Qualitative Risk Assessments Can Assist in 

Reducing Improper Payments.............................................................. 6

Recommendation....................................................................................... 6

Agency Comments and OIG Evaluation..................................................... 6

3 EPA Needs to Recognize Improper Payments Stemming From 

Criminal Judicial Actions................................................................................. 7

Guidance for Identifying and Reporting Improper Payments ...................... 7

EPA Under-Reported Improper Payroll and Travel Payments in 

FY 2014 AFR ....................................................................................... 7

EPA Does Not Have Procedures for Determining 

Improper Payments as a Result of Criminal Proceedings..................... 8

Recommendation....................................................................................... 8

Agency Comments and OIG Evaluation..................................................... 8

4 Improvements Needed to Report SRF Improper Payments........................... 9

Guidance for Identifying and Reporting Improper Payments ...................... 9

Improved Compliance Needed................................................................... 9

Recommendation....................................................................................... 10

Agency Comments and OIG Evaluation..................................................... 10

Status of Recommendations and Potential Monetary Benefits ............................. 11
EPA Complied With Improper Payment Legislation, 15-P-0152

But Opportunities for Improvement Exist

Appendices

A Agency Response to Draft Report................................................................... 12

B Distribution ....................................................................................................... 14
15-P-0152 1

Chapter 1

Introduction

Purpose

The objective of the audit was to evaluate the U.S. Environmental Protection 

Agency’s (EPA’s) reporting of improper payments during fiscal year (FY) 2014. 

Improper payment legislation and Office of Management and Budget (OMB) 

Memorandum M-15-02 require that the Office of Inspector General (OIG)

evaluate the accuracy and completeness of agency reporting and the agency’s 

performance in reducing and recapturing improper payments. Our audit focused

on these requirements.

Background

The purpose of the Improper Payments Elimination and Recovery Act (IPERA) is 

to improve the determination of improper payments. 

OMB Memorandum M-15-02 states that Inspectors General may evaluate (1) the 

accuracy and completeness of agency reporting, and (2) agency performance in 

reducing and recapturing improper payments. Also, Inspectors General are 

annually required to determine whether agencies are in compliance with IPERA. 

Compliance means that the agency has met the following requirements:

 Published an Agency Financial Report (AFR) for the most recent fiscal 

year and posted it on the agency website.

 Conducted a program-specific risk assessment (if required).

 Published improper payment estimates for all programs and activities 

identified as susceptible to significant improper payments (if required).

 Published programmatic corrective action plans (if required).

 Published and met annual reduction targets for each program assessed to 

be at risk and measured for improper payments.

 Reported a gross improper payment rate of less than 10 percent for each 

program and activity for which an improper payment estimate was 

obtained and published in the AFR.
15-P-0152 2

Responsible Offices

The offices responsible for the implementation of the audit recommendations 

include the Office of Financial Management within the Office of the Chief 

Financial Officer; the Office of Acquisition Management within the Office of 

Administration and Resources Management; and the Office of Ground Water and 

Drinking Water and Office of Wastewater Management within the Office of Water.

Noteworthy Achievements

The EPA took substantial corrective actions during FY 2014 to identify improper 

payments and track the recovery of overpayments. We identified fewer 

misstatements in the EPA’s AFR this year compared to prior years. 

The EPA’s implementation of our previous recommendations contributed to more 

accurate identification of improper payments and to tracking the recovery of 

overpayments. Below are the specific details on the impact of completed 

corrective actions.

 We recommended last year that the EPA review a sample of large negative 

draws to identify improper payments. The EPA agreed with the 

recommendation, and this year improved its testing of the Clean Water 

and Drinking Water State Revolving Fund (SRF) programs by testing a 

sample of negative cash draws submitted by states. This process identified 

improper payments that the EPA may not have identified had it not 

implemented the corrective action. 

 We recommended last year that the EPA establish a system for tracking 

the recovery of improper payments. The EPA agreed, and this year added

additional fields in the master SRF improper payment schedules to 

identify how improper payments were detected, the resolution, the date of 

resolution, the amount recovered, the amount outstanding, etc. 

 We recommended that the EPA improve the process of identifying and 

reporting improper payments for the grants payment stream by annually 

reconciling the Grantee Compliance and Recipient Activity Database

disallowed costs and the Compass Data Warehouse database accounts 

receivable. The EPA agreed with this recommendation and reconciled the 

Grantee Compliance and Recipient Activity Database to the Compass 

Data Warehouse for the grants payment stream.

Scope and Methodology

We conducted this audit from November 2014 to March 2015 in accordance with 

generally accepted government auditing standards, issued by the Comptroller 

General of the United States. Those standards require that we plan and perform 
15-P-0152 3

the audit to obtain sufficient, appropriate evidence to provide a reasonable basis 

for our findings and conclusions based on our audit objective. We believe that the 

evidence obtained provides a reasonable basis for our findings and conclusions 

based on our audit objective.

The objective of the audit was to evaluate the EPA’s reporting of improper 

payments during FY 2014 and determine whether the EPA was in compliance

with IPERA. To determine whether the EPA complied with IPERA, we reviewed 

the EPA’s FY 2014 AFR and accompanying materials. We interviewed agency 

staff at the EPA headquarters from the Office of the Chief Financial Officer, the 

Office of Grants and Debarment, the Office of Acquisition Management and the 

Office of Water. We also interviewed Office of the Chief Financial Officer and 

Office of Acquisition Management staff from the Research Triangle Park, 

Cincinnati, and Las Vegas Finance Centers. 

We gained an understanding of the processes, procedures and controls used for 

improper payment and recovery reporting across multiple payment streams—

including SRF, grants, commodities, contracts, payroll, travel, purchase cards, and 

Hurricane Sandy. We traced judgmental samples of reported improper payments 

from the SRF, grants, commodities and contracts payment streams back to source 

documentation to test the accuracy of improper payments reporting in the EPA’s 

FY 2014 AFR. We also reviewed the qualitative risk assessments for the payroll, 

purchase card and travel payment streams. 

In addition to reviewing a sample of transactions reported as improper payments, 

we also reviewed a judgmentally selected sample of program evaluation reports 

(PERs) and transaction testing worksheets provided by the EPA to confirm the 

accuracy and legitimacy of the improper payments. We also confirmed the 

accuracy of both the Office of Grants and Debarment and Las Vegas Finance 

Center’s improper payment schedules to the EPA system-generated support data, 

and verified those aggregate values to the improper payments data reported in the 

FY 2014 AFR for the grants payment stream.

We used information from several EPA data systems during our work, including 

the Grantee Compliance and Recipient Activity Database, Contract Payment 

System, Small Purchase Information Tracking System, and Compass Data 

Warehouse. We verified the information in the systems to source documentation 

and concluded that the information provides a reasonable basis for our findings 

and conclusions.

Prior Audit Coverage 

During the current audit, we followed up on agency corrective actions from EPA 

OIG Report No. 14-P-0171, EPA Needs to Continue to Improve Controls for 

Improper Payment Identification, issued April 10, 2014. We found that all actions 

had been taken.
15-P-0152 4

Chapter 2

Qualitative Risk Assessments Can Be Improved

The EPA did not consider relevant reports when preparing risk assessments. The 

EPA prepared qualitative risk assessments for its purchase card, travel and payroll 

payment streams to determine their susceptibility to improper payments. 

However, these risk assessments did not consider an internal control assessment 

on sensitive payment areas prepared by the EPA itself, nor an OIG report on 

oversight of purchase cards. Both of these reports highlighted areas where 

compliance with existing internal controls needed improvement. OMB Circular 

A-123 requires all agencies to institute either a quantitative or qualitative method 

to identify programs susceptible to significant improper payments. The EPA did 

not consider these reports when preparing the risk assessments because the EPA 

chose to use only those reports issued during the period it used to identify 

improper payments for those payment streams—FY 2013. Both reports were 

issued in FY 2014 but examined 2012 and 2013 data. Also, both reports were 

issued before the EPA prepared the risk assessments. As a result of not relying on 

these reports, the overall risk rating for the three payment streams was 

questionable. Accurate risk assessments can assist in reducing improper 

payments. 

OMB Requires an Evaluation to Determine Susceptibility to 

Significant Improper Payments

Appendix C to OMB Circular A-123, Requirements for Effective Estimation and 

Remediation of Improper Payments,

1

states that all agencies shall institute a 

systematic method of reviewing all programs and identify programs susceptible to 

significant improper payments. The systematic method could be a quantitative 

evaluation based on a statistical sample or a qualitative method. For those 

programs that are susceptible to significant improper payments, Appendix C to 

Circular No. A-123 also requires agencies to put in place a corrective action plan 

to reduce improper payments.

Qualitative Risk Assessments Did Not Consider All Available 

Information

The EPA prepared qualitative risk assessments in June 2014 for its purchase card, 

travel and payroll payment streams to determine their susceptibility to improper 

payments. The risk assessments evaluated a variety of factors based on OMB 

guidance, including, but not limited to:

 

1 OMB Memorandum M-15-02.
15-P-0152 5

 Whether the payment stream was new to the agency.

 If there were major changes in the level of program funding during the 

scope period.

 If there were audit or internal control findings during the scope period.

 If there was a major program change such as the transitioning to a new 

software system. 

The EPA’s risk of improper payments for the purchase card and payment streams, 

on a scale from 0 to 100, was a 0. The risk rating for the payroll payment stream 

was an 8. According to the scoring legend for the risk assessments, a rating of 0 to 

40 indicates a low risk of improper payments.

When preparing these risk assessments, the EPA did not consider a 2014 internal 

report, Internal Control Assessments – Travel, Payroll, Parking and Transit, which

included reviews of both the travel and payroll payment streams. The EPA did not 

consider EPA OIG Report No. 15-B-0014, Ineffective Oversight of Purchase Cards 

Results in Inappropriate Purchases at EPA. The OIG report identified improper 

payments, and concluded that the lack of compliance with existing controls 

indicated a continued risk of improper payments. Both the EPA internal control 

assessment and the OIG report highlighted areas where compliance with existing 

internal controls needed improvement and identified internal control deficiencies. 

Qualitative Risk Assessments Tied to the Same Period Used to 

Identify Improper Payments

The EPA did not use the most current information available to prepare its 

qualitative risk assessments because the EPA limited the information used to 

evaluate risk to the same time period it used to identify improper payments for the 

purchase cards, travel and payroll payment streams—FY 2013. The risk 

assessments were prepared without incorporating the internal EPA and OIG 

reports because both reports were issued in FY 2014 rather than FY 2013. Table 2

shows both reports evaluated data from prior years and were issued prior to the 

completion of the risk assessments. 

Table 1: Relevant reports not considered in preparing risk assessments

Report title

Period of data 

report incorporated

Report 

issued

Internal Control Assessments –

Travel, Payroll, Parking, and Transit

Calendar Year and FY 2013 April 2014

Ineffective Oversight of Purchase 

Cards Results in Inappropriate 

Purchases at EPA

FY 2012 March 2014

Source: OIG analysis.
15-P-0152 6

Although EPA staff were aware of these reports, neither report was considered

when the qualitative risk assessments were completed in June 2014. 

Accurate Qualitative Risk Assessments Can Assist in Reducing 

Improper Payments

The risk ratings for the purchase cards, travel and payroll payment streams were 

questionable. Had the EPA relied on its own internal control review, as well as the 

OIG report on internal control weaknesses in the purchase cards program, the 

overall risk rating would likely have been higher. Using available and current 

information can increase the likelihood of reliable qualitative risk assessments, 

which can assist in reducing future improper payments.

Recommendation

We recommend that the Chief Financial Officer and Assistant Administrator for 

Administration and Resources Management:

1. Ensure future qualitative risk assessments incorporate all information 

available to the EPA at the time the risk assessments are conducted. 

Agency Comments and OIG Evaluation

The EPA agreed with the recommendation. In response to Recommendation 1, the 

Office of the Chief Financial Officer and Office of Administration and Resources 

Management agreed that by September 30, 2015, the agency will ensure that 

future risk assessments incorporate all information available to the agency at the 

time the assessments are conducted, and that any outstanding audits or internal 

control findings are considered. The OIG believes the agency’s actions, when 

implemented, should address the recommendation.
15-P-0152 7

Chapter 3

EPA Needs to Recognize Improper Payments

Stemming From Criminal Judicial Actions

The EPA understated the improper payments for the payroll and travel payment 

streams in the FY 2014 AFR because improper payments resulting from former 

EPA employee John C. Beale’s guilty plea to theft of government property

totaling $886,186 were not reported. Improper payment legislation requires 

federal agencies to include payments to employees, including salary and travel 

payments, as a source of improper payments when the payment should not have 

been made or was made in an incorrect amount. The EPA did not include the 

$886,186 in its estimate of improper payments because the EPA does not have 

procedures for recognizing improper payments stemming from criminal judicial 

actions. Without such procedures, concerns exist about the reliability and integrity 

of improper payment reporting for all payment streams.

Guidance for Identifying and Reporting Improper Payments

IPERA’s definition of an improper payment includes any payment that should not 

have been made or that was made in an incorrect amount under statutory, 

contractual, administrative or other legally applicable requirements. Incorrect 

amounts are overpayments or underpayments made to eligible recipients. Also, 

the Improper Payments Elimination and Recovery Improvement Act of 2012

requires federal agencies to include payments to employees, including salary and 

travel payments, as a source of improper payments.

Further, OMB Memorandum M-15-02 identifies an improper payment as any 

payment made to an ineligible recipient or for an ineligible good or service, or 

payments for goods or services not received. In addition, when an agency’s 

review is unable to discern whether a payment was proper as a result of 

insufficient or lack of documentation, this payment must also be considered an 

improper payment. Repayments to federal agencies as a result of criminal 

convictions and other legal proceedings (exclusive of fines and penalties) 

monetize the amount of improper payments made in prior years.

EPA Under-Reported Improper Payroll and Travel Payments in 

FY 2014 AFR

The EPA understated the amount of improper payments for the payroll and travel 

payment streams by $886,186. The EPA did not include information regarding 

Beale, a former EPA employee, in its reported improper payments. Beale, a 

former senior policy advisor for the EPA, pleaded guilty to theft of government 
15-P-0152 8

property on September 27, 2013, and paid $886,186 to the government in

restitution. John Beale’s conviction monetized the amount of improper payments 

made to him, and those improper payments should have been recognized in 

FY 2014. Because Beale pleaded guilty in FY 2013—the scope period for which 

the EPA was identifying improper payments for both travel and payroll payment 

streams—the EPA should have included the $886,186 in its reported improper 

payments.

EPA Does Not Have Procedures for Determining Improper Payments 

as a Result of Criminal Proceedings

The EPA did not include the $886,186 in its reported improper payments 

estimation because it does not have procedures for recognizing improper 

payments stemming from criminal judicial actions. EPA staff informed the OIG 

that it was aware of the September 27, 2013, guilty plea by Beale. However, 

absent guidance on when and how to treat this type of improper payment, the 

EPA had to decide when to report the improper payment. The EPA staff stated 

that, in deference to the OIG, which was conducting an audit on this issue, the 

improper payments were excluded from the FY 2014 AFR. The EPA staff further 

informed the OIG that this issue would be included in the FY 2015 AFR. Because 

there is no procedure for recognizing improper payments stemming from criminal 

judicial actions, there may be other improper payments that were not captured and 

reported.

Recommendation

We recommend that the Chief Financial Officer:

2. Develop a procedure addressing when the EPA will recognize improper 

payments stemming from criminal judicial proceedings.

Agency Comments and OIG Evaluation

The EPA agreed with the recommendation. In response to Recommendation 2, the 

Office of the Chief Financial Officer stated that by September 30, 2015, it will 

develop a procedure addressing when the EPA will recognize improper payments 

stemming from criminal judicial proceedings. The OIG believes the agency’s 

actions, when implemented, should address the recommendation.
15-P-0152 9

Chapter 4

Improvements Needed to Report 

SRF Improper Payments

The EPA needs to improve compliance with its annual review guidance when 

conducting reviews of its Clean Water and Drinking Water SRF programs. 

We found that regional offices were not completing all required fields of the 

transaction testing worksheet, nor following the EPA’s annual review guidance 

for reporting improper payments in the state PERs. The EPA’s annual review 

guidance for SRF programs requires regional offices to complete all required 

fields in the transaction testing worksheet, and identify the improper payments in 

the PER. The accuracy of improper payment reporting is improved when annual 

review guidance is followed. 

Guidance for Identifying and Reporting Improper Payments

The EPA’s annual review guidance for SRF programs includes a transaction 

testing worksheet that regional offices should complete when testing cash draws. 

The annual review guidance also states that regions identify the improper 

payment discovered during transaction testing in the PER. The PER should 

include the date, amount and grant number of all cash draws tested, the portion 

determined to be improper (and why), and the corrective action planned or taken. 

Improved Compliance Needed

The EPA needs to improve compliance with its annual review guidance when 

conducting annual reviews of SRF programs. We identified some instances where 

regional offices were not completing required fields of the transaction testing

worksheet, nor following the EPA’s annual review guidance for reporting 

improper payments in the PERs. For example, we noted the following:

 EPA regional staff do not always indicate on the transaction testing 

worksheet whether an improper payment was identified.

 One regional office incorrectly included the state match in the “Amount 

Paid from Other Sources” field of the transaction testing worksheet, and 

did not provide an explanation in the “Explanation if Paid Amount is 

Different from Invoiced Total” field.

 PERs do not always list the cash draws that were reviewed.
15-P-0152 10

 For one state, the amount of the improper payments identified in the PER 

did not match the amount recorded in the EPA master schedule of 

improper payments.

 For another state, the amount of the improper payments identified in the

transaction testing worksheet did not match the amount in the Drinking 

Water SRF master schedule. As shown in Table 3, this resulted in an 

adjustment to the Improper Payments Compliance section of EPA FY 

2014 AFR Table 1.

Table 2: Revisions to the EPA FY 2014 AFR Table 1

Source: FY 2014 AFR and OIG analysis.

Note: The top row shows the information as reported in the EPA FY 2014 AFR with the 

incorrect information crossed through; the bottom row is the correct information.

EPA staff informed auditors there may have been some confusion regarding the 

annual review guidance. In addition, for one state, the Office of Water 

headquarters’ review of transaction testing worksheets resulted in a difference of 

opinion regarding the value of improper payments. An oversight by EPA staff 

also resulted in errors made to the extrapolated improper payments to EPA 

FY 2014 AFR Table 1. The accuracy of improper payment reporting is improved 

when guidance is followed.

Recommendation

We recommend that the Assistant Administrator for Water:

3. Provide feedback to regional offices on improving compliance with the 

PERs and transaction testing worksheets.

Agency Comments and OIG Evaluation

The EPA agreed with the recommendation. In response to Recommendation 3, the 

Office of Water will provide feedback by September 30, 2015, to regional offices 

on improving compliance with the SRF Annual Review Guidance, which covers 

the PERs and the transaction testing worksheets. The OIG believes the agency’s 

actions, when implemented, should address the recommendation.

FY 2014 improper 

payment percent

FY 2014 improper 

payment amount

FY 2014

overpayment

FY 2014

underpayment

Drinking 

Water SRF

1.29%

No change

$13.4

$13.3

$13.4

$13.3

$0

No Change
15-P-0152 11

Status of Recommendations and 

Potential Monetary Benefits

RECOMMENDATIONS

POTENTIAL MONETARY 

BENEFITS (in $000s)

Rec. 

No.

Page 

No. Subject Status1 Action Official

Planned 

Completion 

Date

Claimed 

Amount

Agreed-To 

Amount

1 6 Ensure future qualitative risk assessments 

incorporate all information available to the EPA at 

the time the risk assessments are conducted.

O Chief Financial Officer and 

Assistant Administrator for 

Administration and 

Resources Management

9/30/15

2 8 Develop a procedure addressing when the EPA will 

recognize improper payments stemming from 

criminal judicial proceedings.

O Chief Financial Officer 9/30/15

3 10 Provide feedback to regional offices on improving 

compliance with the PERs and transaction testing 

worksheets.

O Assistant Administrator 

for Water

9/30/15

1 O = Recommendation is open with agreed-to corrective actions pending. 

C = Recommendation is closed with all agreed-to actions completed. 

U = Recommendation is unresolved with resolution efforts in progress.
15-P-0152 12

Appendix A

Agency Response to Draft Report 

(Received April 10, 2015)

MEMORANDUM

SUBJECT: Response to Office of Inspector General Draft Audit Report No. OA-FY15-0032,

“EPA Complied With Improper Payment Legislation, But Opportunities for 

Improvement Exist,” dated March 23, 2015

FROM: David A. Bloom /s/ Original Signed By: Stefan Silzer for 

Acting Chief Financial Officer

TO: Janet Kasper 

Director of Contracts and Assistance Agreement Audits

Thank you for the opportunity to respond to the issues and recommendations in the subject draft 

audit report. Following is a summary of the agency’s overall position. We have provided highlevel intended corrective actions and estimated completion dates.

AGENCY’S OVERALL POSITION

The agency concurs with all of the recommendations in the draft audit report. 

AGENCY’S RESPONSE TO DRAFT AUDIT RECOMMENDATIONS

Agreements

No. Recommendation High-Level Intended 

Corrective Action(s)

Estimated Completion 

by Quarter and FY

1 The Chief Financial Officer 

and Assistant Administrator 

for Administration and 

Resources Management 

ensure future qualitative risk 

assessments incorporate all 

information available to the 

EPA at the time the risk 

assessments are conducted. 

OCFO and OARM will ensure 

that future risk assessments 

incorporate all information 

available to the Agency at the 

time the assessments are 

conducted and that any 

outstanding audits or internal 

control findings are considered. 

9/30/2015

2 The CFO develop a 

procedure addressing when 

the EPA will recognize 

improper payments 

OCFO will develop a procedure 

addressing when the EPA will 

recognize improper payments 

9/30/2015
15-P-0152 13

stemming from criminal 

judicial proceedings.

stemming from criminal judicial 

proceedings.

3 The Deputy Assistant 

Administrator for Water 

provide feedback to regional 

offices on improving 

compliance with the PERs 

and transaction testing 

worksheets.

OW will provide feedback to 

regional offices on improving 

compliance with the SRF 

Annual Review Guidance which 

covers the Performance 

Evaluation Reports (PERs) and 

the transaction testing 

worksheets.

9/30/2015

CONTACT INFORMATION

If you have any questions regarding this response, please contact Lorna Washington at 202-564-

1386.

cc: Michael Shapiro

Ken Kopocis

Andrew Sawyers

Peter Grevatt

Stefan Silzer

Jeanne Conklin

Richard Gray

Leo Gueriguian

Nanci Gelb

Howard Corcoran

Denise Polk

John Showman

John Bashista

Thomas Dussault

John Oliver

Brian Long

Lisa Maass

Doug LaTessa

Patrick McIntyre

Mary Anne Strasser

Brandon McDowell

Marilyn Ramos

Lorna Washington
15-P-0152 14

Appendix B

Distribution 

Office of the Administrator 

Chief Financial Officer

Deputy Assistant Administrator for Water

Deputy Assistant Administrator for Administration and Resources Management

Agency Follow-Up Coordinator 

General Counsel 

Associate Administrator for Congressional and Intergovernmental Relations 

Associate Administrator for Public Affairs

Deputy Chief Financial Officer 

Principal Deputy Assistant Administrator for Water 

Principal Deputy Assistant Administrator for Administration and Resources Management 

Director, Office of Financial Management, Office of the Chief Financial Officer 

Deputy Director, Office of Financial Management, Office of the Chief Financial Officer 

Director, Office of Policy and Resource Management, Office of Administration and 

Resources Management 

Deputy Director, Office of Policy and Resource Management, Office of Administration and 

Resources Management 

Audit Follow-Up Coordinator, Office of the Chief Financial Officer 

Audit Follow-Up Coordinator, Office of Water 

Audit Follow-Up Coordinator, Office of Administration and Resources Management