INSPECTOR GENERAL’S SEMIANNUAL REPORT TO CONGRESS

Appalachian Regional Commission

April 1, 2009–September 30, 2009
October 2009 

MEMORANDUM FOR THE FEDERAL CO-CHAIR 

SUBJECT: Semiannual Report to Congress 

In accordance with the requirements of the Inspector General Act Amendments of 1988, Public Law 

100-504, and the Inspector General Reform Act of 2008, Public Law 110-409, I am pleased to submit 

the Office of Inspector General Semiannual Report to Congress. 

This Semiannual Report to Congress summarizes the activities of our office for the 6-month period 

ending September 30, 2009. During this semiannual period, we issued 4 reports. Four other reports 

have been issued in draft. During this period, the Inspector General continued to serve as representative 

of the Council of the Inspectors General on Integrity & Efficiency (CIGIE). 

The Inspector General Act of 1978, as amended by the Inspector General Act Amendments of 1988, 

provides that this report be forward to appropriate Congressional committees within 30 days and that 

you provide whatever additional comments you consider appropriate. 

I appreciate the Commission’s and your cooperation with the Office of Inspector General in the conduct 

of our operations. 

Clifford H. Jennings 

Inspector General 

Enclosure 
 

TABLE OF CONTENTS

Page

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii 

Purpose and Requirements of the OIG Semiannual Report . . . . . . . . . . . iv 

 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 

 II. Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 

Appalachian Regional Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 

Office of Inspector General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 

 III. OIG Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 

Audits, Inspections, Evaluations & Reviews . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 

Investigations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 

 IV. OIG Hotline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 

 V. Legislative & Regulatory Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 

 

Appendices A. Schedule of Reports Issued, 

 April 1, 2009 thru September 30, 2009 

B. Schedule of Reports with Questioned or Unsupported Costs 

C. Schedule of Reports with Recommendations that Funds be put to Better Use 

and Summary of Management Decisions 

D. Schedule of Reports with Recommendations that Funds be put to Better Use 

and Summary of Management Actions 

E. Definition of Terms Used 

 

i 
 

EXECUTIVE SUMMARY

During this reporting period, the Office of Inspector General (OIG) worked on many projects ranging 

from continuing the establishment of an audit recommendations database and writing a new audit and 

procedures manual, to the performance and monitoring of audits (and inspections). For this reporting 

cycle, 4 reports were issued which are summarized below. In addition, the OIG is continuing its efforts 

to implement P.L. 110-409, "The Inspector General Reform Act of 2008.” 

The Appalachian Regional Commission's financial statements are audited by an outside independent 

auditor. The OIG monitors the activities of the auditor to help ensure compliance with applicable 

statutes, OMB guidelines, and auditing standards. Performance and Accountability Report submissions, 

including the financial statement audit, were required by November 17th for 2008. 

The 2008 financial statement audit was issued on June 4, 2009 and was over six months late at issuance. 

Some of the issues contributing to the audit’s late completion included: difficulty complying with child 

agency reporting requirements, continuing use of federal reporting requirements, difficulty preparing a 

federal footnote disclosure, and proper accrual of grant obligations. Also, because of prior year child 

agency reporting problems, ARC had to restate its prior year financial statements, which were unaudited 

(the auditor disclaimed an opinion). Other audit findings were anti-deficiency act violations and 

improper security for some of the Commission’s computer systems. 

ARC has continuing difficulty complying with Parent-Child reporting requirements. Problems are 

related to ARC’s small level of basic agency grant funding (immaterial for the child agencies) relative to 

the funding of its larger child agencies, and are summarized below. 

• Child agencies were not prompt (improving) in providing reports of activities. 

• Child agency reports were not always accurate or in agreement with previously submitted 

reports. 

• ARC personnel had to reconcile activity and balances in current and historic records with 

that of the child agencies. 

• ARC contracted accounting and auditing service fees increased as assistance was needed 

for reconciliation and verification of reported amounts (because of the immateriality of 

amounts to the Child agencies, ARC auditors had to do additional audit work on child 

agency funding and could not rely on the work of the child agency auditors). 

• ARC managers had to expend effort to provide management representations as to the 

validity of child reported grant activity fund usage and balances; therefore, they had to 

understand and obtain confidence in child agency internal controls. 

All told, the reporting requirements have resulted in over a seven-fold increase in audit costs while 

providing neither measurable value or impacting the disclosures of the U.S. Government’s financial 

statements. ARC has previously requested a waiver from the requirements with no success. We believe 

legislative remedy and relief may be needed and we will explore these options in future periods. 

 ii 
 

Another audit report issued during the period concerned funding to a university for the construction of a 

child development and research center. Two recommendations were issued; one having to do with 

improving the accuracy of invoice submittals and the other requiring the university to ensure that an 

excluded party’s (vendor’s) list was consulted prior to contract award. 

The third report issued this year was the second of two reports issued concerning ARC’s grant 

management. The first report dealt with ARC’s grant management system, while the second report dealt 

with ARC’s grant management processes and procedures. The second report made 17 recommendations, 

from the need to develop uniformity and improvement in policies and procedures, to compliance, grant 

documentation, supervisory oversight, and file security, among others. 

The fourth report, an audit of ARC’s internal controls and controls surrounding personally identifiable 

information, contained 10 recommendations, including: improving controls over bank accounts, credit 

cards, travel cards, and updating policies for property management and applicable accounting authority. 

In addition, recommendations were made for creation of a desktop procedures manual and for a process 

to ensure tracking and implementation of audit recommendations. No findings were made concerning 

ARC’s management of personally identifiable information. 

During the reporting period, the IG served on the Council of the Inspectors General on Integrity & 

Efficiency (CIGIE). The OIG commented on legislation that affects the OIG as well as the entire IG 

community. 

 iii 
PURPOSE AND REQUIREMENTS OF THE 

OFFICE OF INSPECTOR GENERAL SEMIANNUAL REPORT

The Inspector General Act of 1978 requires the IG to keep the Federal Co-Chair and Congress fully and 

currently informed about problems and deficiencies in the Commission's operations and the necessity for 

corrective action. In addition, the Act specifies that semiannual reports will be provided to the Federal 

Co-Chair by April 30 and October 31 and to Congress 30 days later. 

The Federal Co-Chair may transmit comments to Congress along with the report but may not change 

any part of the report. The specific requirements prescribed in the Act, as amended (Public Law 100-

504), are listed below. 

 Reporting Requirements

Section 4(a)(2) Review of legislation and regulations Page 9 

 

Section 5(a)(1) Problems, abuses, and deficiencies Pages 6-8

 

Section 5(a)(2) Recommendations with respect to problems, abuses, and deficiencies Pages 6-8

 

Section 5(a)(3) Prior significant recommendations not yet implemented * 

 

Section 5(a)(4) Matters referred to prosecutive authorities Page 8 

 

Section 5(a)(5) 

and 6(b)(2) 

 Summary of instances where information was refused * 

Section 5(a)(6) Listing of audit reports showing number of reports and dollar value of

questioned costs 

 App A 

 

Section 5(a)(7) Summary of each particularly significant report ** 

Section 5(a)(8) Statistical table showing number of reports and dollar value of questioned

costs 

 App B 

 

Section 5(a)(9) Statistical table showing number of reports and dollar value of

recommendations that funds be put to better use and summary of

management decisions 

 App C 

 

Section 5(a)(10) Summary of each audit issued before this reporting period for which no

management decision was made by end of the reporting period 

 * 

Section 5(a)(11) Significant revised management decisions * 

Section 5(a)(12) Significant management decisions with which the Inspector General

disagrees 

 * 

Section 5(b)(3) Statistical table showing number of reports and dollar value of 

 recommendations that funds be put to better use and summary App D 

 of management actions 

* None. 

** See references to Sections 5(a)(1) and 5(a)(2) for discussion of significant reports. 

 iv 
1 

I. INTRODUCTION

The Inspector General Act Amendments of 1988 (P.L. 100-504) provides for the establishment of an 

Office of Inspector General (OIG) at 30 designated Federal entities, including the ARC. The ARC OIG 

became operational on October 1, 1989, with the appointment of an IG and provision of budgetary 

authority for contracted audit and/or investigation activities. 

II. BACKGROUND

A. APPALACHIAN REGIONAL COMMISSION 

The Appalachian Regional Development Act of 1965 (P.L. 89-4) established the Appalachian Regional 

Commission. The Act authorizes a Federal/State partnership designed to promote long-term economic 

development on a coordinated regional basis in the 13 Appalachian States. The Commission represents 

a unique experiment in partnership among the Federal, State, and local levels of Government and 

between the public and private sectors. It is composed of the Governors of the 13 Appalachian States 

and a Federal representative who is appointed by the President. The Federal representative serves as the 

Federal Co-Chair with the Governors electing one of their numbers to serve as the States' Co-Chair. 

 - Through joint planning and development of regional priorities, ARC funds are used to assist and 

encourage other public and private resources to address Appalachia's unique needs. Program 

direction and policy are established by the Commission (ARC Code) with the vote of a majority 

of the State members and the affirmative vote of the Federal Co-Chair. Emphasis has been 

placed on highways, infrastructure development, business enterprise, and human resources 

programs. 

 - Administratively, the Office of the Federal Co-Chair, with a staff of 9, and the Commission, with 

a staff of 43, is responsible for ARC operations. The States maintain an Office of States' 

Representative (2 persons) that has primarily liaison responsibilities. All personnel are located in 

Washington, DC. The Commission staff's administrative expenses, including salaries, are funded 

jointly by Federal and State funds; the States' Representative staff is funded entirely by the 

States; and the Federal Office staff is funded entirely from Federal funds. 

 - The Commission's appropriation for FY 2009 is $75 million. ARC was reauthorized in October 

2008. In addition, Section 1101 of the Safe, Accountable, Flexible, and Efficient Transportation 

Equity Act: A Legacy for Users (SAFETEA-LU) provides annual authorizations of $470 million 

for construction of the Appalachian Development Highway System (ADHS), under Section 201 

of the 1965 Appalachian Regional Development Act, for a total of $2.35 billion over the fiveyear period, FY 2005 through FY 2009, from the Highway Trust Fund. Although these funds are 

derived from the Highway Trust Fund they remain under ARC's programmatic jurisdiction. 

 

 
2 

Program funds are distributed to state and local entities in accordance with an allocation formula 

intended to provide fair and reasonable distribution of available resources. ARC staff has 

responsibilities for program development, policy analysis and review, grant development, 

technical assistance to States, and management and oversight. 

 - In order to avail itself of federal agency expertise and administrative capability in certain areas, 

ARC often relies on other departments and agencies for program administration, especially with 

respect to highways and infrastructure projects. For example, the Appalachian Regional 

Development Act authorizes the Secretary of Transportation to administer the Commission's 

highway programs, with the Commission retaining responsibility for priorities, highway 

locations, and fund allocations. 

ARC ORGANIZATION CHART 
3 
4 
5 

 

B. OFFICE OF INSPECTOR GENERAL 

 

The ARC OIG is an independent audit and investigative unit. An independent Inspector General who 

reports directly to the Federal Co-Chair heads the OIG. 

Role and Authority

The Inspector General Act of 1978 (P.L. 95-452), as amended in 1988, states that the IG is responsible 

for (1) audits and investigations; (2) review of legislation; and (3) recommendation of policies for the 

purpose of promoting economy and efficiency in the administration of, or preventing and detecting fraud 

and abuse in, the program and operations of the establishment. In this regard, the IG is responsible for 

keeping the Federal Co-Chair and Congress fully informed about the problems and deficiencies in ARC 

programs and operations and the need for corrective action. The IG has authority to inquire into all 

ARC programs and activities that are federally funded. The inquiries may be in the form of audits, 

surveys, investigations, personnel security checks, or other appropriate methods. The two primary 

purposes of these inquiries are (1) to assist all levels of ARC management by identifying and reporting 

problem areas, weaknesses, or deficiencies in procedures, policies, program implementation, and 

employee conduct and (2) to recommend appropriate corrective actions. 

Relationship to Other Principal ARC Offices

The States’ and Federal Co-Chairs, acting together as the Commission, establish policies for ARC's 

programs and its administration. These policies are codified in the ARC Code and implemented by the 

Commission staff, which is responsible for monitoring project performance and providing technical 

assistance as needed. The Federal Co-Chair, as the Federal fiscal officer, is responsible for the proper 

use and protection of Federal funds, for ensuring compliance with applicable Federal laws and 

regulations, and for taking appropriate action on conditions needing improvement, including those 

reported by the OIG. The operation of the OIG neither replaces established lines of operating authority 

nor eliminates the need for the Commission offices to take reasonable measures to protect and enhance 

the integrity and effectiveness of their operations. All Commission offices are responsible for 

monitoring and evaluating the programs entrusted to them and reporting information or incidences 

needing further audit and/or investigation to the IG. 

Funding and Staffing

The OIG funding level for FY 2009 is $489,000. Staffing consists of the Inspector General, an Assistant 

Inspector General for Audit, and a confidential assistant. Grant review activities continue to emphasize 

use of contracted services (e.g., independent public accounting firms or other OIG offices) supplemented 

by programmatic and performance reviews directed by OIG staff. Investigative assistance is provided 

by other OIG offices on an as-needed basis through memoranda of understanding. This approach is 

deemed the most appropriate to date in view of the nature of ARC operations and limited resources. 

In order to comply with P.L. 110-409, "The Inspector General Reform Act of 2008, the IG has submitted 

a budget for FY 2010 that includes funding to reimburse other IG’s that will provide counsel and 

investigative services via a Memorandums of Understanding. Future year funding requests will be 

predicated on actual experience using this method. 
6 

III. OIG ACTIVITY

 A. AUDITS, INSPECTIONS, EVALUATIONS & REVIEWS 

During the current reporting cycle, we issued 4 reports involving ARC’s financial statements, grantee 

activities, internal controls, and grant operations. Four other draft audit reports for the same grantee, 

previously issued, await finalization. Also, we are providing contractor oversight for an audit related to 

ARC’s performance metrics and results. The report should address ARC’s metrics and their comparison 

with actual results, the reliability of information derived, and its usage. 

All issued reports can be found on the OIG website http://www.arc.gov/index.do?nodeId=2060

As discussed under the background section of this report, the IG office needs to obtain independent legal 

advice. Recent federal legislation requires all IG’s to have access to independent legal counsel. 

Accordingly, we made arrangements, and are in the process of finalizing a Memorandum of 

Understanding with another IG to utilize the services of their legal counsel. A preliminary meeting has 

already been held with the legal counsel to ensure our needs will be adequately addressed. 

Requests for Information 

Each year we receive and comply with requests for information from various governmental entities 

compiling statistics on OIG offices or their auditee agencies. CIGIE requests information for its annual 

OIG profile update and compilation of OIG statistics. The yearly compilation summarizes the results of 

audit activities for of all federal OIG offices. Information provided concerns the dollar value of 

management decisions related to questioned costs and funds put to better use and OIG recommendations 

related to questioned costs. The House Committee on Oversight and Government Reform, also with 

some regularity, requests information concerning the number, type or status of our recommendations. 

Lastly, we comply with information requests from other government regulatory bodies. For example, 

previously GAO requested us to provide survey information on governance and the role of the inspector 

general. Their requests involved our office’s allocation of resources and the number of open 

recommendations. 

Audits of ARC's Grant Operations 

We completed a comprehensive review of ARC’s grant management system in April 2008. The audit 

revealed the system had data conversion, entry and internal processing errors. Additionally, inadequate 

resources had been allocated to ensure timely completion of the project/system and to provide for 

system documentation. System access and security features were not controlled appropriately and there 

was only a single person knowledgeable of the system internals. Ten recommendations resulted from the 

audit. 

A complement to the grant management system audit was an inspection which focused on ARC’s grant 

administration and monitoring. The inspection report discussed ARC’s control policies and grant 

monitoring processes. ARC grants made to foster economic growth and to address other concerns in the 

Appalachian region are primary to ARC and we placed great emphasis on providing recommendations 

that would improve the process. The inspection report was issued in August 2009 and made 17 

recommendations. The recommendations were wide ranging but addressed: development and 

enforcement of policies, development of grant monitoring plans, improving supervisory oversight, 

training, metric reporting, documentation, file organization, tracking grantee characteristics, and controls 

to safeguard grant files. 

 
7 

2008 Financial Statement Audit 

The 2008 financial statement audit was issued on June 4, 2009 and was over six months late at issuance. 

Some of the issues contributing to the audit’s late completion included: difficulty complying with child 

agency reporting requirements, continuing use of federal reporting requirements, difficulty preparing a 

federal footnote disclosure, and proper accrual of grant obligations. Also, because of prior year child 

agency reporting problems, ARC had to restate its prior year financial statements, which were unaudited 

(the auditor disclaimed an opinion). Other audit findings were anti-deficiency act violations and 

improper security for some of the Commission’s computer systems. 

ARC has continuing problems complying with federal agency Parent-Child, reporting requirements. 

As a parent organization, ARC is much smaller than its children (and smaller than most other parent 

agencies). ARC’s funding, exclusive of highway funding, provided to its child agencies is not material to 

any of its children and therefore is not audited by the children at the lower materiality level needed for 

ARC’s audit needs. This has a negative impact on ARC’s reporting and substantially increases the 

amount of work required by accounting and auditing personnel to support an unqualified financial 

statement opinion. 

For instance, ARC staff needs to ensure that the child agencies are providing timely reports, that the 

numbers on the reports (as previously reported and current) and the posting of those numbers to ARC 

records, the cumulative balance and the results of activities are correct. Additional accountants were 

needed to help reconcile some of the federal activity. In addition, ARC management had to develop 

experience with the internal controls and processes at the other agencies to make affirmations to the 

auditors that the reported results from the child agencies were correct and then it had properly disclosed 

those results (ARC has been forced to move to and adopt the more onerous federal accounting standards 

in lieu of generally accepted accounting standards to report its financial status and activities). Also, ARC 

auditors need to perform testing on the child agency data to satisfy themselves as to its accuracy. All of 

these processes take time and increase costs. All told, the reporting requirements have resulted in over a 

seven-fold increase in audit costs while providing neither measurable value or impacting the disclosures 

of the U.S. Government’s financial statements. ARC has addressed these issues previously and requested 

a waiver of these reporting requirements with no success. A legislative remedy will be explored in 

upcoming periods. 

Peer Review 

Offices of Inspectors General (OIGs) are required to perform (and undergo) reviews of other OIG 

offices every three years to ensure policies and/or procedural systems are in place that provide 

reasonable assurance of compliance with government auditing standards. ARC completed a peer review 

of the Federal Election Commission OIG and issued a report on its system of quality controls on March 

28, 2008. Recently, CIGIE issued new guidance for peer reviews and we have been implementing 

changes to help ensure conformity with them. CIGIE currently has our office scheduled for peer review 

by the Postal Regulatory Commission in October, although the rules allow for a 6 month window for 

completion. We will be conducting the peer review of the Election Assistance Commission in 2012. 

In-process Audits and Audit Related Work 

Four audits, previously issued, await finalization. The audits were conducted for projects in West 

Virginia and concern telecommunications. The purposes of the audits were to determine that funds 

were expended in accordance with the grant requirements, including: reporting, accounting and 

expenditure regulations, and that the objectives of the grant were being met. Draft audit findings 

included: inadequately documented expenses, improper location of projects, and untimely report 

submittals. 
8 

As discussed above, we are providing oversight of an audit examining ARC’s performance metrics. The 

audit work examines results reported by grantees and ARC’s processes for establishing metrics, 

recording metrics, their comparison to actual results, and how the data is utilized. The audit will also 

review budgeting activity related to ARC’s goals. 

Audit work has also begun for ARC’s FY 2009 financial statement with us attending the first meeting of 

auditors and management. Discussions surrounded anticipated audit issues, documentation needs, and 

timelines. The auditor’s are going to be doing interim testing of prior periods and are pushing 

management to get data into them timely in order to meet OMB financial statement issuance deadlines. 

Because of the problems cited in completing the FY 2008 financial statement audit, we are hopeful but 

not overly optimistic about the prospects for timely issuance of FY 2009 financial statements. 

B. INVESTIGATIONS 

 

The Inspector General Act of 1978, as amended, provides that the IG may receive and investigate 

complaints or information concerning the possible existence of an activity constituting a violation of 

law, rules, or regulations; mismanagement; gross waste of funds; or abuse of authority. The OIG does 

not employ criminal investigators. When the need has arisen, the matter has been referred to the 

Federal Bureau of Investigation or assistance was contracted with another Federal OIG. Also, the results 

of investigations may be referred to the appropriate Federal, State, or local prospective authorities for 

action. 

As a result of the computer security review performed by the DHS OIG, an investigation was opened 

and certain personnel actions taken. The investigation is still awaiting the resolution of a referral to 

another law enforcement agency. ARC itself has taken all necessary actions resulting from the audit and 

subsequent investigation. 

Previously, the OIG referred a case involving ARC funding to the Tennessee Valley Authority’s OIG for 

investigation. The investigation is still ongoing. 

During this fiscal year the OIG made a referral to the Ethics Commission of one of ARC’s member 

states. 

C. OTHER 

OIG Policy Manual 

The policy manual, after many months of effort has been completed; adoption was pending at the end of 

September. Many of its guidelines have already been implemented and can apply to many types of 

engagements, but it was specifically written to help ensure compliance with generally accepted 

government auditing standards, and its focus is directed to the type of work most common for the office; 

i.e., performance audits and financial audit monitoring. 

Electronic Audit Workpapers 

The OIG is aware of the benefits of electronic work papers for improving audit efficiency. In particular, 

we believe that an improved indexing, and numbering system, together with an improved supervisory 

review structure could be beneficial. We have recently reviewed the most common electronic 

workpapers in use by federal agencies. Our budget request for FY2011 includes funding to implement 

electronic workpapers. 
9 

Recommendation Tracking Database 

ARC-OIG has implemented a recommendation tracking database. The design of the database and 

customization for ARC-OIG’s use was provided by another OIG for which we are grateful. We are 

continuing to modify its structure for our unique needs and believe it will be very effective in improving 

our processes. 

Implementation of OIG Reform Act 

During this period the OIG has implemented all of the requirements of P.L. 110-409, The Inspector 

General Reform Act of 2008, except for the ability to receive anonymous tips from the OIG website. 

Currently, ARC’s website also hosts the OIG webpage. The ARC website is undergoing a major change 

and the anonymous reporting feature will not be available until the new site is working. Information on 

how to leave anonymous information via mail or telephone is shown on the web page. 

Going Green 

ARC management has implemented green measures within the organization's internal operations. For 

example, a document scanning system has been linked to ARC’s e-mail system. Management, in a 

written response to our draft report on ARC's grant management system stated, “We have had 

preliminary discussion with our state partners about the need to move to a paperless application process, 

and will pursue this more vigorously within this fiscal year.” Reduction in paper utilization can reduce 

cost, improve the timeliness of management decisions through better document storage and retrieval, 

and helps to reduce demands on our earth's ecological systems. 

Our office, in alignment with management's initiative, is committed to “going green” and we continue to 

work toward that end. To date, our office has made substantial strides in working with contracted 

auditors and issuing reports electronically. 

IV. OIG HOTLINE

A region wide toll-free hotline was previously established to enable direct and confidential contact with 

the ARC OIG in line with governmental and longstanding OIG initiatives as identified in the IG Act of 

1978; to afford opportunities for identification of areas subject to fraud, waste, or abuse. However, 

contacts with the ARC OIG relative to public complaints or concerns continue to be primarily received 

through ARC staff, on regular OIG phone lines, or from other OIG offices. 

Also, numerous hotline calls were received with respect to matters for which other agencies have 

jurisdiction. This resulted primarily from the ARC OIG hotline apparently being the first such OIG 

listing in some telephone directories, resulting in ARC OIG being contacted by citizens who did not 

know the appropriate agency for handling their concerns. The ARC OIG facilitated the complaint 

process by identifying the applicable agency based on complainant information and providing the 

correct OIG hotline number. 

V. LEGISLATIVE AND REGULATORY REVIEW

The OIG continues to review and provide comment on legislation germane to the OIG and the OIG 

community. Our comments are provided to the CIGIE for incorporation with comments from all other 

OIGs. 
10 

APPENDIX A 

 SCHEDULE OF AUDIT, INSPECTION, EVALUATION & REVIEW REPORTS

 ISSUED APRIL 1, 2009 TO SEPTEMBER 30, 2009 

Report No. Report Title/Description Program Dollars or 

Contract/Grant 

Amount* 

Questioned/ 

Unsupported 

Costs** 

Funds to Better 

Use***

09-01 

Appalachian Regional Commission, Financial 

Statements, September 30, 2008 (Audited) and 2007 

(Unaudited), With Independent Auditor’s Report 

 

09-02 

Memorandum Report on Review of University of 

Alabama Child Development and Research Center 

(CDRC), Tuscaloosa, Alabama ARC Grant Number: 

CO-14150-I-302 

$ 9,967,000.00 

 

09-03 Inspection Report on the Appalachian Regional 

Commission's Grant Management 

 

09-04 

Final Report, 2008 Internal Control Performance Audit, 

Appalachian Regional Commission, Washington , DC 

TOTALS $ 9,967,000.00 $ 0.00 $ 0.00 
11 

APPENDIX B 

SCHEDULE OF AUDIT, INSPECTION, EVALUATION & REVIEW REPORTS 

QUESTIONED OR UNSUPPORTED COSTS ($ in thousands) 

 No. of 

 Reports

 Questioned 

 Costs 

 Unsupported 

 Costs 

 

A. For which no management decision

was made by the commencement of

the reporting period 

 2 $ 352 $ 0 

 

B. Which were issued during the

reporting period 

 0 $ 0 $ 0 

 Subtotals (A + B) 2 $ 352 $ 0 

 

C. For which a management decision

was made during the reporting

period 

 

 

(i) dollar value of disallowed

costs 

 0 $ 0 $ 0 

 

(ii) dollar value of costs not

disallowed 

 2 $ 352 $ 0 

D. For which no management decision

has been made by the end of the

reporting period 

 0 $ 0 $ 0 

 

E. Reports for which no management

decision was made within 6 months 

of issuance 

 0 $ 0 $ 0 
12 

APPENDIX C 

SCHEDULE OF AUDIT, INSPECTION, EVALUATION & REVIEW REPORTS WITH 

RECOMMENDATIONS THAT FUNDS BE PUT TO BETTER USE AND SUMMARY OF 

 MANAGEMENT DECISIONS

 No. of 

 Reports

 Dollar Value 

 ($ in thousands)

 

A. For which no management decision was made by the

commencement of the reporting period 

 0 $ 0 

B. Which were issued during the reporting period 0 $ 0 

Subtotals (A + B) 0 $ 0 

C. For which a management decision was made during the

reporting period 

 

(i) dollar value of recommendations that were

agreed to by management 

 

--based on proposed management action 0 $ 0 

--based on proposed legislative action 0 $ 0 

 

(ii) dollar value of recommendations that were not

agreed to by management 

 0 $ 0 

 

D. For which no management decision has been made by the

end of the reporting period 

 0 $ 0 

 

E. Reports for which no final management decision was

made within 6 months of issuance 

 0 $ 0 
13 

 APPENDIX D 

SCHEDULE OF AUDIT, INSPECTION, EVALUATION & REVIEW REPORTS WITH

 RECOMMENDATIONS THAT FUNDS BE PUT TO BETTER USE AND SUMMARY OF 

 MANAGEMENT ACTIONS ($ in thousands) 

 OIG Audit 

 Reports 

 

 Number of 

 Reports 

 

 Amounts 

 Recommended 

 by OIG 

 Amounts 

 Agreed to by

 Management

 (Disallowed)

 

A. For which final action by

management had not been taken

by the commencement of the

reporting period 

 0 $ 0 $ 0 

 

B. On which management decisions

were made during the reporting

period 

 0 $ 0 $ 0 

 

C. For which final action was taken

by management during the

reporting period 

 

 

(I) Dollar value of 

recommendations that 

were actually completed 

 0 $ 0 $ 0 

 

(ii) the dollar value of 

recommendations that 

management has 

subsequently concluded 

should not or could not be 

implemented or 

completed 

 

 0 $ 0 $ 0 

 D. For which no final action had 

 been taken by the end of the 

 reporting period 

 0 $ 0 $ 0 

 
14 

DEFINITIONS OF TERMS USED

The following definitions apply to terms used in reporting audit statistics: 

Questioned Cost A cost which the Office of Inspector General (OIG) questioned 

because of an alleged violation of a provision of a law, regulation, 

contract, or other agreement or document governing the 

expenditure of funds; such cost is not supported by adequate 

documentation; or the expenditure of funds for the intended 

purpose is unnecessary or unreasonable. 

Unsupported Cost A cost which the OIG questioned because the cost was not 

supported by adequate documentation at the time of the audit. 

Disallowed Cost A questioned cost that management, in a management decision, 

has sustained or agreed should not be charged to the Commission. 

Funds Be Put To Better Use A recommendation made by the OIG that funds could be used 

more efficiently if management took actions to implement and 

complete the recommendation. 

Management Decision Management's evaluation of the findings and recommendations 

included in the audit report and the issuance of a final decision by 

management concerning its response to such findings and 

recommendations, including actions concluded to be necessary. 

Interim decisions and actions are not considered final management 

decisions for the purpose of the tables in this report. 

Final Action The completion of all management actions that are described in a 

management decision with respect to audit findings and 

recommendations. If management concluded that no actions were 

necessary, final action occurs when a management decision is 

issued.

 
THE OFFICE OF INSPECTOR GENERAL 

 APPALACHIAN REGIONAL COMMISSION 

 serves American taxpayers 

 by investigating reports of waste, fraud, or abuse 

 involving Federal funds. 

 If you believe an activity is 

 wasteful, fraudulent, or abusive of Federal funds, 

 please call 

 toll free 1-800-532-4611 

 or (202) 884-7667 in the Washington metropolitan area 

 or write to: 

 Office of Inspector General 

 Appalachian Regional Commission 

 1666 Connecticut Avenue, NW, Rm. 700 

 Washington, DC 20009-1068 

 Information can be provided anonymously. 

 Federal Government employees are protected from reprisal, 

 and anyone may have his or her identity held in confidence.
Cover photo courtesy of Norfolk Southern 

Appalachian Regional Commission 

 Office of Inspector General 

 1666 Connecticut Avenue, NW, Suite 700 

 Washington, DC 20009-1068