Inspector General’s 

Semiannual Report 

To Congress 

 

April 1, 2003 – September 30, 2003 

Appalachian Regional Commission 
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, I am pleased to submit the Office of Inspector General Semiannual 

Report to Congress for the period April 1 through September 30, 2003. 

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

month period ending September 30, 2003. During this fiscal year we issued 16 reports. 

This report covers 3 reviews/audits dealing with Commission grantees issued during the 

current reporting period. There were no investigations closed during this period. One 

investigative contact was made to other prosecutive authorities as well as continued 

monitoring of another action started as a result of a referral from my office. There is one 

ongoing investigation. 

During the period, the IG continued to serve as representative of the Executive Council on 

Integrity and Efficiency. Also, the IG continued to serve as the IG of the Denali 

Commission in line with a Memorandum of Agreement between the Appalachian Regional 

Commission Inspector General and the Denali Commission Federal Co-Chair. 

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

Amendments of 1988, provides that this report be forwarded to appropriate Congressional 

committees within 30 days and that you provide whatever additional comments you 

consider appropriate. 

I appreciate the Commission’s and your offices’ cooperation with the Office of Inspector 

General in the conduct of our operations. 

Clifford H. Jennings 

Inspector General 

Enclosure
i

 TABLE OF CONTENTS

Page

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

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

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

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

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

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

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

Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 

Investigations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 

 IV. Audit Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 

 V. OIG Hotline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 

 VI. Legislative & Regulatory Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 

 VII. Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 

Appendices A. Schedule of Audit Reports Issued, 

 April 1, 2003, through September 30, 2003 

B. Schedule of Audit Reports with Questioned or Unsupported Costs 

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

Better Use 

D. Definition of Terms Used 
ii

EXECUTIVE SUMMARY

During this fiscal year, the Office of Inspector General (OIG) issued 16 reports, with 3 reports being 

issued during this reporting period. Recommendations in grant reviews were directed at improved 

reporting and eligibility of expenditures. 

Grant reviews disclosed that projects were generally being implemented in accordance with program 

requirements and that grantees generally had satisfactory accounting systems and internal controls. 

However, reading all reports as a group, the need for better oversight and management by 

Commission staff continues to be apparent. A change in audit reporting should bring more oversight 

to grants by the program managers. Reviews and checks of the J-1 Visa Waiver program were 

deferred during this reporting period as the Commission recently performed a 100-percent validation 

of all doctors granted waivers. The J-1 Visa Waiver program provides a waiver of the requirements 

for a foreign physician to return to his/her home country after completion of medical training in the 

United States. ARC participates as a Federal Entity sponsor to assist Appalachian communities in 

providing healthcare services to medically underserved areas. The applicable ARC policies and 

procedures require J-1 physicians to practice 40 hours of primary care per week in a designated 

Health Profession Shortage Area (HPSA) in the Appalachian Region. The ARC program requires 

the physician to serve at least 3 years (unless a State has a longer period). There is no prohibition on 

J-1 physicians working extra hours or practicing subspecialties after fulfilling primary care 

requirements. 

During the reporting period, the IG served on the Executive Council on Integrity and Efficiency. 

The IG is a member of the Government Audit Training Institute Advisory Committee. The IG 

continued as the Inspector General of the Denali Commission under a Memorandum of Agreement 

with the Denali Commission Federal Co-Chair. 

The OIG has met with Commission staff and contractors to work towards positioning the 

Commission for audited financial statements. While the unique makeup of the Commission requires 

much research on determining the applicable standard to be used in preparing financial statements, 

the Commission staff has made great strides during the past year in working towards a final 

determination of standards to be used and coming up with a standard format that will be equally 

acceptable to all parties. Lastly, the Inspector General has continued the process of designing an 

OIG portion of the Commission Management Information System (MIS), which, when completed, 

will allow Commission managers access to OIG reports and information directly. The OIG will 

also work with the Commission staff to place OIG information on the Commission web site. 
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 8 

 

Section 5(a)(1) Problems, abuses, and deficiencies Page 6 

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

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

Section 5(a)(4) Matters referred to prosecutive authorities Page 6 

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 

 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 

 * 

 

 * None. 

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

I. INTRODUCTION

The Inspector General Act Amendments of 1988 (P.L. 100-504) provided 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 longterm 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 number 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) by 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 11, and the Commission, 

with a staff of 48, are responsible for ARC operations. The States maintain an Office of 

States' Representative (3 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 2003 was $71 million. ARC was fully reauthorized 

by Congress in FY 1999, for the first time since 1982, and reauthorized in March 2002. 

Also, the Transportation Equity Act for the 21st Century (TEA-21) authorized $2.25 billion 

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

Section 201 of the 1965 Appalachian Regional Development Act. Enacted in 1998, TEA-21 

authorizes $450 million to be appropriated from the Highway Trust Fund annually from 

FY 1999 through FY 2003. These funds are derived from the Federal Highway Trust Fund 

but remain under ARC’s programmatic jurisdiction.
2 

- Program funds are distributed to State and local entities in line 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, the 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. Under this arrangement, the Commission 

retains responsibility for priorities, highway locations, and fund allocations. 

Federal Alternate 

Inspector General Executive Director 

Planning and Research Program Operations Finance and Administration 

General Counsel 

Public Affairs 

Entrepreneurship Publications 

Human Resources 

Local Development Districts

Transportation 

Federal Office 

Governors’ Alternates

States’ Washington Office 

Federal Co-Chair 

Appalachian Regional Commission 

13 Governors/States’ Co-Chair
3 

Appalachia as defined in the legislation from which the Appalachian Regional Commission derives its 

authority, is a 200,000-square-mile region that follows the spine of the Appalachian Mountains from southern 

New York to northern Mississippi. It includes all of West Virginia and parts of twelve other states: Alabama, 

Georgia, Kentucky, Maryland, Mississippi, New York, North Carolina, Ohio, Pennsylvania, South Carolina, 

Tennessee, and Virginia.
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 operations of the OIG neither replace established lines of operating 

authority nor eliminate 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 2003 was $501,000 prior to a rescission. For FY 2003, approximately 

25 percent was for contract audit services; 62 percent, for salaries and benefits; 6.5 percent, for 

travel; and 6.5 percent, for all other activities (training, equipment, space, supplies, etc.). 

 

Staffing consists of the Inspector General, an auditor, 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 and engineering assistance has been provided by other OIG offices on an 

as-needed basis through memoranda of understanding. This approach has been deemed the most 

appropriate to date in view of the nature of ARC operations and limited resources. 
6 

III. OIG ACTIVITY

A. AUDITS

During the reporting period, 3 reports were issued dealing with grants and grantees with many other 

 ongoing reviews in their final stages. The division of OIG resources results in audit work being 

performed by a combination of permanent and contractor staff. Emphasis will continue to be placed 

on surveys of ARC operations and programs, completion of grant audits, audit resolution and 

followup, and physician compliance with J-1 Visa Waiver program requirements. 

The one common theme resulting from a reading of all the audit reports as a group is the need for 

ARC staff to put more emphasis on oversight of ongoing grants and to be firmer in the 

administration and management of grants. For example, there have been instances where grantees 

have been given further funding when they had not submitted status reports supporting the 

expenditure of previous allocations. The problems we have seen appear to stem from a lack of 

initial understanding by the grantees of grant terms and the necessity to stick to the grant terms 

absent official approval for deviations. The IG met with program operations staff to discuss the 

need for better grant oversight and the need to require that the grantees adhere to grant provisions 

and timeframes. A change in the manner of handling draft audit reports and the agency response 

should bring the program managers more directly into the oversight function of the grants that they 

manage. It is expected that, moving forward, this should not be a reportable issue. 

Our report on the Systems Engineer and Employment Project at Auburn University at Montgomery 

(OIG Report 03-16- ARC Grant AL-13484) had ten recommendations and $109,724 in questioned 

costs of the $200,000 grant. Further, $79,499 in matching contributions was questioned. The 

questioned costs are a result of the grantee’s unauthorized changes in the scope of work and billing 

procedures; lacking of documentation of program results and internal control issues. The grantee 

has stated that they have begun revising their policy and procedures. Followup and oversight by 

ARC should result in full resolution of many of the issues raised in the report. 

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 would be referred to 

the Federal Bureau of Investigation or assistance would be contracted with another Federal OIG. 

Also, the results of investigations may be referred to the appropriate Federal, State, or local 

prosecutive authorities for action. 

The OIG currently has one investigation ongoing with the support of another OIG criminal 

investigators. Further, the OIG is monitoring two other investigations being conducted by state law 

enforcement or ethics organizations that relate to ARC programs. In one instance the case was 

referred to the state by the OIG. 
7 

IV. AUDIT PLANNING

The OIG will be alert for new or revised areas of ARC operations based on the priorities and 

emphasis of ARC management, including results of strategic planning initiatives. Audit planning 

will include consideration of such initiatives with the overall goal being to ensure coverage of high 

priority, including high dollar, areas in order to assist management to fulfill their responsibilities for 

effective and efficient program operations. 

Of particular importance is maintaining the flexibility of the audit plan to address changing needs 

and priorities. Coordination with ongoing ARC efforts to implement an entity-wide strategic plan is 

considered an important element of planning, and discussions with ARC management have 

identified several areas for review. 

The OIG's strategies and objectives for the next 5 years are defined in a strategic plan. The FY 2003 

Annual Plan provides the operational details for OIG activities during FYs 2002-2005 to implement 

this strategic plan. We expect to revise this strategic plan periodically until our experiences validate 

our planning assumptions and we have achieved a comfort level with how we have programmed 

activities over this extended time period. 

Planned FY 2003 audit work included about 30 individual grant audits in the Appalachian States; 

additional followup on grants with completed budget periods, grant extensions, and project results; 

and tests of the J-1 Visa Waiver program. The work not performed during the past fiscal year will 

be carried over to the upcoming fiscal year. Continued emphasis will be placed on audit followup 

and corrective action plans, including working with agency management to address open issues and 

achieve audit resolution and closure. Further emphasis will be placed on audits performed prior to 

grant completion. This method will allow the auditors to spot problems during the period of 

performance and will allow the grantees, who are usually smaller entities, to correct problems midstream and avoid grant closeout problems that, in many cases, the grantee cannot afford to remedy. 

The proactivity with the grantees serves not only the grantee but also the Commission as it allows 

for a better use of funding and a greater likelihood of mission accomplishment. 

In order to maximize use of available resources directed at reviewing ARC activities, emphasis will 

continue to be placed on nonstandard reporting formats including memorandum, letter, and survey 

reports. Although such reporting formats reduce the time and resources necessary for review 

completion, the results and information included in such reports is based on evidence and supporting 

documentation consistent with generally accepted auditing standards. 

V. OIG HOTLINE

A regionwide 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. 
8 

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. The ARC OIG Hotline also serves as the hotline for the Denali 

Commission. 

VI. LEGISLATIVE AND REGULATORY REVIEW

Primary efforts in this area continued to be related to potential legislative initiatives with respect to 

OIG operations. The ARC OIG continues to support legislation that would provide improved 

protections for IGs, including designated and career IGs, by consideration of alternatives such as 

removal for cause criteria and term limits. The IG disagrees with current proposals about 

consolidation of designated federal entity IG offices. 

VII. OTHER

The Inspector General continues to meet with Commission staff to work towards positioning the 

Commission for audited financial statements. While the unique makeup of the Commission requires 

research on determining the applicable standard to be used in preparing financial statements, the 

Commission staff has made great strides during this period in working towards a final determination 

of standards to be used and coming up with a standard format that will be equally acceptable to all 

parties. Further, the IG has worked with Commission staff responsible for the J-1 program to 

gather information early in the process that will assist not only the Commission but also the OIG in 

monitoring the program internal controls. The OIG will actively pursue review of J-1 recipients 

during the next reporting period. The IG is continuing the process of developing an OIG portion of 

the Commission MIS, which, when completed, will allow Commission managers access to OIG 

reports and information directly. The OIG will work with the Commission staff to place OIG 

information on the Commission website during the upcoming period. 

The IG continued to serve on the Executive Council on Integrity and Efficiency. The IG continued 

to serve as the Inspector General of the Denali Commission in line with a Memorandum of 

Agreement between the ARC IG and the Denali Commission Federal Co-Chair. During this period, 

we made a site visit to the Denali Commission and Alaska. A followup was conducted and will be 

completed early in the next fiscal year. The full audit report is included in the most recent Denali 

Commission annual report. The Denali Commission has also forwarded an inquiry into a project 

that the OIG reviewed during the period with the assistance of an engineer from the EPA OIG. The 

report will be issued during the upcoming period. 
9 

The IG worked with the Commission staff to produce a teleconference dealing with the 

Governmental Accounting Standards Board’s Statement No. 34, which deals with basic financial 

statements for State and local governments. Further, the IG made a presentation to ARC 

grantees and potential grantees during a statewide workshop held by the Alabama. These 

outreach presentations will be repeated in other states in the upcoming periods. 

A peer review of the ARC OIG was commenced during the period. The results will be reported 

during the next Semiannual reporting period.
APPENDIX A 

 SCHEDULE OF REPORTS ISSUED APRIL 1, 2003, TO SEPTEMBER 30, 2003

Report 

No. 

Entity and Title Program Dollars 

or Contract/Grant 

Amount* 

Questioned/ 

Unsupported 

Costs** 

Funds to Better 

Use***

03-14 

Women’s Business Institute in 

Taneytown, Maryland $486,242 $119,762 

03-15 

Maryland Department of Housing and 

Community Development $4,620,000 $142,852 $670,000 

03-16 

Auburn University at Montgomery Systems Engineer and 

Employment Project $200,000 $109,724 

TOTALS $5,306,242 $ 372,338 $ 670,000 

 * Grant amounts reported are for ARC grant amounts and do not include matching funds. 

 ** A cost the Office of Inspector General has questioned because of an alleged violation of law, regulation, contract, or other agreements 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. Includes required matching contributions. 

 *** Funds the Office of Inspector General has identified in an audit recommendation that could be used more efficiently by reducing outlays, deobligating 

program or operational funds, avoiding unnecessary expenditures, or taking other efficiency measures, such as timely use of funds. 
APPENDIX B

SCHEDULE OF AUDIT REPORTS WITH 

 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

 3 $ 46 3 

 

B. Which were issued during the

reporting period

 3 $ 372 $ 0

 Subtotals (A + B) 6 $ 418 $ 3 

 

C. For which a management decision

was made during the reporting

period

 1 $ 3 

 

(i) dollar value of disallowed

costs

 1 $3 

 

(ii) dollar value of costs not

disallowed

 1 $16 

 

D. For which no management decision

has been made by the end of the

reporting period

 4 $ 402 

 

E. Reports for which no management

decision was made within 6 months 

of issuance

 1 $ 30 

 
APPENDIX C

SCHEDULE OF AUDIT REPORTS WITH 

 RECOMMENDATIONS THAT FUNDS BE PUT TO BETTER USE

 No. of 

 Reports

 Dollar Value 

 ($ in thousands)

 

A. For which no management decision was made by the 

commencement of the reporting period

 1 $15 

 

B. Which were issued during the reporting period 1 $ 670 

 Subtotals (A + B) 2 $ 685 

 

C. For which a management decision was made during the

reporting period

 0 $ 

 

(i) dollar value of recommendations that were agreed

to by management

 - 

 --based on proposed management action - 

 --based on proposed legislative action - 

 

(ii) dollar value of recommendations that were not

agreed to by management

 - 

 

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

end of the reporting period

 2 $ 685 

 

E. Reports for which no final management decision was made

within 6 months of issuance

 1 $15 

 
APPENDIX D

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 215 

 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.
 Appalachian Regional Commission 

 Office of Inspector General 

 1666 Connecticut Avenue, NW, Suite 215 

 Washington, DC 20009-1068