INSPECTOR GENERAL’S SEMIANNUAL REPORT TO CONGRESS

Appalachian Regional Commission

April 1, 2012–September 30, 2012
December 18, 2012 

MEMORANDUM FOR THE FEDERAL CO-CHAIR and STATES’ CO-CHAIR 

 

SUBJECT: Semiannual Report to Congress 

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

100-504, the Inspector General Reform Act of 2008, Public Law 110-409, and the Dodd-Frank Wall 

Street Reform and Consumer Protection Act, Public Law 111-203. I am pleased to submit the Office of 

Inspector General’s Semiannual Report to Congress. 

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

ending September 30, 2012. During this fiscal period, we issued seventeen reports, followed-up on open 

recommendations and monitored contractor performance. 

Also during this period, the Inspector General and staff continued to serve as representatives on the 

Council of the Inspectors General on Integrity & Efficiency (CIGIE), the Federal Audit Executive 

Committee (FAEC), and the various Intergovernmental Audit Forums covering our jurisdictional region. 

The Inspector General continues to chair a smaller OIG group in order to address issues directly 

impacting these offices and is an active member of the CIGIE Audit Committee. 

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 cooperation with the Office of Inspector General in the conduct of our 

operations. 

Inspector General 

Enclosure 
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, Inspections, Evaluations & Reviews . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 

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

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

 IV. Reporting Fraud, Waste, and Abuse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 

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

 

 VI. Dodd-Frank Legislation ................................................9 

 

 

Appendices 

A. Schedule of Reports Issued, April 1, 2012 thru September 30, 2012 

B. Schedule of Reports with Questioned or Unsupported Costs 

C. Definition of Terms Used 
EXECUTIVE SUMMARY 

ARC grant operations represent the most significant part of ARC’s programs. For this reporting period 

our activities included the issuance of seventeen reports, follow-up on significant recommendations in 

prior reports, addressing two hotline complaints, and monitoring contractor performance of grant 

reviews and Financial Statement audit. This included fifteen grant audits issued during the reporting 

period and two reports dealing with grant management. 

Grant management reviews emphasized ARC follow-up on older open Child Agency grants and 

applicable policies and procedures. Continued ARC actions, including follow-up on basic agency grants 

identified in prior reports as needing follow-up resulted in approximately six million dollars in actual or 

intended recoveries during the past year that can be put to better use. Also, over 670 grants were closed 

between July 1, 2011 and September 30, 2012. Actions were also initiated on 122 of 161 grants 

identified in prior OIG reports that needed follow-up due to limited activity. 

Our follow-up review of older open grants administered by Child Agencies identified the need for 

continued emphasis on timely follow-up on grants with limited activity. Seventy six grants (open for 

over 21 months) were identified without any disbursement activity since grant approval with the longest 

being 115 months. ARC funds of $29,831,574 were approved for these grants, including $8,435,200 for 

grants identified in our prior report of July 2011. 

Our review of ARC administered grants identified substantial progress with respect to inactive older 

grants. The ARC grant management system identified only 12 grants totaling $843,345 for which no 

disbursements were noted during the 21 months since approval. 

Other issues relating to timely follow-up of open grants status included identifying grants with expired 

end dates, closing of grants with zero balances, increased use of controls available to initiate action on 

inactive grants, and strengthened Memorandum of Understandings with Child Agencies that better 

assure notification to ARC of grants and projects with startup problems. 

Individual grant reviews identified a lack of support for required matching funds, a budget request that 

exceeded grantee needs and limited questioned costs. The FY 2012 financial statement audit is on 

schedule for issuance in November. 

Decisions and/or OMB guidance with respect to implementing certain sections of Dodd-Frank 

Legislation have not been issued. The primary issues are the designation of full Commissions/ Boards 

as Agency Heads at designated Federal Entities (DFEs), such as ARC, who’s Commission, consists of 

primarily Non-Federal Officials and the status of Federal OIG staff, including the IG. 

The IG continues to chair a group of smaller OIGs to address issues that have particular impact on these 

offices. The IG is also an active member of the Council of Inspectors General Audit Committee. 

ii 
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 6-7

 

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

deficiencies 

Pages 6-7

 

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

 

Section 5(a)(4) Matters referred to prosecutive authorities * 

 

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 

 

 App C 

 

* None. 

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

iii
I. INTRODUCTION 

The Inspector General Act Amendments of 1988, (Pub. L. No. 100-504) provides for the establishment 

of an Office of Inspector General (OIG) at Designated Federal Entities (DFEs), 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, (Pub.L. No. 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' CoChair. 

 - 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, energy, and human 

resources programs. 

 - To ensure that funds are used effectively and efficiently, and to strengthen local participation, 

ARC works with the Appalachian states to support a network of multicounty planning and 

development organizations, or local development districts (LDDs), throughout the Region. The 

73 LDDs cover all 420 counties in Appalachia. The LDDs’ most important role is to identify 

priority needs of local communities. 

 - Administratively, the Commission has a staff of 53 persons that includes 47 Commission 

employees responsible for program operations, and the office of the Federal Co-Chair that 

includes the three person OIG staff. The Commissions’ staff administrative expenses, including 

salaries, are jointly funded by Federal and State funds. 

 - The Commission's appropriation for FY 2012 was $68.3 million. For FY 2013 ARC is operating 

under a continuing resolution through March 27, 2013 with a funding level of $68,681,000. In 

addition, for FY 2012 ARC received funding of $438,776,680 under the Highway Trust Fund, 

under Section 1101 of the Safe, Accountable, Flexible, and Efficient Transportation 

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Equity Act: A Legacy for Users (SAFETEA-LU). This funding provides for construction of the 

Appalachian Development Highway System which is under ARC’s programmatic jurisdiction; provided 

for under Section 201 of the 1965 Appalachian Regional Development Act 

- ARC’s non-ADHS 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 monitoring.

- 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 relies on Child Agencies including the Departments of 

Agriculture, Commerce and Economic Development Administration and the Tennessee Valley 

Authority to administer and monitor construction related grants. 

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B. OFFICE OF INSPECTOR GENERAL

The ARC OIG is an independent Federal audit and investigative unit that reports directly to the Agency 

Head. 

Role and Authority 

The Inspector General Act of 1978, (Pub.L. No. 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 Agency Head 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, inspections, evaluations, 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 provided under 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 2012 was $658,000. The FY 2013 budget request was for $642,000 and 

is subject to continuing resolutions. 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. 

5 
In order to comply with Pub.L. No. 110-409, the Inspector General Reform Act of 2008, the OIG 

funding for FY 2013 includes reimbursement of other IGs for counsel, audit and investigative services 

via Memorandums of Understanding. Currently, we use the Department of Commerce OIG legal 

counsel to supplement our activities. We also use other OIG offices to provide investigative services. 

This approach is deemed the most appropriate to date in view of the nature of ARC operations and 

limited resources. 

In line with legislation enacted to form more regional commissions, the IG supports consolidating small 

regional commission OIG offices into one OIG organization to better assure sufficient OIG resources to 

operate more efficiently and effectively. 

III. OIG ACTIVITY 

A. Audits, Inspections, Evaluations and Reviews 

During the reporting period seventeen reports were issued, including 15 grant audit reports and two 

grant management reports. 

The grant management reviews focused on follow-up actions to determine the status of older grants with 

limited activity and applicable grant management policies, procedures and controls. These reviews were 

consistent with GAO and OMB emphasis and a management challenge previously noted by ARC-OIG. 

A follow-up review of older grants approved and partially or fully funded by ARC, but administered by 

other agencies (Child Agencies) with construction project expertise as required by legislation, disclosed 

continuing progress with respect to timely follow-up and initiation of actions, including cancellations 

and de-obligations. 

For example, over 670 grants were reported closed between July 1, 2011 and September 30, 2012, and 

approximately $6 million in actual or potential recoveries pertaining to grants included in prior reports 

was reported. Also, actions were initiated on 122 of 161 grants noted in prior reports as subject to 

follow-up. 

Overall, we identified 88 open grants with ARC funding approximating $30.7 million for which there 

were no disbursements in the 21 months subsequent to ARC approval, with the period since approval 

ranging from 21 to 115 months. 

This included 76 Child Agency grants for which no disbursements were reported for grants approved 

prior to 2011. Funds approved for these grants approximated $29.8 million and included 33 grants with 

ARC funds approximating $13 million for which the period of no disbursements since approval ranged 

from 35-113 months. In 21 cases grants with 100% balances totaling approximately $8.4 were included 

in a prior report issued in July 2011. 

Overall, approximately one percent of ARC grants that were approved three or more years prior to 

September 30, 2012 have had no disbursements, although the Child Agency grants have a higher 

percentage of these grants. 

We recognize that Child Agencies administer construction projects and that various factors contribute to 

delayed startup of the related projects. However, periodic follow-up and documented decisions with 

respect to older open projects and grants for which no disbursements have been made is considered 

6 
appropriate. ARC is continuing actions to address these grants, including emphasizing controls to assure 

timely follow-up, project status and potential de-obligations for use on other needed Appalachia 

projects. 

With respect to ARC administered grants we identified 12 open grants with funding of $843,345 for 

which no disbursements were reported within 21 months of approval. This included 6 of 21 grants in 

our prior report with ARC funds of $252,785 that remained open without any further disbursements. 

Also, 13 of 21 grants noted in the prior report as having disbursements, but no disbursements for at least 

21 months, had no further disbursements. 

Other grant management issues and recommendations included (a) continued emphasis on follow-up on 

older open grants, (b) addressing grants with expired end dates, (c) closing older grants with zero 

balances, (d) increasing emphasis on ARC policy that provides that the Commission may revoke or 

revise its approval of any project if work intended to be assisted is not underway in 18 months and (e) 

review of Memorandums of Understanding (MOU) with Child Agencies to include reporting of grants 

where project status are substantially delayed and addition of controls to facilitate identification of 

dormant grant accounts. 

Grant reviews highlighted the need for grantee documentation of required matching funds which 

resulted in lack of documentation for approximately $800,000 in matching funds. Other 

recommendations include revised budget actions to preclude requests for funds that will not be used, 

documentation of the status of performance measures, and approximately $15,000 in question costs, and 

timely grantee progress reports. 

During the reporting period, contract monitoring with respect to grant and financial statement audits was 

performed as required. 

ARC Financial Statement Audit 

The financial statement audit for FY 2012 is progressing on schedule. The prior four reports have been 

issued with a clean audit opinion since ARC adopted federal financial reporting rules in 2007. 

Peer Review 

Offices of the 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 (GAS). The next audit peer 

review of ARC OIG is scheduled for FY 2013. 

The current audit peer review process, as legislatively mandated, assesses compliance with auditing 

standards but does not address issues impacting the efficiency and effectiveness of audit operations 

which comprises the largest segment of OIG offices. 

The IG continues to recommend to the Council of Inspector General and Legislative Staff that OIG peer 

reviews be revised to incorporate assessments of key OIG operational elements such as: planning; timely 

reporting; staff development, including training, utilization and supervision; audit follow-up and 

inclusion of actual results in Semi-Annual and Annual OIG reports based on implementation of 

recommendations

7 
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. 

C. OTHER

Smaller OIG Groups 

Smaller OIG offices have some significantly different operational concerns than larger OIG offices in 

trying to maintain effective and efficient oversight of agency programs. One challenge involves the 

significant human and capital resources being allocated to the ever growing number of mandated 

reviews. 

The IG is the current coordinator/chair of this group that meets periodically to discuss such issues and 

recommends actions/best practices to facilitate smaller OIG operations. 

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 and inspection 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 requests information concerning the number and type or status of 

our recommendations. We also comply with information requests from other government regulatory 

bodies. 

Appalachian Development Highway System (ADHS) Audits 

Since Fiscal Year 1999, ADHS has been funded by the Highway Trust Fund, which is administered in 

part by the U.S. Department of Transportation (DOT). ARC retains certain programmatic 

responsibilities, but the funding source is the Highway Trust Fund. New legislation the ADHS will be 

part of a larger Surface Transportation Program grant to Appalachian states, with the states using the 

funding at their own direction. 

8 
Implementation of OIG Reform Act 

The OIG has implemented all of the requirements of Pub.L. No. 110-409 the Inspector General Reform 

Act of 2008. A Memorandum of Agreement for Counsel Services is in place with the Department of 

Commerce OIG. 

Going Green 

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

Examples include a document scanning system that has been linked to ARC’s e-mail system and an 

expansion of ARC net to include operational elements. ARC continues to encourage state partners to 

move to a paperless application process. 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. 

IV. REPORTING FRAUD, WASTE, AND ABUSE 

A region wide toll-free hotline is maintained 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. Also, in accordance 

with the Inspector General Reform Act of 2008, the ARC OIG implemented another communication 

channel allowing anonymous reporting of fraud, waste or abuse via a link on our website’s home page. 

The web link is, http://ig.arc.gov/. 

V. LEGISLATIVE AND REGULATORY REVIEW 

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

community. Our comments are provided, as appropriate to agency officials, and/or to the CIGIE for 

incorporation with comments from all other OIGs. 

VI. DODD-FRANK LEGLISATION – Reporting to Full Commission 

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. No.111-203) amended the 

Inspector General Act changing the entity head of ARC from the Federal Co-Chair to the 

Commission. The Office of Management & Budget (OMB) has not yet provided guidance on these 

changes through the required notice and publication of the List of Designated Federal Entities (DFEs) 

which are to be published annually under the IG Act. This Act provides that the Inspector General report 

to the full Commission that includes the Federal Co-Chair and 13 Appalachian Governors. 

We believe ARC and other economic development Commissions are among the few DFEs that have a 

majority of non-Presidentially (or non-federal) appointed Commission members. Although the DoddFrank legislation provides tenure protection to DFE IG’s, a question remains as to whether some of the 

provisions were intended to apply to Commission’s composed primarily of non-Federal, nonPresidentially appointed members. In addition to surfacing the issue of non-Federal appointees authority 

to employ IG’s, whose primary responsibility is to oversight the use of Federal funds, the related issue 

of the federal versus the non-federal status of the OIG Office, needs Congressional or OMB resolution. 

9 
We have recommended that DFE’s having a majority of non-Presidential appointees as Commission or 

Board members be exempt from the OIG provisions in the Dodd-Frank Act, or if the Agency Head 

remains the full Commission that the OIG Office, including the IG and current Federal OIG Staff, 

remain Federal. 

Pending additional OMB guidance or direction on Dodd-Frank issues that impact the ARC OIG the 

Commission considers the legislated requirement for the entire Commission to be the Agency Head as 

applicable. Decisions with respect to the Federal/non-Federal status of the OIG have been delayed until 

the final effect of the Dodd-Frank legislation has been settled.

. 

10 
APPENDIX A 

 SCHEDULE OF AUDIT, INSPECTION, EVALUATION & REVIEW REPORTS 

 ISSUED APRIL 1, 2012 TO SEPTEMBER 30, 2012

 

Report No. Report Title/Description Program Dollars or 

Contract/Grant 

Amount* 

Questioned/ 

Unsupported 

Costs** 

Funds to Better 

Use*** 

12-11 Norton VA Sewer Rehabitation $500,000 

12-12 Hale County AL Electronic Records System $218,664 

12-13 AL Shakespeare Festival $400,000 

12-14 Appalachian State University $300,000 

12-15 North Georgia College & State University 

Appalachian Higher Education 

$886,000 $770,000 

12-16 SC Technology and Aviation Center $1,000,000 

12-17 Goodwill Three Month Training $250,000 

12-18 Southeast Education Inc. $308,000 $40,000 

12-19 Brushy Fork KY Institute $1,058,000 $12,000 

12-20 KY Rural Literacy Save The Children $500,000 

12-21 

Marshall University Research Corp. Diabetes 

Control $238,000 

12-22 Ohio Technical Assistance $302,000 $9,000 
12-23 West Virginia Technical Assistance $700,000 

12-24 PA Energy Project $880,000 

12-25 Appalachian Training Investment Partnership $450,000 

12-26 Older Child Agency Administered $29,000,000 $1,000,000 

12-27 Older ARC Administered Grants $1,400,000 $80,000 

Total $38,390,6641

 $831,0002

$1,080,0003

                                                            

1

 Includes $7,990,664 applicable to 15 grant reviews and $30,400,000 applicable to 

older grants recommended for follow-up to determine grant status and potential for 

closing and recoveries and use of funds for other needed projects in Appalachia. 

2

 Involves primarily unsupported matching funds. 

3

 Additional grants and values included in prior reports for which recovery actions 

were initiated or completed. 
APPENDIX B 

SCHEDULE OF AUDIT, INSPECTION, EVALUATION & REVIEW REPORTS 

OF QUESTIONED OR UNSUPPORTED COSTS 

 No. of 

Reports 

 Questioned 

Costs 

 Unsupported 

 Costs 

 

A. For which no management 

decision was made by the 

commencement of the reporting period 

 0 $ 0 $ 0 

 

B. Which were issued during the 

reporting period 

 1 $ 21,000 $ 810,000 1

 

 Subtotals (A + B) 1 $ 21,000 $ 810,000 1

C. For which a management 

decision was made during the reporting 

period

 

 

(i) dollar value of disallowed 

costs 

 1 $ 9,000 $ 0 

 

(ii) dollar value of costs not 

disallowed 

 1 $ 12,000 $ 0 

 

D. For which no management 

decision has been made by the end of 

the reporting period 

 2 $ 0 $ 810,000 1

 

E. Reports for which no 

management decision was made within 

6 months of issuance 

 0 $ 0 $ 0 

1. Awaiting necessary documentation from grantees. 
APPENDIX C

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, Suite 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: 

Blue Ridge Parkway National Park 

Photo courtesy of the U.S. National Park Service 

Appalachian Regional Commission 

 Office of Inspector General 

 1666 Connecticut Avenue, NW, Suite 700 

 Washington, DC 20009-1068