Appalachian Regional Commission
Office of Inspector General

1666 Connecticut Avenue, NW, Suite 700
Washington, DC 20009-1068


possible and within the OIG community the IG continues to emphasize various areas where OIG audit
performance and credibility can be significantly improved by addressing the following issues.

- Develop peer review guides to assess OIG audit efficiency and effectiveness that highlights
key operational elements, such as planning, field work, report timeliness, staff utilization and
training, supervision, audit follow-up and actual results. The required peer review of
compliance with audit standards does not address these key operational elements that
determine OIG efficiency and effectiveness.

- Identify outcome based performance measures that, over a multi-year period, provide for
reporting of actual savings in relation to the multi billions of potential savings reported
annually based primarily on questioned and undocumented costs with low actual savings
potential, OIG Semi-Annual reports identify agreed with disallowances and tracking and
reporting agency actions such as establishment of claims and recoveries appears practical and
reasonable.

- A OIG survey of OIG metrics noted that 13 of 14 respondents to a question as to how they
measured return on investment responded the basis was agreed with recommendations. A
better basis for identifying the return on investment appears appropriate, such as
implemented recommendations and actual rather than potential savings.

- Develop CIGIE guidance to ensure consistent identification of implemented
recommendations. OIGs use different criteria regarding implemented recommendations,
ranging from actually confirming the recommendation was implemented, to obtaining
implantation plans, to accepting agreement with the recommendation as sufficient to consider
the recommendation implemented.

- There is a significant need to broaden the core competencies with respect to the classification
of “auditor”. Currently the GS-511 auditor classification requires 24 credits of accounting or
an equivalent level of accounting credits or experience. However, the large majority of OIG
audits performed by OIG audit staff are performance, not financial, related for which
attributes such as evaluation, analysis, oral and written communications and critical thinking
skills are far more important than accounting for effective performance auditing.

This issue is being addressed in a review by the Office of Personnel Management (OPM) and
the IG has emphasized the need for a “performance auditor classification” identifying
qualifications, attributes and skills most applicable to performance auditing such as analyst,
social science, legal, history, research, economic backgrounds and/or education and attributes
including critical thinking, oral and written communications, report writing, interviewing,
analysis, and interpersonal skills. Such a classification would better assure the employment
of professional staff that met the current and future audit environment. Regardless of OPM
action a primary need involves OIG Audit recognizing current audit requirements and
recruiting and employing audit staff best suited to meet these requirements, including
additional utilization of the management analysis series if necessary.


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 Pages 8

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

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

Section 5(a)(4) | Matters referred to prosecutive authorities =

Section 5(a)(5) Summary of instances where information was refused =

and 6(b)(2)

Section 5(a)(6) Listing of audit reports showing number of reports and dollar App A
value of questioned costs

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

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

of recommendations that fund be put to better use

None.

iii


APPENDIX D

DEFINITIONS OF TERMS USED

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

Questioned Cost

Unsupported Cost

Disallowed Cost

Funds Be Put To Better Use

Management Decision

Final Action

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.

A cost which the OIG questioned because the cost was not supported
by adequate documentation at the time of the audit.

A questioned cost that management, in a management decision, has
sustained or agreed should not be charged to the Commission.

A recommendation made by the OIG that funds could be used more
efficiently if management took actions to implement and complete
the recommendation.

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.

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.


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 2015 is $642,000. 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.

In order to comply with Pub.L. No. 110-409, the Inspector General Reform Act of 2008, the OIG
funding for FY 2015 included reimbursement of other IGs for counsel, audit and investigative services
via Memorandums of Understanding. We use Treasury OIG for Tax Administration for legal services,
and the Interior OIG for investigation services.


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 and Housing and Urban Development (HUD), and the Economic Development
Administration (EDA). Also utilization of State agencies to administer construction related grants is
being emphasized.


IL INTRODUCTION - OIG

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.

IL. BACKGROUND - ARC
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' 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, energy, human resources, and health and education
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’ roles include identification of priority needs of local
communities and assisting with participation in ARC programs.

-  Administratively, the Commission has a staff of 51 persons that includes 45 Commission
employees responsible for program operations, and the office of the Federal Co-Chair that includes the
three person OIG staff. The Commissions’ administrative expenses, including salaries, are jointly
funded by Federal and State funds.

- The Commission's appropriation for FY 2015 is $90 million.

Although Congress changed the funding method for the Appalachian Development Highway System
(ADHS) in July 2012, ARC continues to support and participate in completion of the ADHS including
fulfilling planning and approval responsibilities.

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

1


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.


APPALACHIAN REGION

Appalachia, as defined in the legislation from which the Appalachian Regional Commission derives its
authority, is a 205,000-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 12 other states: Alabama,
Georgia, Kentucky, Maryland, Mississippi, New York, North Carolina, Ohio, Pennsylvania, South Carolina,
Tennessee, and Virginia.


ee ee ee Office of Inspector General
REGIONAL A New Vision
COMMISSION

May 6, 2015
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, 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 March 31, 2015. During this fiscal period, we issued seventeen reports, followed-up on open
recommendations and monitored contractor performance.

During this period, the Inspector General continued to serve as a member of the Council of the
Inspectors General on Integrity & Efficiency (CIGIE), its Audit and Inspections and Evaluations
Committees and small OIG group, and participated with the Small Agency Oversight and sharing of
resources OIG Working Groups.

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

Sincerely,

Hubede Sucks

Hubert Sparks
Inspector General

Enclosure


Region, and limited repetition of information included in prior Strategy Statements. Action has been
initiated to refocus the Annual Statements.

A review of the status of the Appalachian Development Highway System (ADHS) identified the need to
revise the budget plan with respect to approximately $2.3 billion of ARC funds approved for the ADHS.

Based on a new ARC Executive Director ARC/OIG follow-up procedures were updated and revised.
During this period ARC actions were initiated to address audit recommendations and upgrade the ARC
grant management system and the IG met with State ARC Program Managers to highlight grant
compliances issues.

ARC Financial Statement Audit

The financial statement audit for FY 2014 was issued. This report and the prior five years 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 OIG performed a
modified audit peer review of the Postal Regulatory Commission during this reporting period.

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 and utilizes other OIGs to perform needed investigations. Also, the
results of investigations may be referred to the appropriate Federal, State, or local prospective authorities
for action.

An investigation was conducted by the Department of Interior OIG for the ARC OIG with respect to a
grantee internal audit report that questioned a grantee use of about one million dollars of ARC funds to
support other programs and expenses. Staff changes resulted and ARC finalized an agreement that will
result, over a period of years, replacement of ARC funds diverted for non-ARC purpose.

C. OTHER
OIG Working 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 an active member of the small working group that meets periodically to discuss such
issues and recommends actions/best practices to facilitate smaller OIG operations.

The IG also actively participated in OIG Working Groups considering and recommending actions with
respect to oversight for entities not currently receiving independent oversight and sharing of OIG
resources.

7


Til. OIG ACTIVITY
A. Audits, Inspections, Evaluations and Reviews

Grant reviews focused on grant implementation and administration in line with ARC and OMB policies
and procedures. Management reviews focused on headquarters program and grant management
activities. During the reporting period nine grants, seven management, and the FY 2014 Financial
Statement audit were issued. Follow-up on prior reports and recommendations identified $608,828 in
de-obligations pertaining to grants identified in prior reports.

Audits of 9 grants with total ARC funding of about $8.4 million reported overall implementation of
grants in accordance with policies, procedures and regulations. Findings and recommendations were
related to financial systems and internal controls, untimely progress reports, documentation and support
for matching funds and indirect costs, and identification of performance results.

Despite ARC attempts to obtain information from the Department of Housing and Urban Development
(HUD) with respect to grants administered by HUD for ARC there remains old open grants for which
projects were completed and de-obligations are possible. Our follow-up report identified actions on
seven grants with de-obligations of $220,133 and needed action on 4 grants in prior reports with needed
de-obligations of $423,870 and 6 additional grants with balances of $136,375 for which follow-up was
recommended.

A survey of implantation of the 1999 Memorandum of Agreement (MOA) between the Appalachian
Regional Commission (ARC) and the Rural Development Service (RDS) of the Department of
Agriculture (USDA) with respect to administering ARC construction related grants disclosed that MOA
was being successfully implemented but there was a need to update the MOA to address current issues
for clarification or consideration were provided by the RDS and ARC representatives who were
surveyed. ARC and RDS agreed to update the MOA.

The review of ARC Area Development applications and approvals confirmed that a significant amount
of applications and approvals were received and processed in the last quarter of fiscal years, including a
significant amount of dollar amount in the last month of the fiscal years. The timing of these actions
creates an unbalanced workload for ARC staff, and contributes to un-obligated balances.
Recommendations emphasize the need to coordinate with State partners to assure a more timely and
balanced process for receiving and approving grant applications. ARC is proactively coordinating with
State partners to address this condition.

A review of open Federal Highway Administration (FHWA) grants identified numerous old open grants,
including 157 grants approved between 1999 and 2008 that were subject to closing. Actions was
initiated to close these grants, and 141 grants were closed by the end of the reporting period.

An assessment of purchase card use disclosed appropriate use of cards and recommendations pertained
to clarifying some policies and procedures.

Recommendations were made to better focus annual State Strategy Statements on identifying how ARC
funds would be used in the coming year, including emphasis on distressed counties in the Appalachian


ARC ORGANIZATION CHART

Federal Membership State Membership

13 Governors/
States’ Co-Chair

Federal Co-Chair

Alternate Federal Governors’
Co-Chair Alternates

Office of the States’
Washington
Representative

ffice of the Federal
Co-Chair

Office of Inspector
General
he 22

Non-Federal Staff

Executive Director

Local Development
District Program

| Human Resources

Public Affairs
Regional Planning Regional Program Finance and
General Counsel and Research Operations Administration
—



An investigation was conducted by the Department of Interior OIG for the ARC OIG with respect to one
million dollars of ARC funds used by a grantee to support non ARC programs. The investigation
supported ARC actions and results that included staff changes and an agreement to replace ARC funds
over a period of years.

The OIG conducted a modified audit peer review of the Postal Regulatory Commission and actively
participated in OIG Working Groups dealing with oversight of entities without independent oversight,
sharing of OIG resources and issues impacting smaller OIGs.

In December 2013 OMB issued an updated Designated Federal Entity (DFE) list that identified the
Federal Co-Chair and the Governors of the thirteen Appalachian States as the ARC Agency Head. The
applicable Dodd-Frank legislation provides that the Agency Head can terminate the Inspector General
with a two thirds vote. No problems have resulted from the implementation of this provision.

Within the OIG community and the Council of Inspectors General on Integrity and Efficiency (CIGIE)
the IG continues to emphasize OIG wide issues impacting efficiency, effectiveness and credibility of
OIG audit operations.


APPENDIX A

SCHEDULE OF AUDIT, INSPECTION, EVALUATION & REVIEW REPORTS
ISSUED OCTOBER 1 2014 TO MARCH 31, 2015

Report No. Report Title/Description Program Dollars or ‘Questioned’ Funds to Better
Contract/Grant Unsupported User*TM
Amount” Costs**
15-1 Appalachian Rural Development Philanthropy $582,150
15-2 FY 2014 Financial Statement Audit
15-3 Northeastern PA Alliance $103,136
15-4 Northeastern PA Alliance PREP $400,000
15-5 Open FHWA Grants $2,948,894
SW North Carolina Planning and Economic
15-6 Development Commission $300,000
15-7 | City of Pikeville, TN $484,387 $49,700
15-8 North Central PA Regional Planning & $98,013
Development Commission
North Central PA Planning & Development
eI $285,000
1 Commission PREP
15-10 Implementation of MOU Between ARC and USDA
15-11 Institute for Education leadership $93,000
15-12 Grant Applications & Approvals Processing
15-13 State Strategy Statement
1514 Appalachian Development Highway System
Budgeting
15-15 Purchase Card Use
15-16 HUD Administered Grants $599,503 $423,870
15-17 Travelers Rest Performing Arts Center $500,000 $ 14,300

Total $6,394,083 $ 64,000 $423,870



APPENDIX C

SCHEDULE OF AUDIT, INSPECTION AND EVALUATION REPORTS WITH
RECOMMENDATIONS THAT FUNDS BE PUT TO BETTER USE AND SUMMARY OF
MANAGEMENT DECISIONS (THOUSANDS)

No. of
Reports Dollar Value

A. For which no management decision was made by the
commencement of the reporting period

B. Which were issued during the reporting period 2

Subtotals (A + B) 2 $2,400

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 2 $2,400 1

--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

EK Reports for which no final management decision was made 0 0
within 6 months of issuance

1. Based on management decisions to follow-up on older open grants. Also $603,828 in de-obligations resulted from grants identified
for follow-up in prior SAR.


EXECUTIVE SUMMARY

ARC grant operations represent the most significant aspect of ARC programs. For this reporting period
our activity included issuance of seventeen reports including nine grant, seven management and the FY
2014 Financial Statement Audit, follow-up on prior recommendations and monitoring of contractor
grant audits.

Individual grant reviews disclosed that grants were generally implemented in accordance with applicable
regulations and project objectives. Finding and recommendations pertained to matching funds, progress
reports, financial systems, internal controls and identified questioned and un-supported costs.

Continuing agency action included grant follow-up and pro-active efforts to address recommendations.

Follow-up on prior recommendations disclosed de-obligations of $603,828 with respect to grants
identified for follow-up in prior reports which involved funds for better use in connection with needed
projects in the Appalachian Region.

There remains a need for closing of old grants administered by the Department of Housing and Urban
Development (HUD) for the ARC and we identified 14 grants with potential de-obligations of at least
$423,870 ARC has repeatedly urged HUD to provide information necessary to use these funds for other
needed projects.

A survey of implementation of a 1999 Memorandum of Agreement (MOA) between ARC and the
Department of Agriculture (USDA) disclosed successful implementation of the MOA but a need to
update the MOA to address current circumstances and consider recommendations provided by the ARC
and USDA Staff.

A review of the grant application and approval process identified a pattern of late applications and
approvals resulting in a large majority of dollars being approved in the last quarter and
recommendations emphasized coordinating with State partners to improve receipt and processing of
applications that provide for a more balanced staff workload and reduce un-obligated balances. ARC is
proactively addressing this issue with State partners.

Recommendations were also made with respect to closing old ARC grants administered by the Federal
Highway Transportation Administration (FHWA) and refocusing Annual State Strategy Statements to
emphasize how ARC funds will be utilized in the coming year. Actions initiated included closing 141
FHWA and refocusing Annual State Strategy Statements.

The FY 2014 Financial Statement Audit was issued with a clean audit opinion.

Based on anew ARC Executive Director, follow-up procedures were revised and updated. Continuing
agency action included grant follow-up and pro-active efforts to address recommendations. ARC
actions included establishing an IT Committee to assess improved automated controls and use of data
analytics, emphasis on grant follow-up and implementation of grant requirements and assessment of
staffing needs and responsibilities. The IG met with State ARC Program Managers and Headquarters
staff in conjunction with proactive agency initiatives.


TABLE OF CONTENTS

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Appendices

A. Schedule of Reports Issued October 1, 2014 thru March 31, 2015

B. Schedule of Audits, Inspections, Evaluation and Review Reports of Questioned or
Unsupported Cost
Cc. Schedule of Audit, Inspection, Evaluation and Review Reports with Recommendations

that Funds be put to Better Use and Summary of Management Decision

Dz. Definition of Terms Used


Requests for Information

Each year we receive and comply with requests for information from various governmental entities
compiling statistics on OIG offices or their audited 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.

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. Under current legislation the ADHS
is a part of a larger Surface Transportation Program grant to Appalachian states, with the states using the
funding at their own discretion.

Implementation of OIG Reform Act

The OIG has implemented 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 Treasury Inspector
General for Tax Administration and for investigative services is in place with the Interior Inspector
General.

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 reviews 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

OMB issued an updated list of Designated Federal Entity (DFE) Agency Head in December 2013 that
confirmed legislation identifying the 13 Appalachian Governors as part of the Appalachian Regional
Commission (ARC) Agency Head (Commissioners) designations. No problems have been experienced
with respect to implementation of the legislation.

VII. OIGs Audit Community Wide Issues

OIG audit units have provided very valuable services to the taxpayers including significant monetary
benefits and major program improvements. However, as with any organization, improvements are


APPENDIX B

SCHEDULE OF AUDIT, INSPECTION AND EVALUATION REPORTS
WITH QUESTIONED OR UNSUPPORTED COSTS (THOUSANDS)

A. For which no management
decision was made by the
commencement of the reporting period

B. Which were issued during the
reporting period

Subtotals (A + B)

Low For which a management
decision was made during the reporting
period

(i) dollar value of disallowed
costs

(ii) dollar value of costs not
disallowed

D. For which no management
decision has been made by the end of
the reporting period

E. Reports for which no
management decision was made within
6 months of issuance

No. of Questioned Unsupported
Reports Costs Costs
0
1 $49
1
1 $49