INSPECTOR GENERAL’S SEMIANNUAL REPORT TO CONGRESS

Appalachian Regional Commission

October 1, 2012–March 31, 2013
On Cover (clockwise from top left):

Coal Heritage Byway, Wise County, Virginia. Photo by Randy Rose, Courtesy of National Scenic Byways

Online (www.byways.org) 

Maury River, Glasgow, Virginia. Photo by Michael L. Smith/U.S. Fish and Wildlife Service

Blue Ridge Parkway, Virginia. Photo by David West, Courtesy of National Scenic Byways Online

(www.byways.org) 

Shenandoah National Park. Photo courtesy of National Park Service
May 24, 2013 

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, 2013. During this fiscal period, we issued fifteen reports, followed-up on open 

recommendations and monitored contractor performance. 

Also 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 Committee and participate in National 

and Intergovernmental Audit Forums. The Inspector General continues to chair a smaller OIG group in 

order to address issues directly impacting these offices and made presentations to two groups 

representing ARC grantees. 

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. 

Inspector General 

Enclosure 
TABLE OF CONTENTS 

 Page 

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

 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 ............... ..............................10 

 

 

Appendices 

A. Schedule of Reports Issued October 1, 2012 thru March 31, 2013 

B. Schedule of Audits, Inspections, Evaluation and Review Reports of Questioned or 

Unsupported Cost 

C. Schedule of Audit, Inspection, Evaluation and Review Reports with Recommendations 

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

D. Schedule of Audit, Inspection, Evaluation and Review Reports with Recommendations 

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

E. 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 fifteen reports, follow-up on significant recommendations in prior 

reports, and monitoring contractor performance of grant reviews. This included eleven grant audits 

issued during the reporting period, three reports dealing with grant management, and the 2012 Financial 

Statement Audit. 

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

Administered grants and applicable policies and procedures. Continued ARC actions, including followup on basic agency grants identified in prior reports as needing follow-up resulted in approximately 2.5 

million dollars in actual or intended recoveries during the past six months that can be put to better use. 

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. Sixty three grants (open for 

over 24 months) were identified without any disbursement activity since grant approval with the longest 

being 121 months. ARC funds of $24,370,122 were approved for these grants, including $7,989,643 for 

grants with no ARC disbursements at least four years after approval. 

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

grants. The ARC grant management system identified only 17 grants totaling $1,992,374 for which no 

disbursements were noted during the 18 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, and increased use of controls available to initiate action 

on inactive grants, including increased use of ARC guidelines that allow for action on projects not 

started within 18 months of approvals. 

Individual grant reviews and ARC management of the grant process disclosed that grants were generally 

implemented in accordance with applicable regulations and project objectives. These reviews included 

recommendations with respect to supporting documentation for matching funds, timely submission of 

progress and final reports, and identification of performance outcomes. The FY 2012 Financial audit 

received an unqualified opinion for the fifth conservative year. 

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 and its 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 

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

questioned costs 

App C 

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

questioned costs 

App D 

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

questioned costs 

App E 

 

* 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, human resources, 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 progress. 

 - Administratively, the Commission has a staff of 53 persons that includes 50 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 2013 is $64.6 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 with respect to approximately two billion dollars of 

funds remaining available prior to the new legislation. 

1 

 
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. 

2 
ARC ORGANIZATION CHART 

3 

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

via Memorandums of Understanding. We have used the Department of Commerce OIG Legal Counsel 

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

5 
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, effectively and economically. 

III. OIG ACTIVITY

A. Audits, Inspections, Evaluations and Reviews

During the reporting period fifteen reports were issued, including 11 grant audit reports, three 

management reports and the FY 2012 Financial Statement Audit. 

The grant management reviews focused on grant management from applications to closing, 

identification of grants without disbursement over lengthy periods, follow-up actions to address these 

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

consistent with GAO and OMB emphasis and reports previously issued by ARC-OIG. 

A primary criteria used to identify older inactive open grants was ARC guidelines that provide that, at 

the request of a state, the Commission may revoke or revise its approval of any project if the work 

intended to be assisted is not under way within 18 months after the date of approval of such a project. 

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

agencies (Child Agencies) and grants administered directly by ARC disclosed continuing progress with 

respect to timely follow-up actions, including de-obligations and identifying the status of projects. 

For example, approximately $1.6 million dollars was de-obligated after follow-up on older inactive 

grants in prior reports and approximately $845,000 will be de-obligated when final reports are received 

from a Child Agency. 

In addition, we identified 63 Child Agency grants with ARC funding approximating $24.3 million for 

which the period of no disbursement of ARC funds ranged from 24 to 121 months. This included 21 

grants with ARC funds approximating $8 million for which no ARC funds had been disbursed as of four 

or more years since approval. 

Follow-up actions on 76 older open Child Agency grants included in our prior report identified 

subsequent start-up actions in many cases and de-obligations of $1.5 million in three instances. 52 of 

the grants included in prior reports were included in this report as having no ARC disbursements. 

ARC has initiated follow-up action, including introduction of the Basic Agency Monitoring Report 

(BAMR), which will provide detailed annual Child Agency reporting to ARC on the status of older open 

projects including expenditures, projects phase and reason for delays. As of our review the initial 

BAMR reports were submitted by the responsible agencies in 11 of the 13 Appalachian states. 

Although there remained no disbursements of ARC funds for most of the cases cited in our prior report, 

the first BAMR reports identified project start up in many cases. The control provides an improved 

basis for effective follow-up on grants with no ARC disbursements, including assessments about 

potential grant actions such as cancellation, de-obligations, long un-liquidated obligations, and 

justifications for lengthy delays and continued need for ARC funds. 

6 
Also, 27 additional Child Agency grants for which no disbursements had been reported 18 to 24 months 

subsequent to approval and having ARC balances approximating $7.7 million were also identified as 

were 13 grants valued at approximately $1 million for which there were initial disbursements followed 

by no disbursements for lengthy periods. 

In 22 cases ARC records noted that approximately $845,00 could be de-obligated if necessary closing 

information was received from the Child Agency administering these grants. 

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

delayed start up for construction grants. However, periodic follow-up and documented decisions with 

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

appropriate. 

With respect to older open grants directly administered by ARC we identified only 17 cases with ARC 

funding approximating $2 million, for which, with two exceptions, no ARC disbursements had been 

made 18 to 30 months since approval. In six cases, grants with disbursements but no recent activity for 

lengthy periods (15 to 58 months) had balances totaling $652,000. 

ARC administered grants identify estimated project end dates and a report identified 45 grants valued at 

approximately $2.3 million with expired end dates. This included 9 grants, valued at about $1 million 

for which no funds had been disbursed at least 18 months since grant approval. Adherence to end dates 

is particularly important since, without justified and documented extensions, expenditures incurred after 

identified end dates are generally considered un-allowable expenses. 

Overall, only about one percent of ARC grants approved more than four years prior to 3/31/13 had no 

disbursements although the Child Agency administered grants have a higher percentage of these grants. 

A primary recommendation was to increase use of the 18 month provision which, in correlation with the 

BAMR, would provide a more effective control for identifying projects needing follow-up and potential 

de-obligations. Other recommendations pertained to continued emphasis on, and follow-up on older 

inactive grants, addressing grants with expired end dates and closing grants with zero balances. 

A review of the grant management process and grant audits reported overall implementation of grants in 

accordance with policies, procedures and regulations. Recommendations emphasized documentation of 

matching costs, timely progress reports, improved contracting practices, emphasis on servicing primary 

clients, additional policies and procedures and identifying outcomes. Unsupported costs approximating 

$163,000 were identified in grant audits. 

ARC Financial Statement Audit 

The financial statement audit for FY 2012 was issued with a clean opinion. The prior four reports have 

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

7 
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 

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. 

8 
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 request 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. Under new 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 direction. 

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 has been 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. 

9 
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. 

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. 

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 OCTOBER 1, 2012 TO MARCH 31, 2013

 

Report No. Report Title/Description Program Dollars or 

Contract/Grant 

Amount* 

Questioned/ 

Unsupported 

Costs** 

Funds to Better 

Use*** 

13-01 Financial Statement Audit 

13-02 Virginia Technical Assistance $240,000 

13-03 Mississippi State University $440,200 $ 45,675 

13-04 Project Navigator Mississippi State University $600,000 $ 93,191 

13-05 Tri County Council of Western MD LDD $148,000 

13-06 Kid One Transport System, AL $150,000 

13-08 KY Science of Technology Corp. $550,000 

13-09 KY Research Foundation 

Youth E-Discovery Challenge 

$475,000 $ 22,618 

13-10 Tennessee Technical Assistance $220,000 

13-11 Fentress County TN Children’s Center $341,497 

13-13 Georgia Technical Assistance $223,300 

13-14 WV Region II planning and Development Council $ 84,000 $ 1,388 
13-17 ARC Grant Management 

13-18 Older Child Agency Administered Grants $33,082,453 

13-19 Older ARC Administered Grants $2,644,551 

Total $39,198,8011

 $162,8722

$2,548,2873

 1

 Includes $2,644,551 applicable to 11 grant reviews and $36,530,591 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 

 4 

 

 Subtotals (A + B) 4 

C. For which a management 

decision was made during the reporting 

period

 

 

(i) dollar value of disallowed 

costs 

 1 $0 $0 

 

(ii) dollar value of costs not 

disallowed 

 1 $0 $0 

 

D. For which no management 

decision has been made by the end of 

the reporting period 

 2 $0 $0 

 

E. Reports for which no 

management decision was made within 

6 months of issuance 

 0 $0 $0 
 APPENDIX C 

SCHEDULE OF AUDIT, INSPECTION, EVALUATION & REVIEW REPORTS WITH 

RECOMMENDATIONS THAT FUNDS BE PUT TO BETTER USE AND SUMMARY OF 

 MANAGEMENT DECISIONS 

 No. of 

Reports 

 

Dollar Value 

 

 

A. For which no management decision was made by the 

 commencement of the reporting period 

 0 $ 0 

 

B. Which were issued during the reporting period 2 $ 0 

 Subtotals (A + B) 2 $ 0 

C. For which a management decision was made during the 

 reporting period 

 

 (i) dollar value of recommendations that were agreed to by 

 management 

 

 --based on proposed management action 2 $2,548,287 1

 

 --based on proposed legislative action 0 $ 0 

 

 (ii) dollar value of recommendations that were not agreed to 

 by management 

 0 $ 0 

 

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

 of the reporting period 

 0 $ 0 

 

E. Reports for which no final management decision was made 

 within 6 months of issuance 

 0 $ 0 

1. Actions resulting from ARC follow-up on grants recommended for follow-up in prior 

reports. Available funds to be used for additional needed projects in Appalachia. Follow-up 

actions on current period reports will be identified in subsequent semi-annual reports.

 
APPENDIX D 

SCHEDULE OF AUDIT, INSPECTION, EVALUATION & REVIEW REPORTS WITH 

 RECOMMENDATIONS THAT FUNDS BE PUT TO BETTER USE AND SUMMARY OF 

 MANAGEMENT ACTIONS 

OIG Audit 

Reports 

 

Number of 

Reports 

 

Amounts 

Recommended 

by OIG 

 Amounts 

Agreed to by

Management

(Disallowed)

 

A. For which final action by 

management had not been taken by the 

commencement of the reporting period 

 0 $ 0 $ 0 

 

B. On which management decisions 

were made during the reporting period 

 2 $ 0 $ 0 

 

C. For which final action was taken 

by management during the reporting 

period 

 

 

Dollar value of recommendations that 

were actually completed 

 2 $ 0 $ 1,682,337 

 

(ii) the dollar value of 

recommendations that management has 

subsequently concluded should not or 

could not be implemented or completed 

 

 0 $ 0 $ 0 

 D. For which no final action had 

 been taken by the end of the 

 reporting period 

 1 $ 0 $865,950 

 

**Prior Reports recommended follow-up on older open grants, and resulting agency actions are 

identified in subsequent SARs, ARC follow-up and actions on inactive grants is continuing and 

ongoing process. 

 
APPENDIX E

DEFINITIONS OF TERMS USED 

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

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

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

contract, or other agreement or document governing the 

expenditure of funds; such cost is not supported by adequate 

documentation; or the expenditure of funds for the intended 

purpose is unnecessary or unreasonable. 

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

supported by adequate documentation at the time of the audit. 

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

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

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

more efficiently if management took actions to implement and 

complete the recommendation. 

Management Decision Management's evaluation of the findings and recommendations 

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

management concerning its response to such findings and 

recommendations, including actions concluded to be necessary. 

Interim decisions and actions are not considered final management 

decisions for the purpose of the tables in this report. 

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

management decision with respect to audit findings and 

recommendations. If management concluded that no actions were 

necessary, final action occurs when a management decision is 

issued. 
 

 THE OFFICE OF INSPECTOR GENERAL 

 APPALACHIAN REGIONAL COMMISSION 

 serves American taxpayers 

 by investigating reports of waste, fraud, or abuse 

 involving Federal funds. 

 If you believe an activity is 

 wasteful, fraudulent, or abusive of Federal funds, 

 please call 

 toll free 1-800-532-4611 

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

 or write to: 

 Office of Inspector General 

 Appalachian Regional Commission 

 1666 Connecticut Avenue, NW, Rm. 700 

 Washington, DC 20009-1068 

 Information can be provided anonymously. 

 Federal Government employees are protected from reprisal, 

 and anyone may have his or her identity held in confidence. 
Appalachian Regional Commission 

 Office of Inspector General 

 1666 Connecticut Avenue, NW, Suite 700 

 Washington, DC 20009-1068