April 1, 2016 

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, 2016. During this fiscal period, we issued fourteen reports, followed-up on open 

recommendations and monitored contractor performance. 

During this period, the Inspector General continued to serve as an active member of the Council of the 

Inspectors General on Integrity & Efficiency (CIGIE), its Audit and Inspections and Evaluations 

Committees and small OIG group. 

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, 

Hubert Sparks 

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 

Investigations . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . .. 7 

Other . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . 7 

 IV. Reporting Fraud, Waste, and Abuse . . .. . . . . . . . . . . . . . . . . . . . . .... . . . . . 7 

 V. Legislative & Regulatory Review . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . 8 

 

 VI. Dodd-Frank Legislation ..............................................8 

 VII. OIG Audit Community Wide Issues ...............................................8 

 

 

Appendices 

A. Schedule of Reports Issued October 1, 2015 thru March 31, 2016 

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. Definition of Terms Used

i 
EXECUTIVE SUMMARY

ARC grant operations, including grant management and grant projects represent the most significant 

aspect of ARC programs and OIG reviews. For this reporting period OIG activity included issuance of 

fourteen reports, including nine grant audits, four management evaluation reports and the FY 2015 

Financial Statement audit. Follow-up on prior recommendations, including coordinating with ARC on a 

report follow-up process, and monitoring of contractor grant audits were also emphasized. 

Individual grant audits disclosed that grants were generally implemented in accordance with applicable 

regulations and project objectives. Findings and recommendations pertained to matching funds, 

progress reports, financial systems, internal controls, and un-supported or questioned costs and expired 

end dates that could result in ineligible payments. 

Agency action included grant follow-up and pro-active efforts to address recommendations, including 

older grants identified for follow-up and potential deobligations. Follow-up on prior recommendations 

disclosed de-obligations of approximately $880,000 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. 

Based on evaluations of grant management continued emphasis and actions was recommended with 

respect to timely grant applications, approvals and obligations, Basic Agency Monitoring Reports 

(BAMR), progress reports, supportable extensions of grant periods, and follow-up on older inactive 

grants. The application, approval and obligation process resulted in a large majority of annual approvals 

and obligations in the last quarter of the fiscal year, particularly in September. The condition also 

results in an unbalanced workload for program staff. 

An IT Security Evaluation disclosed overall implementation of information security measures and the 

recommendations are being addressed by ARC.

The FY 2015 Financial Statement Audit contained a clean opinion similar to the prior opinions received 

since ARC adopted Federal Financial Reporting rules in 2007. 

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 issues impacting efficiency, effectiveness and credibility of OIG-wide 

audit operations. These issues include independent peer reviews of the efficiency and effectiveness of 

audit operations, identification and support of performance auditor qualifications and reporting of actual 

monetary rather than primarily potential monetary benefits.

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 12

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) 

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)(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 recommendations that fund be put to better use 

App C

* None. 

iii
I. 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. 

II. 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' 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, 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 53 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 2016 is $96 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 

1 
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 (USDA), Housing and Urban Development (HUD), and the Economic Development 

Administration (EDA) to administer construction related grants. Also utilization of State agencies to 

administer construction related grants is being emphasized. 

2 
ARC ORGANIZATION CHART

3
4 

 
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 OIG.

Funding and Staffing

The OIG funding level for FY 2016 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 conducted 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 2016 included reimbursement of other IGs for counsel and investigative services via 

Memorandums of Understanding. 

5 
III. 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 audits, four management reports and the FY 2015 

Financial Statement Audit were issued. Follow-up on prior reports and recommendations identified 

approximately $880,000 in de-obligations for which these funds became available for use on other 

needed Appalachia projects. 

Audits of nine grants with total ARC funding of about $4,191,119 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, indirect costs and identification of performance results. 

Follow-up reports identified additional older open ARC grants with no or limited disbursements for 

which additional follow-up was recommended. ARC actions on prior reports included additional 

follow-up based on information available in Basic Agency Monitoring Reports (BAMR) and 

implementation of controls that enable project coordinators to better track grant status. 

Additional recommendations included increased emphasis on grant expenditures within the grant period 

to avoid ineligible payments, supportable requests for extension of performance periods, receipt of 

BAMRs from basic agencies and closing of grants with zero balances.

Continued ARC emphasis and action with respect to timely grant applications, approvals and obligations 

was recommended. The follow-up reports noted that the FY 2015 patterns were basically similar to the 

FY 2014 patterns with respect to applications received and resulted in a large majority of approvals (71 

percent) and obligations (83 percent) in the last quarter, including 58 percent of obligations in 

September. This pattern also contributes to an unbalance annual workload for project coordinators 

responsible for reviewing applications, obtaining additional information as required and recommending 

actions.

An IT Security Evaluation disclosed overall implementation of information security measures and the 

recommendations are being implemented by ARC. 

ARC and OIG coordinated on finalizing a report follow-up policy and procedures that will better assure 

attention to and resolution of recommendations on a more timely basis. 

ARC Financial Statement Audit

The financial statement audit for FY 2016 is in process. The prior six 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 

6 
offices every three years to ensure audit policies and/or procedural systems are in place that provide 

reasonable assurance of compliance with government auditing standards (GAS). The next peer review 

of ARC OIG is scheduled for FY 2017. 

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. 

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.

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. 

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 

7 
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 

possible and within the OIG community the IG continues to emphasize various areas where OIG-wide

audit performance and credibility can be significantly improved by addressing the following issues. 

- Develop and implement peer review guides to independently 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. OIGs that conduct internal assessments of operational elements consider 

these as independent since they are conducted by staff from other units within that OIG. 

- There is a significant need to broader the qualifications with respect to the classification of “auditor”. 

Currently the 0511 auditor series and classification that requires 24 credits of accounting or an 

equivalent level of accounting credits or experience is out of date and out of touch with the OIG audit 

workload. The large majority of OIG audits are performance, not financial, related for which skills, 

attributes and competencies such as analysis, evaluation, oral and written communications, analytics, 

problem solving, interpersonal relationships, and critical thinking are far more important than 

accounting for effective performance auditing.

This issue is being considered by the Office of Personnel Management (OPM) and the IG has 

emphasized and recommended a “Performance Auditor” classification. Such a classification would 

identify broader educational and/or experience requirements that would be consistent with competencies 

identified as more closely related to performance. Such a classification would better assure the 

employment of professional staff that better meet the current and future OIG audit environment. 

Regardless of OPM action a primary need is OIG Audit recognizing and accepting current audit 

requirements and recruiting and employing audit staff best suited to meet these requirements. Other

government and private sector audit organizations including the Government Accountability Office have 

recognized and addressed this issue. 

8 
An option is significantly increased use of a management analyst series such as GAO implemented to 

address skills gap issues related to performance auditing. 

- 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 audit related ($250 billion over 

prior 5 years) 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 primary argument presented against including some actual rather than only potential monetary 

benefits over a multi-year period in OIG Semi-annual reports (SAR) and the CIGIE Annual Report to 

the President is the difficulty in obtaining this information. However, the IG Act and OMB Circular A50, Audit Follow-up specifically require the agency head to identify actual monetary related benefits 

resulting from OIG reports when transmitting the OIG SAR to Congress. Section 5(b)(2)(c)(i) & (ii) of 

the IG Act specifies that the agency head will include the disallowed costs that were recovered by 

management through collection, offset, property in lieu of cash or otherwise and the dollar of disallowed 

costs that were written off by management as part of the agency head transmittal of the OIG SAR to 

Congress. 

- Develop CIGIE guidance to ensure consistent identification of implemented recommendations. OIGs 

use different criteria regarding implemented recommendations, ranging from confirming the 

recommendation was implemented, obtaining implantation plans, or accepting agreement with the 

recommendation as sufficient to consider the recommendation implemented. Emphasis should be 

placed on validation of implementation actions with respect to significant program or monetary benefits 

recommendations. In order to address non-implementation of significant practical recommendations and 

the constraints imposed by OMB A-50 with respect to the agency follow-up official having the final 

decision on audit recommendations increased use of section 5(a)(12) of the IG Act that provides for 

including in the semi-annual report information concerning any significant management decision with 

which the IG is in disagreement is an available action.

- Expand the Council of Inspectors General Annual Report to the President to include a few significant 

programmatic and improved service non-monetary recommendations. Currently the audit sections of 

this report only identifies the extent of questioned costs and funds to better use and significantly 

understates the benefits of OIG audit work. 

9 
APPENDIX A

 SCHEDULE OF AUDIT, INSPECTION, EVALUATION & REVIEW REPORTS

 ISSUED OCTOBER 15 2015 TO MARCH 31, 2016

 

Report No. Report Title/Description Program Dollars or 

Contract/Grant 

Amount*

Questioned/

Unsupported 

Costs**

Funds to Better 

Use*** 

16-01 Northern Tier LDD $103,136 $95,713

16-02 Northern Tier Prep $285,000 $116,965

16-03 KY Oral Health $1,046,932

16-04 Financial Statement Audit

16-05 Upgraded Water System $300,000

16-06 Training Facility $500,00

16-07 PA Technical Assistance $700,000

16-08 MS High Performance Leadership $259,000

16-09 MS Appalachian Community Learning $697,051 $166,256

16-10 Chautauqua Trail $300,000

16-11 IT Security Evaluation

16-12 ARC/State Admin. Grants $1,726,883 $242,458

16-13 Basic Agency Admin Grants $8,230,349 $639,801

16-14 Applications, Approvals and Obligations

Total $14,148,351 $377,934 1/ $882,259

1/ Most questions costs are undocumented costs.

2/ Deobligations based on grants noted in prior report.
APPENDIX B

SCHEDULE OF AUDIT, INSPECTION AND EVALUATION REPORTS

WITH QUESTIONED OR UNSUPPORTED COSTS (THOUSANDS)

No. of

Reports

Questioned

Costs

Unsupported

Costs 

A. For which no management 

decision was made by the 

commencement of the reporting period

0

B. Which were issued during the 

reporting period 

3 $ 375 $ 377 1/

 Subtotals (A + B) 

C. For which a management 

decision was made during the reporting 

period

 2 

(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 

1 $ 166

E. Reports for which no 

management decision was made within 

6 months of issuance 

1/ Costs that are questioned in audit reports primarily relate to unsupported costs for which support is provided subsequent to the audit

Report. Thus amounts noted are similar. 

 
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 $12,000 1/

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 $ 880 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 

 

E. Reports for which no final management decision was made

 within 6 months of issuance 

0 0

1. Based on value of grants recommended for follow-up. Management agrees to follow-up on identified grant and the value 

noted in c(i) is actual deobligations during the reporting period. 

 
APPENDIX D

DEFINITIONS OF TERMS USED

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

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

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

contract, or other agreement or document governing the expenditure 

of funds; such cost is not supported by adequate documentation; or 

the expenditure of funds for the intended purpose is unnecessary or 

unreasonable. 

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

by adequate documentation at the time of the audit.

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

sustained or agreed should not be charged to the Commission. 

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

efficiently if management took actions to implement and complete 

the recommendation. 

Management Decision Management's evaluation of the findings and recommendations 

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

management concerning its response to such findings and 

recommendations, including actions concluded to be necessary. 

Interim decisions and actions are not considered final management 

decisions for the purpose of the tables in this report. 

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

management decision with respect to audit findings and 

recommendations. If management concluded that no actions were 

necessary, final action occurs when a management decision is 

issued. 
THE OFFICE OF INSPECTOR GENERAL

APPALACHIAN REGIONAL COMMISSION

serves American taxpayers

by investigating reports of waste, fraud, or abuse 

involving Federal funds. 

If you believe an activity is 

wasteful, fraudulent, or abusive of Federal funds, 

please call

toll free 1-800-532-4611 

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

or write to:

Office of Inspector General

Appalachian Regional Commission

1666 Connecticut Avenue, NW, Rm. 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