January 29, 2020 

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 DoddFrank Wall Street Reform and Consumer Protection Act, Public Law 111-203. I am pleased to 

submit the Appalachian Regional Commission (ARC) Office of Inspector General’s Semiannual 

Report to Congress. 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. 

 Every 6 months we provide Congress with a report detailing our independent oversight of ARC 

during the reporting period. The OIG looks forward to continuing efforts to provide independent 

and effective oversight of ARC and working with the Council of Inspectors General on Integrity 

and Efficiency (CIGIE) on important issues that cut across our government. 

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

period ending September 30, 2019. During this fiscal period, we issued 20 reports including 16 

grant audits and 4 management reports. Overall, grant audits concluded that ARC grants are 

being implemented effectively. However, recommendations in some grant audit reports 

pertained to improving policies and procedures, improving performance reporting, performance 

measures, indirect costs, internal controls and supporting cost documentation. Actions were 

initiated by grantees and ARC to address the recommendations. 

The management reports emphasized management of grant applications and related awards and 

obligations, inactive grants, and expired performance periods. Recommendations emphasized 

follow-up on grants with no ARC payments at least two years after approval or obligation to 

determine the potential use of funds on other priority projects and addressing expired 

performance periods that could result in significant ineligible payments. 

Basic Agency Monitoring Reports (BAMR) recommended action on 6 inactive grants with 

balances approximating $1.1 million which could be recovered and put to better use. 

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 a group addressing small OIG issues. The report also contains 

continuing significant issues impacting the OIG audit community that are not directly connected 

to ARC operations. 
I take this opportunity to again express my appreciation to agency officials and the Congress for 

their recognition and support for the Offices of Inspectors General (OIG) and OIG staff during 

my 50 years in the OIG community and 20 years as IG at the Appalachian Regional 

Commission. 

Sincerely, 

Hubert Sparks 

Inspector General 

Enclosure 
INSPECTOR GENERAL’S SEMIANNUAL REPORT TO CONGRESS

Appalachian Regional Commission

April 1, 2019–September 30, 2019
TABLE OF CONTENTS 

 Page 

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

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

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

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

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

Audits, Inspections, Management & Reviews . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .6 

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

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

 IV. Reporting Fraud, Waste, and Abuse . . .. . . . . . . . . . . . . . . . . . . . . .... . . . . ...8 

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

 

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

 VII. OIG Audit Community Wide Issues ...............................................9 

 

 

Appendices 

A. Schedule of Reports Issued April 1, 2019 thru September 30, 2019 

B. Schedule of Audits, Inspections, Evaluation and Management Reports of 

Questioned or Unsupported Cost 

C. Schedule of Audit, Inspection, Evaluation and Management Reports with 

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

Decisions 

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 twenty reports, including sixteen grant audits and four management reports. 

Overall there is a high degree of implementation of ARC policies and procedures. However, 

recommendations were made in grant audit reports that pertained strengthening policies and 

procedures, improved performance reporting, equipment management, indirect costs, internal 

controls and supporting documentation for costs claimed. Actions were initiated by grantees to 

address the recommendations. 

Management reports pertained to grant application approvals and obligations, inactive grants, 

and grants with expired end dates. Recommendations emphasized follow-up on grants with no 

ARC payments at least two years after approval or obligation to determine potential use of funds 

on other priority projects and addressing expired grant periods that could result in significant 

ineligible payments. For inactive grants, Basic Agency Monitoring Reports identified 6 grants 

totaling approximately $1.1 million approved ARC funds that are not being implemented timely 

and could be cancelled and funds reallocated to other projects.

ARC is a Designated Federal Entity (DFE). The IG Act identifies the DFE agency head as the 

applicable Board or Commission that includes the Federal Co-Chair and the Governors of the 13 

Appalachian States. 

Legislation provides that the DFE 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 and actions to address these issues. These issues include 

identification and support of revised performance auditor qualifications to address performance 

auditing skills gaps, addressing open and unimplemented recommendations, independent peer 

reviews of the efficiency and effectiveness of audit operations and reporting of actual monetary 

rather than 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 8 

 

Section 5(a)(1) Problems, abuses, and deficiencies Page 8 

Section 5(a)(2) Recommendations with respect to problems, abuses, and deficiencies Page 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 funds be put to better use 

App C 

 

* None. 

iii 
1 

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 OIG operations including internal 

or contracted audits, investigations, inspections and evaluation. 

II. BACKGROUND - ARC

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 Co-Chair who is appointed by the 

President. Annually the group of Governors elect one Governor 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 infrastructure development, business enterprise, energy, human resources, and 

health and education programs, and highways with emphasis on job creation including coal 

miner dislocation. Specific priority initiatives to stimulate economic growth and opportunity in 

the region includes the Partnership for Opportunity and Workforce and Economic Revitalization 

(POWER), Southern/South Central Appalachia Workforce Training and Central Appalachia 

Broadband. 

 - 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’ role includes 

identification of priority needs of local communities and assisting with participation in ARC 

programs. 

 - Administratively, the Commission currently has a staff of 53 non-Federal employees and 

six Federal employees responsible for program operations. The Commissions’ administrative 

expenses, including salaries, are jointly funded by Federal and State funds. 

 - The Commission's appropriation for FY 2019 was $165 million and is $175 million for 

FY 2020. 

 

ARC approves about 450 grants annually with funds allocated to the thirteen Appalachian States 

for area economic development, including special projects such as broad band expansion, 
2 

significant funding for distressed counties, local development districts administrative funds, 

research projects identifying Appalachian issues, and technical assistance funds for State 

economic and development agencies. 

An additional 300 grants totaling about one hundred fifty million dollars were approved since FY 

2015 for the POWER program directed at growing the economy in coal impacted communities. 

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 were 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, technical 

assistance to States, and management and monitoring. 

In order to avail itself of federal agency expertise, administrative capability, and funding 

opportunities in certain areas ARC often relies on other departments and agencies, 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. ARC also has successfully assisted State Departments of Transportation 

(State DOTs) in securing United States Department of Transportation (USDOT) discretionary 

grant funding, exemplified most recently in 2019 with USDOT's award of $100 Million to West 

Virginia for ADHS Corridor H (Nationally Significant Federal Lands and Tribal Projects 

program) and $52.4 Million to Mississippi DOT for ADHS Corridor V (Infrastructure for 

Rebuilding America program). Working with State DOTs, ARC continues to actively monitor 

the status of ADHS construction and look for innovative approaches to make progress toward 

completion. 

In FY 2019, ARC worked closely with the Federal Highway Administration and State DOTs to 

finalize a Strategic Plan to Complete the ADHS. The goal of the plan is to define ADHS 

completion, identify completion priorities, and highlight key completion strategies to guide 

future ARC, FHWA and State DOT activities. Key completion strategies include greater pursuit 

of innovative funding sources, development and periodic update of an ADHS Completion Plan 

which includes costs to complete unfinished segments, and streamlining status classification, 

reporting, and approval of modifications. 

 

ARC relies on Child Agencies (Basic Agencies), including the Departments of Agriculture 

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

Administration (EDA) to administer construction related grants to oversee non-highway 

infrastructure grants. Currently the use of State agencies to administer construction related 

grants is being emphasized. 
3 
4 
5 

B. OFFICE OF INSPECTOR GENERAL

 

The ARC OIG is an independent 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, investigations, inspections and evaluations; (2) review of legislation; 

and (3) recommendation 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 full Commission, acting together, establishes 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 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, inspections, evaluation and 

investigations to the OIG. 

Funding and Staffing

The OIG funding level for FY 2020 is $710,000. 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 

contracts with other IGs for counsel and investigative services to the degree needed. 
6 

III. OIG ACTIVITY

A. Audits, Inspections and Management 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 sixteen grants audits and four management 

reports were issued. 

Of the sixteen grant audits, with total ARC funding of $25,334,986 million, and matching costs 

of $34,406,643, we determined there was overall implementation of grants in accordance with 

policies, procedures and regulations. Questioned or unsupported costs and funds to better use 

totaled $1,275,310. 

Recommendations in grant audit reports pertained to internal controls, policies and procedures, 

performance measures and reporting, indirect costs, payment procedures, supporting 

documentation of costs, equipment management, and progress reporting. Actions were generally 

initiated by grantees to address the recommendations. 

Management reports addressed issues with respect to inactive grants not started within two years 

of ARC approval or obligations, expired end dates with large ARC balances, grants with small 

balances and no recent payments and a review of the timelines of 2018 grant approvals and 

obligations. 

We noted 79 grants with no payments within two years of grant approval and obligations totaling 

$47,970,533. This included 29 basic agency administered grants totaling $35,066,299. 26 RSBA 

grants totaling $9,575,004 and 14 ARC administered grants totaling $3,329,190. This also 

included 6 grants totaling $1,070,000 for which Basic Agency Monitoring Reports (BAMR) 

recommended action to deobligate the grants. 

A contributing factor with respect to grant closeouts and deobligations for Basic Agency and 

State administered grants is the difficulty ARC has in obtaining necessary information from the 

grant administering agencies. 

There were 102 grants identified where performance end dates for grants with over $50,000 

balances totaling $20,563,856, had expired subjecting these grants to possible ineligible 

expenditures. This includes 38 ARC administered grants totaling $4,569,316; 35 Basic Agency 

administered grants totaling $8,672,218 and 29 State administered grants totaling $7,322,322. 

This is considered a significant issue based on policy that project expenditures identified after the 

performance period are ineligible for reimbursement. The absence of supporting extensions 

results in expenditures being at risk. ARC policies provide a process for grantees to request and 

support an extension prior to expiration of the performance period. There were no changes to 13 

grants with expired end dates and large balances included in prior reports. 
7 

Recommendations emphasized timely follow-up on grants with no reported payments at least 

two years after approval or obligation to determine the potential to use funds on other priority 

projects, and addressing expired performance periods that could result in significant ineligible 

payments and timely use of advances. 

There was $149,989 deobligated this period and became available for use on other projects. 

The review of FY 2018 grant application approvals and obligations determined that 64 percent of 

applications were approved in the last quarter of the fiscal year. This resulted in an unbalanced 

workload and 73 percent of the FY obligations occurring in the last quarter. 

Although ARC approves grant applications in a timely manner the process does not significantly 

address an approval process that better assures a more balanced distribution of applications, 

approvals and the unbalanced workload. 

There are various factors that contributes to late applications, approvals and obligations. It has 

been generally agreed by ARC and State representatives that more timely submissions of 

applications would be beneficial for improving the grant approval process. 

Continued follow-up with State partners to identify and address actions to reduce the imbalance 

of applications, approvals, obligations and the unbalanced workload. The OIG has identified this 

and similar issues in past reports. 

ARC generally agreed with the recommendations noted above. 

Peer Review 

Offices of the Inspectors General (OIGs) are required to perform (and undergo) reviews of other 

OIG 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 

OIG peer review conducted in FY 2017 by the Commodity Futures Trading Commission OIG 

disclosed no findings and the next peer review of ARC is scheduled for FY 2020. 

Also, peer reviews of Inspections and evaluations have been initiated by CIGIE and the first 

review of ARC OIG is scheduled for FY 2020. 

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 ARC OIG does not employ criminal investigators and utilizes other 

OIGs to perform needed investigations. Also, if appropriate, the results of investigations may be 

referred to Federal, State, or local prosecutor authorities for action. 
8 

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 required to mandated reviews. The IG is an 

active member of the 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 all federal OIG offices. 

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 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

The OMB list of Designated Federal Entities (DFE) includes ARC and conforms legislation 

identifying the 13 Appalachian Governors and Federal Co-Chair as the ARC Agency Head. No 

problems have been experienced with respect to implementation of the legislation. 
9 

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 there are areas where OIG-wide audit 

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

The noted issues do not involve Appalachian Regional Commission operations. 

Performance Audit Skills Gaps 

 

There is a continued significant need to address the audit critical skills gap with respect to OIG 

performance auditing that constitute the large majority of OIG audit work conducted by OIG 

audit organizations. In 2012 the Office of Personnel Management (OPM) and OIGs identified an 

audit skills gap pertaining to performance auditing and OPM and OIG’s noted that the OPM 

0511 auditor series that requires 24 credit hours of accounting or an equivalent level of 

accounting experience was outdated and did not attract individuals with the core competencies to 

conduct performance audits. An ongoing OPM study, including focus groups involving OIG 

staff, has overwhelmingly identified primary performance audit skills as oral and written 

communications, problems solving, data analytics, interpersonal communications and critical 

thinking. 

The current 0343 management analyst series is not used to a significant degree in relation to the 

audit workload and does not include educational requirements. 

A 2016 internal OIG survey highlighted the need to address this issue. 54 OIG respondents 

reported that 88.8 percent or 3825 of the 4307 performance or financial auditors were considered 

performance auditors. Also, the survey noted that 90.1 percent of the 609 vacant or anticipated 

vacant performance and financial audit positions were considered performance auditor positions. 

Other government audit organizations including the Government Accounting Office (GAO) have 

recognized and addressed this issue. 

Recommendations and actions to increase auditor qualification flexibility with emphasis on the 

primary performance audit competencies are not intended and would not interfere with continued 

use of the 0511 auditor series for financial related audit work. However, action to correct the 

identified audit skills gaps would facilitate employment of staff best suited for the large majority 

of OIG audit work at most OIG’s and, over a period of time, significantly increase audit 

effectiveness and reduce wasted use of OIG resources. 

Implementation of Recommendations 

Report OIG disagreement with management decisions not to implement very significant 

programmatic recommendation. A prior Congressional report noted 15,222 open 

recommendations with potential monetary savings of $87 billion dollars. The IG Act provision 

5(a)(12) that provides for including in the semi-annual report information concerning any 
10 

significant management decision with which the IG is in disagreement is seldom, if ever, used to 

highlight disagreement with management decisions on significant programmatic or potential 

large monetary benefit recommendations. 

Audit Peer Reviews

- 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. Such reviews should 

contribute to increased OIG audit efficiency and effectiveness such as addressing timely 

reporting that often surfaces as a criticism. 

Some OIGs conduct internal assessments of key operational elements. These reviews are 

considered independent since they are conducted by staff from other units within the OIG. This 

reasoning conflicts with a major reason for establishment of OIGs being that agency internal 

audit units were not considered sufficiently independent even though audits were conducted by 

units not connected with the audited unit. 

Actual Versus Potential Monetary Results 

- 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 savings 

reported annually based primarily on questioned and undocumented costs. OIG 

recommendations result in savings in excess of OIG operational costs. However, actual savings 

are not included in the OIG Annual Report to the President or in most OIG Semi-annual reports. 

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 A-50, 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 dollars of disallowed costs that were written off by management 

as part of the agency head transmittal of the OIG SAR to Congress. OMB circular A-50 states 

that the Agency follow-up official is to Semi-annually provide the head of the agency the amount 

of collections, offsets, write-offs, demands for payment and other monetary benefits resulting 

from audits. 

Based on this available information and OIG Semi-annual reports that identify agreed with 

disallowances tracking of some actual savings over a multi-year period appears reasonable and 

would better support OIG credibility. 
11 

Such reporting would also be in conformance with the intent of the Government Performance 

and Results Act (GPRA) that emphasizes reporting projected and actual results. 
APPENDIX A 

 SCHEDULE OF AUDIT, INSPECTION, EVALUATION & REVIEW REPORTS 

 ISSUED APRIL 1, 2018 TO SEPTEMBER 30, 2019

 

Report No. Report Title/Description Program Dollars or 

Contract/Grant 

Amount* 

Questioned/ 

Unsupported 

Costs** 

Funds to Better 

Use*** 

19-25 SW PA Corporation PA $662,567 

19-26 Jobs for MS Graduates, Inc. $600,000 $123,124 

19-27 Trenholm State Community College $1,714,640 $42,275 

19-28 Itawamba Community College $1,200,000 

19-29 Approvals & Obligations 

19-30 Hagerstown Community College $500,000 

19-31 Isothermal Community College $987,940 $39,911 

19-32 MS Department of education $540,000 

19-33 East MS Community College $10,769,271 

19-34 Baptist Memorial Hospital $552,779 

19-35 Consortium for Entrepreneurship Education $2,196,450 

19-36 Marshall University Research Corporation $1,502,939 

19-37 Fayette County Community Action Agency $1,750,000 

19-38 Washington Greene County Job Training $653,400 

19-39 Southern Alleghenies Planning & Community 

Development Commission (LDD) $304,000 

19-40 Southern Alleghenies Planning & Community 

Development Commission (PREP) $1,200,000 

19-41 Ohio Mid-Eastern Regional Education Services $200,000 

19-42 ARC Administered Grants 

19-43 State Administered Grants 

19-44 Basic Agency Administered Grants $1,070,000

Total $25,333,986 $205,310 $1,070,000 

1/Evaluations assessed grant management actions with respect to about $30 million in programs expenditures. 

. 
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 

 4 $ 275 

 

 Subtotals (A + B) 1 $ 275 

C. For which a management 

decision was made during the reporting 

period

 

 

(i) dollar value of disallowed 

costs 

 $10 

 

(ii) dollar value of costs not 

disallowed 

 

 

D. For which no management 

decision has been made by the end of 

the reporting period 

 4 

 

E. Reports for which no 

management decision was made within 

6 months of issuance 
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 4 $1,200 

 Subtotals (A + B) 4 

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 4 1/ $1,200 

 

 --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 

 0 

 

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 in prior report. Management agrees to follow-up on identified grant and

the value noted 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, Suite 700 

Washington, DC 20009-1068 

Information can be provided anonymously. 

Federal Government employees are protected from reprisal, 

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