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Examination of Costs Claimed 

Under Grant AB-83363501 

Awarded to Lead Remediation 

Association of America

Report No. 13-P-0341 August 6, 2013

U.S. ENVIRONMENTAL PROTECTION AGENCY

OFFICE OF INSPECTOR GENERAL
Report Contributors: David Kim

Lela Wong

Abbreviations

CFR Code of Federal Regulations

EPA U.S. Environmental Protection Agency

LRAA Lead Remediation Association of America

OGD Office of Grants and Debarment

OIG Office of Inspector General

RRP Renovation, Repair and Painting

Hotline

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write: EPA Inspector General Hotline 

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13-P-0341

August 6, 2013

Why We Did This Review

The U.S. Environmental 

Protection Agency, Office of 

Inspector General, conducted 

this examination to determine 

whether the costs claimed 

under grant AB-83363501 

awarded to the Lead 

Remediation Association of 

America are reasonable, 

allowable and allocable in 

accordance with the applicable 

laws, regulations and grant 

terms and conditions. The OIG 

also sought to determine

whether the objectives of the 

grant were met. 

This report addresses the 

following EPA Goal and 

Cross-Cutting Strategy:

Ensuring the safety of 

chemicals and preventing 

pollution.

For further information, contact 

our Office of Congressional and 

Public Affairs at (202) 566-2391.

The full report is at:

www.epa.gov/oig/reports/2013/ 

20130806-13-P-0341.pdf

Examination of Costs Claimed Under Grant 

AB-83363501 Awarded to Lead Remediation 

Association of America

 What We Found

We found that LRAA’s financial management system did not meet the standards 

established under the Code of Federal Regulations at 40 CFR § 30.21. LRAA’s 

accounting system data was not updated timely. LRAA also made cash draws and 

submitted its final federal financial report using the grant budget amounts rather than 

actual costs incurred. In addition, LRAA did not maintain source documentation to 

support the costs incurred or claimed. 

Title 40 CFR § 30.21(b) requires the recipient’s financial management systems to 

provide accurate, current and complete disclosure of the financial results and to include 

records that adequately identify the source and application of funds for federally 

sponsored activities. Title 2 CFR Part 230, Appendix A, Paragraphs A.2(a) and (g), also 

require costs to be allocable and adequately documented to be considered allowable 

under an award. LRAA did not meet these requirements. 

We also found that LRAA did not meet the grant objectives as outlined in the approved 

work plan. The work plan requires LRAA to produce and distribute lead safety work 

practice DVDs, provide lead safety training and workshops, distribute brochures, and 

carry out other duties to promote lead safety practices in low-income communities. As of 

the date of our report, 2 years after the grant period end date of June 30, 2011, LRAA

has not produced the required DVDs, provided evidence of brochure distribution, or 

completed the required training and workshops.

As a result of the issues noted above, we questioned the $249,870 claimed and 

recommended recovery of the $249,882 drawn under the grant.

 Recommendations 

We recommend that the director of the Office of Grants and Debarment question 

$249,870 claimed and recover $249,882 drawn under the grant. We also recommend 

that the director verify that LRAA has a financial management system that meets the 

federal standards established under 40 CFR § 30.21 prior to any future awards.

LRAA generally agreed that it did not have the documentation to meet the federal 

requirements. However, LRAA disagreed with our recommendation to question the 

$249,870 claimed under the grant. LRAA stated that it is entitled to the claimed costs 

because it has done work under the grant and its general ledger showed incurred costs.

Costs recorded in the general ledger without the supporting source documentation do not 

meet CFR requirements; therefore, we will continue to question the costs.

U.S. Environmental Protection Agency

Office of Inspector General

At a Glance
August 6, 2013 

MEMORANDUM 

SUBJECT: Examination of Costs Claimed Under Grant AB-83363501 Awarded to Lead 

Remediation Association of America

Report No. 13-P-0341

FROM: Arthur A. Elkins Jr.

TO: Howard Corcoran, Director

Office of Grants and Debarment

This report contains time-critical findings that describe the problems the Office of Inspector General has 

identified and corrective actions the OIG recommends. This report represents the opinion of the OIG and 

does not necessarily represent the final position of the U.S. Environmental Protection Agency. In

accordance with established audit-resolution procedures, EPA managers will make final determinations 

concerning matters in this report. 

Action Required 

In accordance with EPA Manual 2750, you are required to provide us your proposed management 

decision on the findings and recommendations contained in this report before you formally complete 

resolution with the recipient. Your proposed management decision is due in 120 days or on 

December 4, 2013. To expedite the resolution process, please email an electronic version of your 

proposed management decision to adachi.robert@epa.gov.

Your response will be posted on the OIG’s public website, along with our memorandum commenting on 

your response. Your response should be provided as an Adobe PDF file that complies with the 

accessibility requirements of Section 508 of the Rehabilitation Act of 1973, as amended. The final 

response should not contain data that you do not want to be released to the public. If your response 

contains such data, you should identify the data for redaction or removal. This report will be available at 

http://www.epa.gov/oig. 

If you or your staff have any questions regarding this report, please contact Richard Eyermann, acting 

assistant inspector general for the Office of Audit, at (202) 566-0565 or eyermann.richard@epa.gov; 

or Robert Adachi, product line director, at (415) 947-4537 or adachi.robert@epa.gov.

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

WASHINGTON, D.C. 20460

THE INSPECTOR GENERAL
Examination of Costs Claimed Under Grant AB-83363501 13-P-0341

Awarded to Lead Remediation Association of America

Table of Contents

Chapters

1 Independent Accountant’s Report .................................................................. 1

2 Introduction ...................................................................................................... 3

Purpose ..................................................................................................... 3

Background................................................................................................ 3

3 Financial Management System Did Not Meet Federal Requirements ........... 4

Recommendations..................................................................................... 9

Recipient Comments.................................................................................. 9

OIG Response .......................................................................................... 10

4 LRAA Did Not Meet Grant Objectives ............................................................. 11 

LRAA Did Not Produce and Distribute DVDs ............................................. 11

LRAA Did Not Complete the Required Training ......................................... 12

LRAA Did Not Meet Other Objectives ....................................................... 12

Conclusion ................................................................................................ 13

Recommendation....................................................................................... 13

Recipient Comments.................................................................................. 13

OIG Response ........................................................................................... 13

5 Other Matter...................................................................................................... 14 

Status of Recommendations and Potential Monetary Benefits ............................. 15

Appendix

A Distribution ....................................................................................................... 16
13-P-0341 1

Chapter 1

Independent Accountant’s Report

At the request of the U.S. Environmental Protection Agency, Office of Grants

and Debarment, we have examined the costs claimed by Lead Remediation 

Association of America in its October 18, 2009, final federal financial report for 

grant number AB-83363501. 

By signing the award documents and thus agreeing to the terms set out therein, 

LRAA has accepted responsibility for complying with the requirements of the 

Code of Federal Regulations under 2 CFR Part 230, 40 CFR Part 30, and the grant 

terms and conditions. Our responsibility is to express an opinion as to whether 

LRAA complied with the applicable requirements. 

Our examination was conducted in accordance with the Government Auditing 

Standards issued by the Comptroller General of the United States and the 

attestation standards established by the American Institute of Certified Public 

Accountants. We examined, on a test basis, evidence supporting the amount 

claimed under the grant and performed other procedures we considered necessary 

under the circumstances. We believe our examination provides a reasonable basis 

for our opinion.

We conducted our fieldwork from March 12, 2013, through August 6, 2013. 

We performed the following steps to obtain an understanding of the project and 

LRAA’s policies and procedures: 

Interviewed LRAA’s executive director and program manager, as well as 

its outside certified public accountant.

Reviewed written policies and procedures. 

Reviewed the grant application and approved work plan to identify grant 

objectives and expected deliverables.

Reviewed all source documentation provided by LRAA to determine cost 

allowability and proper support for meeting grant objectives.

LRAA is responsible for establishing and maintaining effective internal control 

over compliance with the requirements of 40 CFR Part 30, 2 CFR Part 230, and 

the terms and conditions of the grant. In planning and performing our 

examination, we considered LRAA’s internal control over compliance with the 

requirements listed above as a basis for designing our examination procedures for 

the purpose of expressing our opinion on compliance, but not for the purpose of 

expressing an opinion on the effectiveness of internal control over compliance. 

Accordingly, we do not express an opinion on the effectiveness of LRAA’s 

internal control over compliance. 
13-P-0341 2

Our consideration of internal control over compliance was for the limited purpose 

described in the preceding paragraph and was not designed to identify all 

deficiencies in internal control over compliance that might be significant 

deficiencies or material weaknesses; therefore, there can be no assurance that all 

deficiencies, significant deficiencies or material weaknesses have been identified. 

A significant deficiency is a deficiency in internal control, or combination of 

deficiencies, that adversely affects that entity’s ability to initiate, authorize, 

record, process, or report data reliably in accordance with the applicable criteria 

or framework, such that there is more than a remote likelihood that a misstatement 

of the subject matter that is more than inconsequential will not be prevented or 

detected. A material weakness is a significant deficiency, or combination of 

significant deficiencies, that results in more than a remote likelihood that material 

misstatement of the subject matter will not be prevented or detected. 

Our examination disclosed a material weakness concerning LRAA’s 

internal control over compliance with the requirements of 40 CFR Part 30, 

2 CFR Part 230, and the terms and conditions of the grant. Our examination 

disclosed that LRAA’s financial management system did not meet the federal 

standards established under 40 CFR § 30.21. We noted the following issues:

Accounting system data was not updated timely. 

Costs charged to the grant were based on grant budget rather than actual 

costs incurred.

LRAA did not maintain source documentation to support costs incurred or 

claimed. 

Our examination also disclosed that LRAA also did not meet the objectives of 

the grant. As of the date of our report, 2 years after the grant period end date of 

June 30, 2011, LRAA has not produced the required DVDs, provided evidence 

of the required brochure distributions, or completed the training and workshops 

required under the grant. 

As a result of the issues noted above, we questioned the $249,870 claimed and 

recommended recovery of the $249,882 drawn under the grant. In our opinion, 

because of the effect of the issues described above, the costs claimed in the final 

federal financial report for grant number AB-83363501 do not meet, in all material 

respects, the requirements of 40 CFR Part 30, 2 CFR Part 230, and the grant terms 

and conditions.

Robert K. Adachi

Director, Forensic Audits

August 6, 2013
13-P-0341 3

Chapter 2

Introduction

Purpose

The U.S. Environmental Protection Agency, Office of Inspector General,

conducted this examination to determine whether the costs claimed under EPA 

grant number AB-83363501 are reasonable, allowable and allocable in 

accordance with the applicable laws, regulations and grant terms and conditions. 

The OIG also sought to determine whether the objectives of the grant were met. 

Background

We initiated this examination at the request of EPA Office of Grants and 

Debarment. During a desk review, OGD identified several areas of concern, 

including lack of internal controls, lack of adequate documentation and project 

results not being achieved. As a result, OGD requested the OIG to conduct a 

review of the grant. 

The EPA awarded the grant to LRAA on September 5, 2007. The total amount of 

the grant is $249,988 with no recipient match requirement. The purpose of the grant 

is to raise lead hazard awareness for children and families in low-income 

communities in the San Francisco Bay Area. The project and budget period was 

from September 1, 2007, to June 30, 2011. LRAA submitted its final federal 

financial report on October 18, 2009, claiming $249,870 in federal expenditures.
13-P-0341 4

Chapter 3

Financial Management System Did Not 

Meet Federal Requirements

Our examination disclosed that LRAA’s financial management system did not 

meet the federal standards established under 40 CFR § 30.21. LRAA’s accounting 

system data was not updated timely. LRAA submitted its final federal 

financial report on October 18, 2009. However, when we started fieldwork on 

March 12, 2013, LRAA’s general ledger was not ready for review. In addition, 

LRAA made cash draws and submitted its final federal financial report using the 

grant budget amounts rather than actual costs incurred. LRAA did not maintain 

source documentation to support the costs incurred or claimed. 

Title 40 CFR § 30.21(b) requires the recipient’s financial management systems to 

provide accurate, current and complete disclosure of the financial results and to 

include records that adequately identify the source and application of funds for 

federally sponsored activities. Title 2 CFR Part 230, Appendix A, Paragraphs 

A.2(a) and (g), also require costs to be allocable and adequately documented to be 

considered allowable under an award. LRAA did not meet these requirements. As 

a result, we questioned $227,702 of the $249,870 claimed under the grant and 

recommend recovery of the $227,714 drawn in excess of the allowable project 

costs. Details are summarized in table 1 below.
13-P-0341 5

 Table 1: Summary of questioned costs

Cost category

Amount

claimed

Costs questioned

Ineligible Unsupported Note

Labor and fringe benefit $100,590 - $100,590 1

Contract 40,152 - 40,152 2

Equipment 52,520 $1,219 29,133 3, 11

Stipend 26,700 - 26,700 4

Rental payment 8,500 - 8,500 5

Supplies 1,288 - 1,288 6,11

Travel 473 - 473 7

Meals and entertainment 173 173 - 8

Other 11,513 - 11,513 9, 11

Costs claimed in excess of 

costs reported in general ledger

7,961 - 7,961

Total project costs $249,870 $1,392 $226,310

Total costs questioned 227,702

Allowable project costs 22,168

Allowable federal share (100%) 22,168

Cumulative cash draw 249,882

Amount due EPA $227,714

Sources: Amounts claimed are from LRAA’s general ledger and final federal financial report submitted 

to the EPA under the grant. Costs questioned are based on OIG’s analysis of the data.

Note 1: We questioned labor and fringe benefit costs of $100,590 as unsupported 

because LRAA claimed these costs based on the grant budget rather than 

actual costs incurred. LRAA did not provide supporting timesheets or 

other payroll documentation to substantiate the costs claimed. 

This practice does not comply with the federal requirements under 

2 CFR Part 230, Appendix B, Paragraph 8.m. The regulation states 

“[t]he distribution of salaries and wages to awards must be supported by 

personnel activity reports...” and “[these] reports must reflect an afterthe-fact determination of the actual activity of each employee. Budget 

estimates (i.e., estimates determined before the services are performed) 

do not qualify as support for charges to awards.”

In response to our discussion draft documents, LRAA acknowledged 

that it did not have the documentation to meet federal requirements. 

LRAA stated that it will complete timekeeping procedures by 

July 15, 2013, to ensure compliance with federal requirements in 

the future. LRAA claimed to have a spreadsheet of actual hours worked 

under the grant. However, this spreadsheet was not mentioned during 

fieldwork, although the OIG specifically asked for supporting 
13-P-0341 6

documentation for actual hours worked. The spreadsheet was not 

provided to the OIG for review. As LRAA acknowledged, the 

spreadsheet also did not meet the federal requirements. We will 

continue to question the $100,590 as unsupported.

Note 2: We questioned contract costs of $40,152 as unsupported because LRAA

did not provide any documentation to support that these costs were 

incurred for the grant purpose. The contract costs claimed under the 

grant consist of payments to companies owned by the executive director 

and the program manager. LRAA did not provide contracts, invoices or 

other documents to support the work performed in connection with these 

contract costs. According to 2 CFR Part 230, Appendix A, Paragraph

A.2., to be allowable under a federal award, a cost must be allocable to 

the award and adequately documented. Paragraph A.4.a.(1) defines 

allocable costs as costs incurred specifically for the award.

LRAA acknowledged that it did not have the documentation to meet 

federal requirements. LRAA explained that these contract costs were 

based on the approved budget. However, the budget is an estimate and 

does not support actual costs incurred. Since LRAA is unable to support 

the $40,152 claimed, we questioned the costs.

Note 3: We questioned equipment costs of $1,219 as ineligible and $29,133 as 

unsupported. The ineligible amount of $1,219 represents a refund for 

cameras purchased under the grant. According to 2 CFR Part 230, 

Appendix A, Paragraph A.5.a, credits and refunds should be credited to 

the federal grant as a reduction to expense or cash refund. However, 

LRAA did not credit the refund amount to the grant. As result, LRAA 

overstated the amount claimed by $1,219. 

The unsupported amount of $29,133 consists of $23,372 for a DVD 

burner and $5,761 for miscellaneous equipment items. The DVD burner 

is questioned because LRAA did not conduct cost or price analysis, as 

required under 40 CFR § 30.45. The regulation states that “[s]ome form 

of cost or price analysis shall be made and documented in the 

procurement files in connection with every procurement action.

Price analysis may be accomplished in various ways, including the 

comparison of price quotations submitted, market prices and similar 

indicia, together with discounts. Cost analysis is the review and 

evaluation of each element of cost to determine reasonableness, 

allocability and allowability.” LRAA’s procurement policy also requires 

cost or price analysis for every procurement action above $500 in value. 

LRAA only obtained one price quote for the DVD burner. There was 

no price comparison or other documentation to demonstrate that the 

price was fair and reasonable. As a result, we questioned $23,372 

as unsupported. 
13-P-0341 7

The remaining $5,761 equipment costs are questioned as unsupported 

because LRAA did not provide documentation to support that these 

costs were incurred for grant purposes. According to 2 CFR Part 230, 

Appendix A, Paragraph A.2., to be allowable under a federal award, a 

cost must be allocable to the award and adequately documented.

Paragraph A.4.a.(1) defines allocable costs as costs incurred specifically 

for the award. Since LRAA is unable to support the $5,761 claimed, we 

questioned the costs. 

Note 4: We questioned stipend costs of $26,700 as unsupported because LRAA

did not provide adequate documentation to support the cost claimed. 

According to 2 CFR Part 230, Appendix A, Paragraph A.2.(g), to be 

allowable under a federal award, a cost must be adequately documented. 

The stipends were paid to day laborers as incentives to attend training 

courses conducted under the grant. LRAA provided a few training 

sign-in sheets for review, but the sign-in sheets did not include the actual 

amounts paid, attendee signatures acknowledging receipt of the stipend 

amount, attendees’ contact information, or any other evidence to 

substantiate payment and receipt of the stipends. According to LRAA, 

the training sessions were held at locations not conducive to 

documentation. Many of the attendees were also unwilling to provide 

their information, possibly due to questionable immigration status. Since 

LRAA is unable to support the $26,700 claimed, we questioned the 

costs.

In response to our discussion draft documents, LRAA stated that it will 

institute procedures to ensure stipend costs are properly documented in 

the future.

Note 5: We questioned rental costs of $8,500 as unsupported because LRAA

charged arbitrary monthly rental fees to the grant, contrary to federal 

requirements. According to 2 CFR Part 230, Appendix B, Paragraph 

43.c, rental agreements between the entity and its key employees are 

considered less-than-arms-length transactions. As such, the rental 

agreements LRAA has with its executive director and program manager 

are less-than-arms-length leases. In such transactions, the grantee is 

allowed rental costs up to the amount that would be allowed had the 

grantee owned the property. Paragraph 43.b of the regulation provided 

examples of allowable expenses for properties owned by the grantee. 

Examples include depreciation or use allowance, maintenance, taxes and 

insurance. LRAA charged a flat monthly fee of $500 for each of the two 

rentals under the grant. The charges were not based on any of the costs 

allowed under the regulations. As a result, we questioned the $8,500 

claimed.
13-P-0341 8

LRAA stated that it was unaware of the federal requirements related to 

allowable rental costs and that it would have been helpful to have some 

training on federal regulations from the EPA. However, when LRAA 

signed the award documents, LRAA has accepted responsibility for 

complying with the applicable federal requirements. It is LRAA’s 

responsibility to ensure that staff and management have adequate 

knowledge of the federal requirements to ensure compliance.

Note 6: We questioned supplies costs of $1,288 as unsupported because LRAA

did not provide documentation to support that these costs were incurred 

for grant purposes. According to 2 CFR Part 230, Appendix A, 

Paragraph A.2., to be allowable under a federal award, a cost must be 

allocable to the award and adequately documented. Paragraph A.4.a.(1) 

defines allocable costs as costs incurred specifically for the award. Since 

LRAA is unable to support the $1,288 claimed, we questioned the costs.

Note 7: We questioned travel costs of $473 as unsupported because LRAA did 

not provide documentation to support that these costs were incurred for 

grant purposes. The $473 included costs for car rental and gas. 

According to 2 CFR Part 230, Appendix A, Paragraph A.2., to be 

allowable under a federal award, a cost must be allocable to the award 

and adequately documented. Paragraph A.4.a.(1) defines allocable costs 

as costs incurred specifically for the award. Since LRAA is unable to 

support the $473 claimed, we questioned the costs.

Note 8: We questioned meal and entertainment costs of $173 as ineligible costs 

because these costs are not allowable under 2 CFR Part 230, 

Appendix B, Paragraph 14. The regulation states that costs of 

entertainment, including meals, are unallowable. LRAA also could not 

provide documentation to support that the $173 was incurred for grant 

purposes. According to 2 CFR Part 230, Appendix A, Paragraph A.2., to 

be allowable under a federal award, a cost must be allocable to the 

award and adequately documented. Paragraph A.4.a.(1) defines allocable 

costs as costs incurred specifically for the award.

Note 9: We questioned other costs of $11,513 as unsupported. The $11,513 

claimed include costs for conferences/conventions/meetings, software 

purchases, gas, telephone/telecommunications, printing and copying, 

postage/mailing services, bank service charges, and accounts payable

transactions. LRAA did not provide documentation to support that these 

costs were incurred for grant purposes. According to 2 CFR Part 230, 

Appendix A, Paragraph A.2., to be allowable under a federal award, a 

cost must be allocable to the award and adequately documented. 

Paragraph A.4.a.(1) defines allocable costs as costs incurred specifically 
13-P-0341 9

for the award. Since LRAA is unable to support the $11,513 claimed, we 

questioned the costs.

Note 10: We questioned additional costs of $7,961 as unsupported. The $7,961 

represents the amount claimed in the final federal financial report in 

excess of the amount recorded in LRAA’s general ledger. The $7,961 is 

questioned because LRAA did not provide supporting accounting data or 

source documentation for the amount. According to 2 CFR Part 230, 

Appendix A, Paragraph A.2.g., to be allowable under a federal award, a 

cost must be adequately documented. Since LRAA is unable to support 

the $11,513 claimed, we questioned the costs.

Note 11: Our review of the bank statements revealed that LRAA received 

credit/refunds of $2,765 under the grant. The $2,765 included the 

$1,219 refund for the camera purchase discussed under Note 3 above. 

The remaining amount consists of $1,292 in check reversals, $244 in 

office supplies return and $10 in cash back award. According to 

2 CFR Part 230, Appendix A, Paragraph A.5.a, credits and refunds 

should be credited to the federal grant as a reduction to expense or cash 

refund. LRAA did not credit the EPA for the refunds/credits. As a result, 

the amount claimed is overstated by $2,765. These costs are already 

being questioned under Notes 1 to 10 above.

Recommendations

We recommend that the director, Office of Grants and Debarment:

1. Question the $227,702 claimed under the grant and recover the $227,714 

drawn in excess of the allowable project costs. 

2. Verify that LRAA has a financial management system that meets federal 

standards established under 40 CFR § 30.21 prior to any future awards.

Recipient Comments

The OIG conducted a field exit conference with LRAA and OGD on 

June 5, 2013, to discuss the preliminary audit results. We also provided OGD and 

LRAA with the discussion draft documents on June 4 and 5, 2013, respectively. 

We met with LRAA on June 20, 2013, to obtain its verbal comments on the 

discussion draft. LRAA generally agreed that it did not have the documentation to 

meet the federal requirements. LRAA stated that the lack of documentation was 

mainly due to the fact that LRAA moved its office three times and that most of 

the transactions in question occurred more than 5 years ago. Furthermore, LRAA 

noted that the training sessions for day laborers were held in public parks, parking
13-P-0341 10

lots and other places where the attendees naturally congregate, and not in a formal 

classroom. As such, the environment was not conducive to recordkeeping. LRAA 

also stated that it will update policies and procedures to ensure that federal 

recordkeeping requirements are met in the future.

LRAA disagreed with our recommendation to question the $227,702 claimed 

under the grant. LRAA stated that it has done work under the grant and its 

general ledger showed over $200,000 of costs incurred; therefore, LRAA is 

entitled to the payment.

OIG Response

We questioned the $227,702 because LRAA was unable to provide documentation 

to support the costs claimed. Costs recorded in the general ledger without the 

supporting source documentation do not meet the federal requirements of 

2 CFR Part 230, Appendix A, Paragraphs A.2 and A.4; therefore, we will 

continue to question the costs. 
13-P-0341 11

Chapter 4

LRAA Did Not Meet Grant Objectives

LRAA did not meet the grant objectives as outlined in the approved work plan.

The work plan states that LRAA will produce and distribute lead safety work 

practice DVDs, provide lead safety work practice training and workshops, 

distribute brochures and carry out other administrative duties to promote lead 

safety in low-income communities. As of the date of our report, 2 years after the 

grant period end date of June 30, 2011, LRAA has not produced the required 

DVDs, provided evidence of the required brochure distributions, or completed the 

training and workshops required under the grant. Since LRAA did not complete 

the work under the grant, the EPA should question and recover the $249,870 

claimed under the grant. However, because $227,702 of the $249,870 claimed 

has already been questioned in chapter 3 of this report, we questioned the 

remaining $22,168.

LRAA Did Not Produce and Distribute DVDs

The approved work plan requires LRAA to produce and distribute 3,750 lead safety 

work practice DVDs for various groups in English and Spanish as well as making 

the film available for download on the internet. The original project period was

from September 1, 2007, to August 31, 2008, but it has been extended to 

June 30, 2011, through three no-cost time extension amendments. 

As of the date of our report, 2 years after the grant period, LRAA has not produced 

the required DVDs. The executive director said that LRAA produced some films in 

2007 and 2008 according to the approved work plan. However, when LRAA 

learned that the EPA’s Renovation, Repair and Painting Program will issue new 

lead safety guidelines to be effective in 2010, LRAA decided to discontinue the

filming because it would become obsolete within a year. Instead, LRAA focused on 

obtaining the material to produce films to reflect the new RRP guideline. 

According to the executive director, the filming from 2007 and 2008 is no longer 

available because the external hard drive containing the films crashed in 2010.

LRAA filmed the videos based on the new RRP guidelines between mid-2011 

and 2012. The videos were posted to YouTube for the EPA’s review in 

January 2012. LRAA revised the videos based on the EPA’s comments and 

provided them in DVD format to the EPA for further comments in December 2012. 

However, based on discussions with the EPA project officer in June 2013, the 

revised DVDs also do not meet the grant requirements.

According to the executive director, the changes in work plan and deliverables 

were communicated with the EPA project officer verbally. However, LRAA was 
13-P-0341 12

unable to provide documentation to support this claim. Title 40 

CFR § 30.25(c)(1)(i) requires any changes in scope and objective of 

the project to be approved by the awarding officer, not the project officer.

LRAA Did Not Complete the Required Training 

The approved work plan for the grant requires LRAA to provide a total of 30 

8-hour lead safety work practice training to property owners, maintenance 

workers, contractors, day workers and those who hire them in order to increase 

their effectiveness in identifying and reducing the likelihood of incidences of 

elevated blood-lead levels in low-income communities. LRAA was also to 

implement and complete a total of 75 one-hour lead safety work practice 

workshops for do-it-yourselfers and contractors. The total expected training hours 

per the work plan is 315 hours. However, LRAA only provided 9 sign-in sheets 

for 4-hour lead safety awareness classes, totaling 36 hours of training.

LRAA Did Not Meet Other Objectives 

The work plan requires LRAA to initially meet with the Association of Bay Area 

Governments, the Bay Area Real Estate Association and other community groups

in order to create a project champion group and identify a listing of low-income 

communities within each county to be targeted for outreach and training. 

According to the approved work plan, LRAA was to conduct two strategic 

planning training meetings with the champion group to discuss the initiative in 

general and the group’s roles, responsibilities and expectations. LRAA was also 

to hold a regional lead conference. LRAA did not provide evidence to 

demonstrate that these tasks were accomplished.

LRAA’s executive director said he contacted the Association of Bay Area 

Governments. However, lead problem was not a high priority among the bay area 

governments at the time. The executive director also said he reached out to many 

lead professionals, such as the directors of lead programs at various cities in the 

bay area, with attempts to create a champion group for the cause. He said LRAA’s 

efforts yielded no results due to economic downturn. However, LRAA was unable 

to provide any documentation to support these outreach efforts.

The work plan also states that LRAA will distribute at a minimum 7,500 

brochures, fact sheets, flyers and other materials to homes and apartments in 

low-income communities, as well as in any natural gathering places within and

without these communities where building construction workers congregate.

According to LRAA, training materials downloaded from EPA’s website were 

distributed in training class, not to the general public. However, LRAA was 

unable to provide evidence that the brochures were distributed, in class or to the 

general public.
13-P-0341 13

Conclusion

Since LRAA did not complete the work under the grant, the EPA should question 

the entire amount of $249,870 claimed under the grant. However, $227,702 of the 

$249,870 claimed has already been questioned in chapter 3 of this report. We 

questioned the remaining $22,168 under this section.

Recommendation

We recommend that the director, Office of Grants and Debarment:

3. Question and recover the $22,168 claimed under the grant. In the event

 recommendation 1 is not sustained, the director should question the 

 entire amount of $249,870 claimed and recover the $249,882 drawn 

 under the grant. 

Recipient Comments

The OIG conducted a field exit conference with LRAA and OGD on 

June 5, 2013, to discuss the preliminary audit results. We also provided OGD and 

LRAA with the discussion draft documents on June 4 and 5, 2013, respectively. 

We met with LRAA on June 20, 2013, to obtain its verbal comments on the 

discussion draft. LRAA reiterated that it had done filming in 2007 and 2008. 

LRAA stated that it had recently found a copy of an interview conducted with the 

deputy director of the San Francisco Public Health Department in 2008. LRAA 

also stated that producing and distributing DVDs are tied with the required 

training. According to LRAA, the plan was always to produce the DVDs once the 

EPA approved the films and distribute the DVDs in class. 

LRAA plans to provide more training once the DVDs are approved by the EPA. 

However, LRAA will not be able to complete all training in the work plan due to 

financial constraints. LRAA stated that it originally applied for $500,000 in 

federal funding for the project. However, since the EPA award was only about 

$250,000, LRAA had to try to secure additional funding from other sources. 

However, due to general economic downturn, LRAA was unsuccessful. 

OIG Response

LRAA has not provided documentation to support its claim that the original grant 

budget was $500,000 rather than the award amount of $249,988. Regardless of the 

financial circumstance, when LRAA signed the grant award documents, it agreed to 

complete the work within the award budget of $249,988. Interviewing the deputy 

director of the San Francisco Public Health Department was not part of the work

plan and does not support the grant objective. Since LRAA did not meet the grant 

objectives, we will continue to question the costs. 
13-P-0341 14

Chapter 5

Other Matter 

During our fieldwork, it came to our attention that LRAA did not file the 

required tax returns and lost its nonprofit status as a result. We confirmed 

through the Internal Revenue Service that LRAA’s nonprofit status was 

revoked on May 15, 2010. Therefore, LRAA will not be eligible to receive 

nonprofit assistance agreements in the future.

LRAA’s executive director stated on June 25, 2013, that he has contacted the 

Internal Revenue Service about LRAA’s nonprofit status. The executive director 

stated that LRAA is currently preparing the documents necessary to retroactively 

reinstate its nonprofit status.
13-P-0341 15

Status of Recommendations and 

Potential Monetary Benefits

RECOMMENDATIONS

POTENTIAL MONETARY 

BENEFITS ($000s)

Rec. 

No.

Page 

No. Subject Status1 Action Official

Planned 

Completion 

Date

Claimed 

Amount

Agreed-To 

Amount

1 9 Question the $227,702 claimed under the grant

and recover the $227,714 drawn in excess of the 

allowable project costs. 

U Director, Office of Grants 

and Debarment

$228

2 9 Verify that LRAA has a financial management 

system that meets federal standards established 

under 40 CFR § 30.21 prior to any future awards. 

U Director, Office of Grants 

and Debarment

3 13 Question and recover the $22,168 claimed under 

the grant. In the event recommendation 1 is not 

sustained, the director should question the entire 

amount of $249,870 claimed and recover the 

$249,882 drawn under the grant.

U Director, Office of Grants 

and Debarment

$22

1 O = Recommendation is open with agreed-to corrective actions pending.

C = Recommendation is closed with all agreed-to actions completed.

U = Recommendation is unresolved with resolution efforts in progress.
13-P-0341 16

Appendix A

Distribution

Assistant Administrator, Office of Administration and Resources Management

Director, Office of Grants and Debarment, Office of Administration and Resources Management

Director, Grants and Interagency Agreements Management Division, 

Office of Administration and Resources Management

Agency Follow-Up Official (the CFO)

Agency Follow-Up Coordinator

Associate Administrator for Congressional and Intergovernmental Relations

Associate Administrator for External Affairs and Environmental Education

Audit Follow-Up Coordinator, Office of Administration and Resources Management

Audit Follow-Up Coordinator, Office of Grants and Debarment,

Office of Administration and Resources Management

Executive Director, Lead Remediation Association of America