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U.S. ENVIRONMENTAL PROTECTION AGENCY

OFFICE OF INSPECTOR GENERAL

Audit of American Recovery and 

Reinvestment Act Cooperative 

Agreement 2A-00E85701 Awarded 

to the Greater Lansing Area 

Clean Cities 

Report No. 14-R-0088 January 9, 2014 

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Abbreviations 

CFR Code of Federal Regulations 

EPA U.S. Environmental Protection Agency 

GLACC Greater Lansing Area Clean Cities 

IPA Independent Public Accounting 

OG&C Ollie Green & Company 

OIG Office of Inspector General 

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Washington, DC 20460
 Washington, DC 20460 
 

U.S. Environmental Protection Agency 14-R-0088 

January 9, 2014 Office of Inspector General 

At a Glance 

Why We Did This Review 

The U.S. Environmental 

Protection Agency (EPA) 

awarded American Recovery 

and Reinvestment Act 

cooperative agreement 

2A-00E85701 to the Greater 

Lansing Area Clean Cities 

(GLACC). The Office of 

Inspector General (OIG) 

contracted with Ollie Green & 

Company, an independent 

accounting (IPA) firm, to audit 

the agreement. The objectives 

of the audit were to determine 

whether GLACC’s costs 

claimed and procurements 

under the cooperative 

agreement complied with the 

applicable federal requirements 

and whether GLACC met the 

Recovery Act requirements and 

cooperative agreement 

objectives. 

This report addresses the 

following EPA themes: 

 Making a visible difference 

in communities across the 

country. 

 Addressing climate change 

and improving air quality. 

 Launching a new era of 

state, tribal and local 

partnerships. 

For further information, 

contact our public affairs office 

at (202) 566-2391. 

The full report is at: 

www.epa.gov/oig/reports/2014/ 

20140109-14-R-0088.pdf 

Audit of American Recovery and Reinvestment Act 

Cooperative Agreement 2A-00E85701 Awarded to the 

Greater Lansing Area Clean Cities 

 What the IPA Auditor Found 

The IPA found that the costs claimed by GLACC were GLACC awarded 

generally not allowable because two contracts with contracts with conflicts 

of interest, resulting in conflicts of interest were awarded under the 

questioned costs of cooperative agreement. In addition, the IPA found that $805,759. the accounting system used by GLACC needs 

improvement to better identify costs by project. 

The IPA found that except for the two contracts with conflicts of interest, GLACC 

complied with the procurement requirements of the Code of Federal Regulations 

(CFR) under 40 CFR Part 30 and the applicable Recovery Act requirements. The 

IPA also found that GLACC met all cooperative agreement objectives. 

In addition, the IPA identified a concern about GLACC’s lack of physical entity, 

which increased the government’s risk that the work under the cooperative 

agreement may not be completed. 

The IPA is responsible for the content of the audit report. The OIG performed the 

procedures necessary to obtain reasonable assurance about the IPA’s 

independence, qualifications, technical approach and audit results. Having done 

so, the OIG accepts the IPA’s conclusions and recommendations.

 Recommendations 

The IPA’s report recommended that the Region 5 Regional Administrator 

require GLACC to recover the questioned costs of $805,759 due to 

conflicts of interest. The report also recommended that the Regional 

Administrator verify that GLACC’s accounting system is adequate for 

providing accurate and complete disclosure of financial results of each 

federally sponsored program, as required by 40 CFR 30.21(b)(1), prior to 

any future award. 

GLACC disagreed with the findings and recommendations. Region 5 disagreed 

with the accounting system issue, and stated that the region did not have 

sufficient information to comment on the conflict of interest issue. 
 

 

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

WASHINGTON, D.C. 20460 

THE INSPECTOR GENERAL 

January 9, 2014 

MEMORANDUM 

SUBJECT:	 Audit of American Recovery and Reinvestment Act Cooperative 

Agreement 2A-00E85701 Awarded to the Greater Lansing Area Clean Cities 

Report No. 14-R-0088 

FROM:	 Arthur A. Elkins Jr. 

TO:	 Susan Hedman, Regional Administrator 

Region 5 

This memorandum transmits the final report for the audit of American Recovery and Reinvestment Act 

cooperative agreement 2A-00E85701 awarded to the Greater Lansing Area Clean Cities. 

The independent public accounting (IPA) firm Ollie Green & Company conducted this audit on behalf 

of the Office of Inspector General (OIG) of the U.S. Environmental Protection Agency (EPA). The audit 

was required to be conducted in accordance with Government Auditing Standards, issued by the 

Comptroller General of the United States. The IPA is responsible for the audit report and the 

conclusions expressed in that report. The OIG performed the procedures necessary to obtain a 

reasonable assurance about the IPA’s independence, qualifications, technical approach and audit results. 

Having done so, the OIG accepts the IPA’s conclusions and recommendations. 

The IPA’s full report is attached. The OIG prepared a status of recommendations and potential monetary 

benefits table that summarizes the findings the IPA has identified and the corrective actions it 

recommends. The recommendations represent the opinion of the IPA and the OIG, and do not 

necessarily represent the final position of the EPA. EPA managers, in accordance with established audit 

resolution procedures, will make a final determination on 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 May 9, 

2014. To expedite the resolution process, please also email an electronic version of your 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 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. 
Audit of American Recovery and 


Reinvestment Act Funded Cooperative 


Agreement No. 2A-00E85701 awarded to 


the 


Greater Lansing Area Clean Cities 

November 20, 2013 

Mr. Robert Adachi, Director of Forensic Audits 

U.S. Environmental Protection Agency 

Office of Inspector General 

San Francisco, CA 94105 

Mr. Adachi: 

Please find attached a copy of the final audit report of our 

Recovery Act audit of Cooperative Agreement No. 2A00E85701 awarded to Greater Lansing Area Clean Cities 

(GLACC) on July 21, 2009. Our audit was conducted in 

accordance with the terms and conditions of Contract No. EPG12H-00536 dated September 21, 2012 and Government 

Auditing Standards, Revised 2011. 

We appreciate the opportunity to have worked with the U.S 

Environmental Protection Agency, Office of Inspector 

General. Please contact me with any questions you may 

have. 

Sincerely, 

Ollie Green, MBA, CPA 

Managing Partner 
 

 

 

Audit of American Recovery and Reinvestment Act 14-R-0088 

Cooperative Agreement No. 2A-00E85701 Awarded to the 

Greater Lansing Area Clean Cities 

Table of Contents 

Introduction ................................................................................................................. 1
 

Purpose................................................................................................................... 1 

Background ............................................................................................................. 1 

Scope and Methodology ......................................................................................... 1
 

Results of the Audit .................................................................................................... 3 

Cost Allowablity....................................................................................................... 3 

1 - GLACC has Conflicts of Interest on the Board of Directors and With 

 Contracted Staff....... ........................................................................................ 4 

2 - GLACC’s Accounting System Needs Improvement .......................................... 5 

Procurements ................................................................................................................ 6 

Recovery Act Compliance ............................................................................................. 6 

Cooperative Agreement Objectives .............................................................................. 6 

Recommendations...................................................................................................... 6 

Recipient and Agency Comments ............................................................................. 6 

Ollie Green & Company Response............................................................................ 7 

Other Matter................................................................................................................. 8 

Recipient and Agency Comments ....................................................................... 8 

Ollie Green & Company Response...................................................................... 8 

Appendices 

A GLACC’s Response to the Draft Report............................................................. 9 

B EPA Region 5’s Response to the Draft Report .................................................. 18 
 

Introduction 

Purpose 

The purpose of our audit was to determine whether Greater Lansing Clean Cities 

(GLACC) costs claimed under the cooperative agreement were allowable under 

the Code of Federal Regulations (CFR) in 40 CFR Part 30; whether procurements 

under cooperative agreement 2A-00E85701 complied with 40 CFR Part 30 

requirements; whether GLACC complied with Section 1605 (Buy American), 

Section 1606 (Wage Rate Requirements/Davis Bacon Act) and Section 1512 

(Reporting) of the American Recovery and Reinvestment Act of 2009 (Recovery 

Act); and whether the objectives of the cooperative agreement were met. 

Background 

GLACC was awarded cooperative agreement 2A-00E85701 by the U.S. 

Environmental Protection Agency (EPA) on July 21, 2009. The purpose of the 

cooperative agreement was to retrofit 405 public school buses with emission 

reduction equipment and replace six public school buses with lower emission 

vehicles. The cooperative agreement was later modified to reduce the number of 

retrofits to 364 and increase the number of new schools buses to 10. The total 

amount of the cooperative agreement is $1,670,325. The federal share is 64 

percent or $1,073,528 funded with Recovery Act monies and GLACC’s 

contribution is 36 percent or $596,799. The period of performance was from July 

29, 2009 through March 31, 2011. Funding for this cooperative agreement was 

part of the $300 million Diesel Emissions Reduction Act Program funded by 

Recovery Act. 

Scope and Methodology 

Our Recovery Act performance audit covered the period from June 29, 2009 

through March 31, 2011. We conducted our fieldwork at GLACC in Grande 

Ledge, Michigan from November 12 to November 16, 2012, and from February 

25 to February 27, 2013. The scope of our audit was limited to determining 

whether: 

 The costs claimed under the cooperative agreement were allowable under 

40 CFR Part 30; 

 GLACC’s procurements under the cooperative agreement were conducted 

in accordance with 40 CFR Part 30; 

	 GLACC complied with Recovery Act Section 1605 (Buy American), 

Section 1606 (Wage Rate Requirements/Davis Bacon Act) and Section 

1512 (Reporting); and 

	 The objectives of the cooperative agreement were met. 

14-R-0088 1 
 

The scope of the audit included the review of GLACC’s procurement processes 

and controls related to Recovery Act cooperative agreement transactions. Our 

work included reviewing GLACC’s solicitation, evaluation, tabulation and award 

processes related to cooperative agreement 2A-00E85701 procurements. Our 

audit methodology also included conducting structured interviews with officials at 

GLACC to gain an understanding about the internal controls, processes, systems 

and procedures used to capture, measure and report costs, process procurement 

actions, and ensure cooperative agreement objectives are met. 

We requested, received and reviewed documentation from GLACC to assess 

GLACC’s procurement processes and internal controls over procurements. This 

documentation included GLACC’s procurement policies and procedures and a 

written description of the internal controls in place during the audit period 

designed to detect and/or prevent potential errors related to the procurement 

process. We also requested, received and reviewed a list of buses that had been 

retrofitted and new bus purchases. We inspected a judgmental sample of new 

buses and retrofitted buses to validate that retrofit equipment specified in the 

cooperative agreement had been installed. We also inspected a judgmental sample 

of vendor invoices to verify that costs claimed were allowable and that program 

objectives were met. Finally, we reviewed documentation to determine 

compliance with Recovery Act requirements. 

A performance audit includes gaining an understanding of internal controls 

considered significant to the audit objectives, testing controls, and testing 

compliance with significant laws, regulations and other requirements. For this 

engagement, we obtained an understanding of GLACC’s procurement processes 

and internal controls. The testing of internal controls over this process was not 

determined to be significant to our audit objectives. 

We conducted this performance audit in accordance with generally accepted 

government auditing standards. Those standards require that we plan and perform 

the audit to obtain sufficient, appropriate evidence to provide a reasonable basis 

for our findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provided a reasonable basis for our findings and 

conclusions based on our audit objectives. 

14-R-0088 2 
 

 

 

Results of the Audit 

Our audit found that costs claimed under the cooperative agreement were 

generally not allowable because of two conflicts of interest existed during the 

period of performance. As a result, we questioned $805,759 in costs claimed as 

illustrated in Table 1 below. Our audit also found that the accounting system used 

by GLACC needs improvement. 

Except for the two instances of conflict of interest, GLACC complied with the 

procurement requirements of 40 CFR Part 30. GLACC also complied with 

applicable Recovery Act requirements and met all program objectives. 

Table 1 

Summary of Questioned Costs 

Cost Category Amount 

Claimed Amount Questioned Note 

Personnel $33,298 $33,298 1 

Fringe Benefits 0 

Travel 92 

Equipment 0 

Supplies 1,001 

Contractual 0 

Other 1,039,137 $772,461 1 

Indirect Charges 0 

Totals $1,073,528 $805,759 

Sources: Amounts claimed were from the recipient’s accounting system and U.S. EPA 

payment requests. Costs questioned were based on our analysis of the data. 

Note 1: We questioned $805,759 of the $1,073,528 claimed as unsupported 

because these costs were claimed under contracts involving conflict of interest. The 

$805,759 consists of $33,298 in personnel costs and $772,461 in other costs. As a 

result of the conflict of interest, we could not determine whether procurement 

decisions made by GLACC, including the contract prices, were influenced by the 

subrecipient/Board Member and/or by the contractor/Executive Director. This issue 

is explained in more detail under the section “GLACC Has Conflicts of Interest on 

the Board of Directors and With Contracted Staff.” 

Cost Allowability 

Our audit found that generally, costs claimed under the cooperative agreement were 

not allowable because two conflicts of interest existed during the period of 

performance. As a result, we questioned $805,759 in costs claimed. In addition, we 

14-R-0088 3 
 

found that GLACC’s accounting system needs improvement in order to meet 

federal requirements. 

GLACC Has Conflicts of Interest on the Board of Directors and With 

Contracted Staff 

Our audit found that GLACC has conflicts of interest on the Board of Directors 

and with contracted staff. The first conflict of interest involved the appointment of 

a subrecipient’s family member to GLACC’s Board of Directors on June 14, 

2010. The subrecipient was paid $772,461 under the cooperative agreement. The 

second conflict of interest involved GLACC’s use of a contractor to provide 

professional services while also appointing one of the contractor’s owners as 

GLACC’s Executive Director. The contractor was paid $33,298 under the 

cooperative agreement. 

According to 40 CFR 30.42, the recipient shall maintain written standards of 

conduct governing the performance of its employees engaged in the award and 

administration of contracts. No employee, officer, or agent shall participate in the 

selection, award, or administration of a contract supported by Federal funds if a 

real or apparent conflict of interest would be involved. Such a conflict would arise 

when the employee, officer, or agent, any member of his or her immediate family, 

his or her partner, or an organization which employs or is about to employ any of 

the parties indicated, has a financial or other interest in the firm selected for an 

award. The officers, employees, and agents of the recipient shall neither solicit 

nor accept gratuities, favors, or anything of monetary value from contractors, or 

parties to subagreements. 

Our audit found no written internal controls or firewalls designed to mitigate the 

impact of the aforementioned conflicts. As a result, we could not determine 

whether procurement decisions made by GLACC were influenced by the 

subrecipient/Board Member and/or by the contractor/Executive Director. We 

therefore question $805,759 in costs paid to the subrecipient and to the contractor. 

Board of Directors Conflict 

GLACC’s audit coordinator indicated that a subrecipient’s family became a Board 

member after the proposal process and partner selection and after the EPA 

awarded the grant. He was elected as a Board member during the grant period 

after GLACC learned of his qualifications, experience and interest in supporting 

GLACC’s mission. The audit coordinator said that GLACC’s Board had fully 

disclosed and was transparent about the appointment of the subrecipient’s family 

member to the Board. In addition, he said the individual’s presence on the Board 

had no influence on the amount of funds paid to the subrecipient. Our audit did 

not identify any special measures taken by GLACC to recuse the subrecipient’s 

family member/Board member from participating on GLACC business dealing 

14-R-0088 4 
 

 

with subrecipient transactions. Therefore the conflict of interest was not 

mitigated. 

Outside Consulting Conflict 

The audit coordinator indicated that the contractor who also served as GLACC’s 

Executive Director has never served on GLACC’s Board and has no voting 

privileges. This individual worked under the direction of the Board of Directors. 

He further indicated that this individual is a 50% owner of the contractor 

company which has fully managed GLACC’s operations under a contract with 

GLACC since February 2007. At the time of the grant proposal development and 

award, the contractor was already under contract to provide full management 

services for GLACC, including proposal development and grant administration. 

During the contract that covered the first part of this grant management period 

July 2009 through June 2010, GLACC was contractually obligated to continue 

using the contractor for the management of all grants. He indicated that for the 

grant period continuing July 2010 through March 2011, the GLACC Board 

renewed the contract with the contractor for management of the grant and other 

services. 

We acknowledge that GLACC had contracted with the contractor company prior 

to being awarded the cooperative agreement. Our audit found no special measures 

taken by GLACC to mitigate the inherent conflicts of interest of having a 

contractor perform the functions of GLACC’s Executive Director. These inherent 

risks include having responsibility for GLACC’s procurements, check signatory, 

disbursements and other decision making responsibilities of an executive director 

while also serving as a contractor. 

GLACC’s Accounting System Needs Improvement 

Our audit found that the accounting system used by GLACC needs improvement. 

We found that the accounting system established by GLACC could not generate 

cost reports by project. For example, GLACC could not provide reports to capture 

total program costs, cash receipts, and cash disbursements related to cooperative 

agreement transactions without explanation and/or significant adjustments. Title 

40 CFR 30.21(b)(1) requires the recipients’ financial management systems to 

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

each federally-sponsored project or program in accordance with the reporting 

requirements set forth in 40 CFR 30.52. Our audit found that GLACC had not 

properly designed the accounting system to segregate transactions by project. As a 

result, some reports generated by GLACC contained other information that 

required explanations and/or adjustments to be useful. Despite the accounting 

system issue, we were able to reconcile and verify the costs claimed under the 

cooperative agreement to the accounting system data when used in conjunction 

with hard copy documentation; therefore, we did not question costs under this 

issue. 

14-R-0088 5 
 

 

Procurements 

Our audit found that except for the two conflicts of interest discussed above under 

“GLACC Has Conflicts of Interest on the Board of Directors and With Contracted 

Staff”, GLACC complied with the procurement requirements of 40 CFR Part 30. 

Recovery Act Compliance 

The objective of this component of our audit was to determine GLACC’s 

compliance with Recovery Act requirements under Section 1605 (Buy American), 

Section 1606 (Wage Rate Requirements/Davis Bacon Act) and Section 1512 

(Reporting). Our audit found that Section 1605 (Buy American) and Section 1606 

(Wage Rate Requirements/Davis Bacon) were not applicable to the projects under 

the cooperative agreement. We found that GLACC submitted the Section 1512 

reports timely and reported the jobs created and retained in accordance with the 

requirements. 

Cooperative Agreement Objectives 

The objective of the cooperative agreement was to retrofit 364 public school 

buses with emission reducing equipment and to replace 10 public school buses. 

Our audit found that these objectives were met. 

Recommendations: 

We recommend that the Regional Administrator, Region 5: 

1.	 Recover the questioned costs of $805,759 due to conflict of interest. 

2.	 Verify that GLACC’s accounting system is adequate for providing 

accurate and complete disclosure of financial results of each federally 

sponsored program as required by 40 CFR 30.21(b)(1) prior to any future 

award. 

Recipient and Agency Comments 

OG&C issued a draft report on July 18, 2013, and provided copies to GLACC, 

EPA Region 5 and the OIG. We received written comments on the draft report 

from GLACC on August 27, 2013. Region 5 provided written comments on 

August 28, 2013. The exit conference was conducted with GLACC, Region 5 and 

the OIG on September 18, 2013, via teleconference. 

GLACC disagreed that there are conflicts of interest and indicated that the 

circumstances did not show a conflict in selection, implementation or 

administration of the grants provided through the cooperative agreement. EPA 

14-R-0088 6 
 

 

 

Region 5 i n d i c a t e d t h a t i t does not have sufficient information regarding 

the conflict of interest issue to respond to the recommendation. 

GLACC disagreed that improvements are needed with its accounting system 

and indicated that it used Quickbooks accounting software which could generate 

cost reports without explanation and/or significant adjustments. GLACC did 

acknowledge that an issue came up during the audit where Quickbooks did not 

allow for line item allocation of partial payments. EPA Region 5 disagreed with 

the finding and indicated that GLACC provided accurate and complete 

disclosure of financial results for the cooperative agreement. 

GLACC and Region 5 disagreed that Recovery Act Section 1512 reporting was not 

always timely. GLACC indicated that there were slight delays because it worked 

closely with the EPA to ensure that reports were correct prior to final submission. 

Subsequent to the final exit conference, Region 5 provided evidence to show that 

the delays were within the extensions allowed by the Recovery Accountability and 

Transparency Board. 

GLACC and Region 5 disagreed with the salvaged bus issue. GLACC indicated that 

the buses were salvaged as a result of more stringent interpretation of the inspection 

requirements by the Michigan State Police. Region 5 stated that the buses were 

retrofitted in accordance with the cooperative agreement requirements and that the 

salvage was due to circumstance beyond GLACC’s control. 

The full text of GLACC’s and Region 5’s written responses are attached in 

Appendix A and B respectively. 

Ollie Green & Company Response 

Based on comments from GLACC and Region 5, along with the documentation 

subsequently provided, we have removed the issues relating to the Recovery Act 

Section 1512 reporting and salvaging of retrofitted buses. Our positions on the 

conflict of interest and accounting system issues remain unchanged. The 

subrecipient’s family member was on GLACC’s Board and the contractor served 

as GLACC’s Executive Director. Both parties appeared to have been involved in 

the administration of the contract, contrary to the codes of conduct under 40 CFR 

30.42. On the accounting system issue, we found that several reports provided 

during fieldwork did not capture total program costs, cash receipts, and/or cash 

disbursements related to the cooperative agreement without explanation and/or 

significant adjustments. GLACC also acknowledged the system’s inability to 

allocate partial payments to line item costs. This issue was problematic 

throughout the audit. 

Details of our responses to GLACC’s and Region 5’s comments are embedded as 

text boxes in Appendix A and B respectively. 

14-R-0088 7 
 

 

 

Other Matter 

GLACC is a 501(c)(3) nonprofit entity created in 2005. GLACC is a coalition of 

stakeholders working to achieve cleaner air and energy security in mid-Michigan 

through alternative fuel and vehicle usage and fuel economy practices. GLACC 

certified in its representations and certifications that it had the legal authority to 

apply for Federal assistance and the institutional, managerial, and financial 

capacity to ensure proper planning, management and completion of the project 

described in its application. However, we found during our audit that GLACC had 

no employees, no office or equipment and consisted only of a Board of Directors. 

All administrative and operational responsibilities related to cooperative 

agreement 2A-00E85701 had been outsourced to an outside contractor. GLACC 

used two subrecipients to carry out the project requirements of the cooperative 

agreement. The lack of physical entity increased the risk to the government that 

the work under the cooperative agreement may not be completed. We believe the 

government should consider this risk in future grant awards. 

Recipient and Agency Comments 

GLACC disagreed that the lack of physical entity increases the level of risk to the 

government that the project may not be completed nor does it agree that this should 

affect GLACC’s eligibility to receive grants. Region 5 did not comment on this 

issue. 

The full text of GLACC’s and Region 5’s written responses are attached in 

Appendix A and B respectively. 

Ollie Green & Company Response 

While we understand the limitations of a small non-profit organization, we 

believe the lack of physical entity and having a contractor acting on behalf of the 

entity are risks that the government should considered in its award decisions. We 

have modified the final report to advise the government of the risks rather than 

recommending the government to reevaluate its decisions to award grants to 

GLACC. 

Details of our responses to GLACC’s and Region 5’s comments are embedded as 

text boxes in Appendix A and B respectively. 

14-R-0088 8 
 

 

 

 

Appendix A 

GLACC Response to Draft Report 

August 28, 2013 

Mr. Ollie Green 

Ollie Green and Company, CPAs 

1300 South Fourth Street, 

Suite 100 

Louisville, KY 48208 

Dear Mr. Green, 

Greater Lansing Area Clean Cities (GLACC) provides this written response to audit findings 

dated July 18, 2013 documented by Ollie Green & Company, contractor to the Office of 

Inspector General, relative to GLACC's Ameri can Recovery and Reinvestment Act EPA 

Cooperative Agreement {cooperative agreement) No. 2A-OOE85701. GLACC's responses to 

each finding are outlined below. 

Before addressi ng those items however, GLACC wishes to remind you that the project as 

implemented fulfilled the objectives of the American Recovery and Reinvestment Act by 

allowing GLACC and its subrecipients to receive valuable funding to acquire EPA 

approved environmental equipment and as a result enabled jobs to be retained and created 

both locally and nationally. This effort extended the life, utility and mileage efficiency of 

school buses in the region. The installation of this equipment also provided important 

environmental and health benefits. In fact, eighty-five {85) percent of one of the 

subrecipient's passengers are youth with special needs, including some with asthmatic 

conditions. The buses operate largely in municipal areas, which already present air 

pollution concerns.The use of the retrofitted buses unquestionably reduced pollutants that 

would be emitted otherwise from the buses. 

14-R-0088 9 
 

 

 

 

1. GLACC Has Conflicts of Interest on the Board of Directors 

and With Contracted Staff: 

Specifically the draft Audit Report states: 

{Our audit found no written internal controls or firewalls designed to mitigate the impact 

of the aforementioned conflicts. As a result we could not determine whether procurement 

decisions made by GLACC were influenced by the subrecipient/Board Member and/or by 

the contractor/ Executive Director. We therefore question $805,759 ($772,461 + $33,298)} 

in costs paid to the subrecipient and to the contractor.} 

A review of the circumstances do not show a conflict in selection, implementation or 

administration of the grants provided through the cooperative agreement. 

GLACC does have a written Conflict of Interest policy contained in the organization's Articles of 

Incorporation & Bylaws, Rules of Administrative Procedure as amended January 30, 2008 

(Article X, Sec.5, Conflict of Interest), which states: 

No particular matter of GLACC shall, in the absence of fraud, be affected or 

invalidated by the fact that the personal representative of GLACC of any member 

organization of GLACC, or any corporation, firm or association of which he or she may 

be a director, officer, stockholder, or member, may be a party to or an interest, pecuniary 

or otherwise, in any such matter, provided that the nature and extent of his or her 

interest was disclosed to or known by the entire membership before acting on such matter, 

and provided that the representative did not participate in the matter. 

Additi onal responses related to each noted conflict of interest is included below. 

Board of Directors Conflict 

Relative to this finding, the draft Audit report states: 

{Our audit did not identify any special measures taken by GLACC to recuse the 

subrecipient's family member/ Board member from participating on GLACC business 

dealing with subrecipient transactions. Therefore the conflict of interest was not 

mitigated.} 

The subrecipient's family member was approached to be a volunteer Board Member of GLACC 

after demonstrating extensive knowledge and expertise in the area of environmental best 

practices and green fleet issues. This individual provided the organization with a skill set that 

further enhanced its mission to improve air quality in the region for the public benefit. As a 

501C3 organization with limited resources, this individual brought specific skills to the 

organization that have benefited the region GLACC serves. 

The relationship of the Board Member to the subrecipient company was fully disclosed, and 

potential conflicts of interest were discussed prior to approval to the Board. GLACC as noted 

14-R-0088 10 
 

maintains a written conflict of interest policy in its articles of incorporation, which governs board 

action and daily business. This policy has been reviewed during A133 audits. GLACC's Board 

understood its obligation to protect the interest of EPA and believes that in good faith it has 

adequately demonstrated no conflict of interest existed during the selection, award and 

administration of this project and that it took steps to ensure work plans were followed. 

As stated in the draft Audit Report, the subrecipient's family member was elected to the Board on 

June 14, 2010 long after the proposal process and partner selection was made, also substantially 

after the grant was awarded on July 21, 2009, and even after bidding for equipment was 

complete on January 21, 2010. The subrecipient's family member had no influence on the 

amount of funds paid. 

As a safeguard and firewall, the GLACC Project Administrator established a process for the 

subrecipient to submit reports and requests for reimbursement for eligible funds paid under the 

approved project plan. The GLACC Project Administrator reviewed subrecipient reimbursement 

requests in comparison to the work plan and determined if costs were allowable under the 

approved grant plan prior to requesting reimbursement from the EPA for approved technology. 

This administrative process, which did not require Board action, was established in consultation 

with EPA to ensure funds were spent within the approved work plan and provided a control 

measure for reimbursing approved project expenses. 

In addition, any funds whenever received by the subrecipient were passed on to a third party 

vendor selected through a bidding process. The subrecipient received no funds for its expenses, 

installation or maintenance of equipment purchased through the grant. The grant was in the final 

phase of administration at the time when the subrecipient's family member actually joined the 

Board for his first actual Board meeting on January 11, 2011. All installation of equipment 

finished on March 31, 2011. 

In short, following the election of the subrecipient's family member to the GLACC Board, the 

Board made no decisions and conducted no business relative to the selection, award, or 

administration of contracts with the subrecipient, and thus there .was no occasion which 

necessitated the subrecipient's family member to be recused from participation. Had it been 

necessary for the Board to conduct business relative to the grant following the election of the 

subrecipient's family member to the Board, the subrecipient's family member would not have 

participated in the matter pursuant to the organization's conflict of interest policy stated above. 

GLACC disputes this finding. No conflict of interest existed pursuant to 40 CFR Part 

30.42. 

Outside Consulting Conflict 

Relative to this finding, the draft Audit Report states: 

{We acknowledge that GLACC had contracted with the contractor company prior to being 

awarded the cooperative agreement. Our audit found no special measures taken by GLACC to 

14-R-0088 11 
 

 

mitigate the inherent conflicts of interest of having a contractor perform the functions of 

GLACC's Executive Director.} 

The draft report does not indicate what “inherent conflicts of interest” means, or what conflict of 

interest is perceived to have existed. GLACC has, since 2007, contracted a professional firm to 

provide services to the organization, including functioning as contracted staff under the 

supervision of the Board of Directors. It is a common practice for nonprofit organizations to 

utilize contractors to perform duties, including leadership roles, to fulfill the mission of the 

organization in a cost-effective and efficient manner. The role of Executive Director has no, nor 

had at the time of the proposal or during the grant period, voting privileges and, thus, had no 

decision-making authority, nor influence over procurement decisions involving the contractor. In 

this case, GLACC also adhered to its Conflict of Interest policy stated above. 

GLACC disputes this finding. No conflict of interest existed pursuant to 40 CFR Part 

30.42. 

OG&C Response 1. We disagree with GLACC’s position that no conflict of interest 

existed in the selection, implementation or administration of the grants provided through 

the cooperative agreement. We acknowleged during the audit that GLACC had conflict of 

interest policies and procedures in its Bylaws. However, we found no controls in place to 

ensure that the subrecipient family member and executive director recused themselves on 

matters related to their contracts. Both the subrecipient family member and the 

Executive Director participated in the administration of the cooperative agreement in their 

respective roles as Board Member and Executive Director of GLACC. This condition is 

contrary to the conflict of interest requirements of 40 CFR 30.42. Title 40 CFR 30.42 

states that “The recipient shall maintain written standards of conduct governing the 

performance of its employees engaged in the award and administration of contracts. No 

employee, officer, or agent shall participate in the selection, award, or administration of a 

contract supported by Federal funds if a real or apparent conflict of interest would be 

involved. Such a conflict would arise when the employee, officer, or agent, any member of 

his or her immediate family, his or her partner, or an organization which employs or is 

about to employ any of the parties indicated herein, has a financial or other interest in the 

firm selected for an award.” Because we found no written controls specifically designed 

to address the subrecipient family member and Executive Director conflicts that existed, 

no change is made to this finding. 

2. GLACC’s Accounting System Needs Improvement 

The draft Audit Report states: 

{Our audit found that the accounting system used by GLACC needs improvement. We 

found that the accounting system established by GLACC could not generate cost reports by 

project. For example, GLACC could not provide reports to capture total program costs, cash 

receipts, and cash disbursements related to cooperative agreement transactions without 

explanation and/or significant adjustments. Title 40 CFR 30.21 (b}{l} requires the recipients 

14-R-0088 12 
 

 

 

 

 

' financial management systems to provide for accurate, current and complete disclosure of 

the financial results of each federally -sponsored project or program in accordance with the 

reporting requirements set forth in Title 40 CFR 30.52. Our audit found that GLACC had 

not properly designed the accounting system to segregate transactions by project. As a 

result, some reports generated by GLACC contained other information that required 

explanations and/or adjustments to be useful.} 

GLACC uses Quickbooks accounting software, which could generate cost reports by 

project without explanat ion and/or significant adjustments. GLACC provided numerous 

project cost reports, including total program costs, cash receipts, and cash 

disbursements, generated by Quickbooks without explanation required. The auditor 

requested all reports be exported into spreadsheets and did not view the actual 

Quickbooks accounting system files. The perception of the system being incapable of 

generating these reports was due to the requests that reports be exported and 

manipulated in different software. 

One Quickbooks issue did exist whereby bills entered into the system would not allow 

for line item allocation of partial payments. As GLACC previously shared with the 

auditor, this issue was corrected with a software update and GLACC adopted new 

procedures during the project. This single issue required additional explanation on one 

report type requested by the auditor's staff only. 

GLACC disputes this finding and maintains the organization complied with 

the referenced federal regulations. 

OG&C Response 2. We disagree with GLACC’s position that the Quicksbooks 

accounting system always generated cost reports that required no explanation and/or 

significant adjustments. Several reports provided during fieldwork did not capture total 

program costs, cash receipts, and cash disbursements related to cooperative agreement 

transactions without explanation and/or significant adjustments. GLACC acknowledged in 

its response that the system would not allow for line item allocation of partial payments. 

This was problematic throughout the audit. Other issues included duplicate check 

numbers and missing check numbers on cash disbursement transaction requests. Title 40 

CFR 30.21(b)(1) requires the recipients’ financial management systems to provide for 

accurate, current and complete disclosure of the financial results of each federallysponsored project or program in accordance with the reporting requirements set forth in 40 

CFR 30.52. No change is made to this audit finding. 

3. GLACC Did Not Always Submit Required Section 1512 Reporting 

On a Timely Basis. 

Relative to this finding, the draft Audit Report states: 

{We found substantial compliance with ARRA requirements. However, we found that 

reporting was not always timely.}; and, {Our audit found that GLACC did not have 

14-R-0088 13 
 

 

 

 

 

adequate controls and procedures in place to ensure that ARRA Section 1512 reports are 

submitted on a timely basis. This lack of control caused two of the three quarterly reports 

selected in our sample to be submitted late. GLACC's audit coordinator indicated that 

GLACC has implemented procedural changes to ensure proper reporting on federally funded 

projects.} 

GLACC did have controls and procedures in place to ensure that ARRA Section 1512 

reports were submitted on a timely basis; however, as this was the first cooperative 

agreement administered by GLACC, the organization worked closely with the EPA 

to ensure reports were completed correctly prior to final submission. This process led 

to some slight delays in report submission in the two cited examples, twelve days and four 

days respectively. As previously indicated, based on experience gained through 

administering this grant, GLACC will ensure timely reporting for any future federally 

funded projects. 

GLACC acknowledges this finding, but requests the finding be closed. 

OG&C Response 3. GLACC indicated that it had worked closely with EPA, Region 5 to 

ensure completeness and correctness of the reports prior to submission and that this 

process led to some slight delays. After discussing this finding with Region 5, Ollie 

Green & Company and the OIG agreed that the Late 1512 Reporting finding should be 

eliminated from the final GLACC report due to: (1) support provided by Region 5 

showing extensions allowed by the Recovery Accountability and Transparency Board for 

the reporting periods in question; and (2) confirmation obtained from the 

FederalReporting.gov helpdesk that submissions are considered timely within the 

extension timeframe. 

4. GLACC's Subrecipient Salvaged 22 Percent of the Retrofitted 

Buses Within Two Years of Project Period End. 

The draft Audit Report states: 

{We found that 77 of the 364 {22 percent) of the retrofitted buses had been salvaged 

within two years of project period end by GLACC's subrecipient. As illustrated in Table 2 

below one bus was salvaged prior to project period end of M arch 31, 2011, 27 buses were 

salvaged between April 1, 2011 and M arch 31, 2012 (within one year after project period 

end) and 49 buses were salvaged between April 1, 2012 and M arch 31, 2013 (within two 

years after project period end). 

In GLACC's application for the award, there was an estimated useful life of five years or 

more for the buses selected to be retrofitted. EPA awarded the cooperative agreement based 

on the terms in the application and EPA adopted the application as the Statement of Work 

for the project. 

14-R-0088 14 
 

 

GLACC's audit coordinator indicated the 77 salvaged buses did not pass the Michigan 

State Police Inspection Program or they had mechanical problems. He also indicated that the 

subrecipient replaced all salvaged buses with new EPA compliant buses. 

While we acknowledge management’s explanation, we believe a 22 percent inspection 

failure rate is unreasonably high and management should have had prior indications of 

problems. The costs spent retrofitting these buses yielded no environmental benefit. As a 

result, we question the cost claimed in connection with the retrofit of these 77 buses, 

totaling $103,707. However, these costs are already being questioned under the Conflict of 

Interest issue. Therefore, no additional costs are being questioned under this issue.} 

This project included the installation of emission-reducing retrofit technologies, specifically 

diesel oxidation catalysts (DOCs), on school buses with engine model years ranging from 1994 

to 2003. As part of EPA DERA projects, these technologies (DOCs) are generally installed on 

older buses (pre-2004) given that newer vehicles are manufactured to be lower emitting than in 

the past. Projects involving retrofit technologies target a narrow window of model years - 

vehicles must be old enough to necessitate the technology and yet have a reasonable expectation 

of a useful life of five years. In good faith, GLACC worked with the subrecipient and the EPA to 

identify eligible vehicles for inclusion and made best efforts to ensure included vehicles were 

anticipated to have a useful life of five years. GLACC provided a list identifying each vehicle 

and its years of use to the EPA, which was approved by the EPA. 

As stated above, this type of project includes older vehicles, which are inherently more 

susceptible to unforeseen issues than newer model year vehicles. With any vehicle type, 

particularly those targeted by this type of technology, projecting potential issues is difficult. 

School buses, especially, are subject to more stringent requirements to ensure the safety of the 

vulnerable riders they transport. The Michigan State Police (MSP) Motor Carrier Division 

regulates school buses in Michigan. MSP has specific regulations for operating school 

transportation vehicles (Michigan Public Act 187 of 1990) that operate in the state to ensure 

safety for Michigan’s school children. During the inspection process safety related concerns are 

addressed with each transportation provider and resolutions are made to ensure safety. An 

unusually high number of the salvaged vehicles identified in the draft Audit Report were 

removed from the road as a result of this MSP inspection process becoming more stringent. 

Additionally, several vehicles were involved in accidents or rendered inoperable due to 

maintenance issues. In all cases, the subrecipient replaced salvaged vehicles with new EPA 2010 

comp leant vehicles. This action is consistent with GLACC's mission and the objectives of the 

EPA DERA program. It also resulted in the creation of an even greater economic and 

environmental benefit. The fact remains that 78 percent of the retrofitted vehicles continue to 

provide substantial reductions in pollutants and that, while the remaining 22 percent did not 

achieve the desired five year life intended, the remaining salvaged vehicles as retrofitted did 

provide pollution reduction until they were no longer usable. In addition, vehicles that replaced 

the salvaged ones clearly have met the more stringent pollution reduction requirements for newer 

model vehicles. 

GLACC acknowledges 77 vehicles were salvaged within three years of installation as 

stated; however, GLACC maintains that the organization made reasonable and best efforts 

to ensure selected vehicles had an anticipated operational-life of five years or greater. 

14-R-0088 15 
 

 

 

 

OG&C Response 4. The issue has been removed from the final report based on 

subsequent evidence provided by GLACC demonstrating that the salvage was primarily 

due to more strict interpretation of the inspection requirements by the Michigan State 

Police. 

5. Other Matters 

Following the recommendations provided in the draft Audit Report, an additional section 

has been included, which states the following: 

{GLACC is a 501(c)(3) nonprofit e n tity created in 2005. GLACC is a coalition of 

stakeholders working to achieve cleaner air and energy security in mid-Michigan through 

alternative fuel and vehicle usage and fuel economy practices. GLACC certified in its 

representations and certifications that it had the legal authority to apply for Federal 

assistance and the institutional, managerial, and financial capacity to ensure proper 

planning , management and completion of the project described in its application. However, 

we found during our audit that GLACC had no employees, no office or equipment and 

consisted only of a Board of Directors .All administrative and operational responsibilities 

related to Cooperative Agreement 2A-OOE85701 had been outsourced to an outside 

contractor. GLACC u s e d t w o subrecipients t o carry o u t t h e project requirements of the 

cooperative a g r e em e nt . This lack of physical entity as described above increases the level of 

risk to the government that the project may not be completed and also raises questions and 

concerns about GLACC's eligibility to receive Federal government grants under these 

circumstances . Based on this information, we believe that the government should 

reevaluate its decisions to award grants to GLACC when these conditions exist.} 

GLACC rejects the notion that "this lack of a physical entity as described above increases the 

level of risk to the government that the project may not be completed and also raises questions 

and concerns about GLACC's eligibility to receive Federal government grants under these 

circumstances." There is no basis for this statement. Like many small nonprofit organizations, 

GLACC contracts services to ensure cost-effective, professional support for development and 

implementation of its programs and operations. It is quite common for nonprofit organizations to 

fully contract with a management service organization or association management company to 

provide administrative, executive, and program management services. As a small, communitybased nonprofit organization with a limited operating budget and led by a volunteer Board of 

Directors, GLACC has effectively utilized a contractual relationship to provide a physical 

presence for the organization as well as professional contracted staff. Not only is this type of 

arrangement a common practice in the nonprofit sector, but it was also fully disclosed to the 

government during the proposal and awarding periods. 

Further, the statement that "GLACC used two subrecipients to carry out the project requirements 

of the cooperative agreement" indicates a lack of understanding of the project's scope and intent. 

14-R-0088 16 
14-R-0088 17 

GLACC’s Closing Statements: 

Appendix B 

The very nature of these types of projects generally involves a nonprofit organization applying 

for funds on behalf of a fleet or fleets who then serve as subrecipients. 

GLACC disputes thi s section and the suggestion that GLACC’s operational structure 

raises questions about the organization’s eligibility for federal funds. 

OG&C Response 5. While we understand the limitations of a small non-profit 

organization, we believe the lack of physical entity and having a contractor acting on 

behalf of the entity are risks that the government should considered in its award decisions. 

We have modified the final report to advise the government of the risks rather than 

recommending the government to reevaluate its decisions to award grants to GLACC. 

Closing Statements 

GLACC maintains that the organization effectively and successfully administered this project 

compliant with government standards and always under the guidance and oversight of EPA 

program management staff. At no time during the first government audit in March 2010 or the 

grant management process were the concerns expressed in the draft Audit Report raised. In 

contrast, the EPA lauded GLACC for its effective management of the grant, which yielded 

significant environmental impact and included extremely low administrative costs (less than 5% 

of the award). GLACC sincerely believes that the local and national economy received benefits, 

that local employment increased, and that pollution decreased, all of which have fulfilled the 

purpose of the American Recovery and Reinvestment Act. 

While the grant enabled GLACC to advance its objective of increasing the usage of clean 

transportation technologies in the region to reduce emissions, it came at a high price. This 

extensive and costly audit process will greatly deter GLACC from applying for federal funds in 

the future and has caused the small organization significant financial hardship. It also caused 

significant strain on GLACC's relationship with the subrecipient, who is an environmental leader 

in the region, but will no longer consider comparable projects in the future due to the financial 

and time-cost burden experienced through this particularly onerous audit process. Additionally, 

the lengthy audit process has diverted GLACC from its mission of increasing awareness and 

usage of clean fuels, vehicles, and technologies in the region, which was the goal of the project 

to begin with. 
 

 

 

 

 

 

 

Appendix B 

EPA Region 5 Response to Draft Report

 UNITED STATES ENVIRONMENTAL PROTECTION 

AGENCY 

REGION 5
 

Tl 77 WEST JACKSON 

BOULEVARD CHICAGO, IL
 

60604-3590
 

AUG 2 8 2011 

MEMORANDUM 

SUBJECT:	 Response to Draft Recovery Act Audit Report: Cooperative Agreement No.2AOOE85701 Awarded to the Greater Lansing Area Clean Cities 

FROM: Susan Hedman, Regional Administrator 

 Region 5 

TO: Robert Adachi, Director 

Office of Audit 

Thank you for the opportunity to review the July 18, 2013 draft report entitled "Audit of 

American Recovery and Reinvestment Act Cooperative Agreement No. 2A-OOE85701 Awarded 

to the Greater Lansing Area Clean Cities (GLACC)." 

The purpose of the audit was to determine whether the costs claimed by GLACC under the grant 

were allowable; whether the procurement complied with grant regulation requirements; whether 

GLACC complied with the American Recovery and Reinvestment Act of 2009, Section 1605 

(Buy American), Section 1606 (Wage Rate Requirements/Davis Bacon Act), and Section 1512 

(Reporting) requirements; and whether the objectives of the cooperative agreement were met. 

The grant was for the purpose of retrofitting buses to reduce diesel air emissions. 

The contractor performing the audit concluded that: 1) costs of $805,759 should be recovered 

because of apparent conflicts of interest for two GLACC employees, and costs of $103,707 

should be recovered because some buses retrofitted under the grant were subsequently taken out 

of service and salvaged; 2) GLACC's accounting system was not adequate; and 3) GLACC failed 

to timely and correctly report under the grant. 

The Region's responses to the recommendations of the audit report are set forth below: 

14-R-0088 18 
 

 

Auditor Recommendation No. 1: Recover the questioned cost of $805,759 due to a conflict 

of interest. In the event that the conflict of interest issue is resolved without cost recovery, EPA 

should recover the cost of $103,707 related to the buses that ended up being salvaged after the 

project was implemented. 

EPA, Region 5 does not have sufficient information regarding the conflict of interest issue to 

respond to the recommendation at this time and suggests a careful review of materials submitted 

by the Grantee in response to the audit. However, when apparent conflicts of interest are 

identified, the determination regarding recovery of related costs must be based upon: 1) a real 

conflict of interest, and 2) participation in the allocation of grant money. If both questions are 

answered in the affirmative, costs associated with the conflict of interest would be disallowed. 

Facts must be established regarding the timeline of the grant allocations and the relevant persons' 

employment and specific roles with the Grantee and recipient organizations, as well as any 

recusal agreements or other safeguards that may have been in place to prevent harm from any 

potential conflicts. 

OG&C Response 1. Region 5 did not agree or disagree with the finding. Region 5 indicated 

that it did not have sufficient information regarding the conflict of interest issue to respond to 

the recommendation. Region 5 also discussed the criteria for cost disallowance when there is 

an apparent conflict of interest. Our position has not changed as a result of Region 5’s 

response. Therefore this finding and recommendation will remain in the report as cited. 

EPA, Region 5 does not agree that the cost of $103,707 should be recovered from the salvaged 

buses. The Region's position is that buses were retrofitted as per the grant requirement. The 

salvaging of buses could not have been anticipated when the buses were retrofitted and Region 5 

considers this occurrence beyond GLACC's control. Of the buses salvaged because they did not 

pass Michigan State Police Inspection safety requirements, most were in operation for one to two 

years, yielding environmental benefit during this time. Further, all salvaged buses were replaced 

with new EPA-compliant buses. 

OG&C Response 2. The issue has been removed from the final report based on subsequent 

evidence provided by GLACC demonstrating that the salvage was primarily due to more 

strict interpretation of the inspection requirements by the Michigan State Police. 

Auditor Recommendation No. 2: Verify that GLACC's accounting system is adequate for 

providing accurate and complete disclosure of financial results of each federally sponsored 

program, as required by 40 CFR 30.21 (b) (I) prior to any future award. 

EPA, Region 5 found that GLACC provided accurate and complete disclosure of financial results 

for this project. GLACC provided reports to EPA, segregating transactions by project, including 

cost reports by project similar to the line items in the grant. 

14-R-0088 19 
 

 

 

OG&C Response 3. Region 5 disagreed that GLACC’s accounting system needs 

improvement as cited in the draft report and stated that GLACC provided accurate and 

complete disclosure of financial results for this project. We disagree with Region 5’s 

position. As explained under Appendix A, OG&C Response 2, several reports provided 

during fieldwork did not capture total program costs, cash receipts, and cash disbursements 

related to cooperative agreement transactions without explanation and/or significant 

adjustments. GLACC acknowledged in its response that the system would not allow for line 

item allocation of partial payments. This was problematic throughout the audit. Other issues 

included duplicate check numbers and missing check numbers on cash disbursement 

transaction requests. Title 40 CFR 30.21(b)(1) requires the recipients’ financial management 

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

each federally-sponsored project or program in accordance with the reporting requirements 

set forth in 40 CFR 30.52. No change is made to this audit finding. 

Auditor Recommendation No. 3: Require GLACC to implement internal controls to ensure that 

all federally funded project reports are submitted on a timely basis. 

EPA, Region 5 does not agree that GLACC submitted two Section 1512 reports late. Both the 

Office of Transportation and Air Quality and Region 5's Air and Radiation Division, the offices 

responsible for ensuring timeliness of Section I 512 reports, found that GLACC filed their initial 

reports within the appropriate I O-day timeframe. 

OG&C Response 4. As explained in Appendix A, OG&C Response 3, this issue has been 

removed from the final report. 

If you have any questions regarding our response, please contact Sharleen Phillips at 312-353-

3486, or Phillips.sharleen@epa.gov. 

cc: George Czerniak, ARD 

John Mooney, ARD 

Diane Nelson, ARD 

Sharleen Phillips, ARD 

Pamela Blakley, ARD 

 Eric Levy, RMD 

Dale Meyer, RMD 

Andre Daugavietis, ORC 

 Eric Cohen, ORC 

 Jan Lister, OIG 

Ollie Green & Company 

14-R-0088 20 
 

 

 

 

 

 

 

 

 

 

Status of Recommendations and 

Potential Monetary Benefits 

POTENTIAL MONETARY 

RECOMMENDATIONS BENEFITS (in $000s) 

Rec. 

No. 

Page 

No. Subject Status1 Action Official 

Planned 

Completion 

Date 

Claimed 

Amount 

Agreed-To 

Amount 

1 

2 

6 

6 

Recover the questioned costs of $805,759 due to 

conflict of interest.. 

Verify that GLACC’s accounting system is 

adequate for providing accurate and complete 

disclosure of financial results of each federally 

sponsored program, as required by 40 CFR 

30.21(b)(1) prior to any future award. 

U 

U 

Region 5 

Regional Administrator 

 Region 5 

Regional Administrator 

$806 

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.
 

14-R-0088 21 

1 
 

Distribution 

Regional Administrator, Region 5 

Deputy Regional Administrator, Region 5 

Director, Grants and Interagency Agreements Management Division, 

Office of Administration and Resources Management 

Agency Follow-Up Official (the CFO) 

Agency Follow-Up Coordinator 

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

Office of Administration and Resources Management 

Audit Follow-Up Coordinator, Region 5 

Grants Management Officer, Region 5 

Board of Directors, Greater Lansing Area Clean Cities 

14-R-0088 22