U.S. ENVIRONMENTAL PROTECTION AGENCY 

OFFICE OF INSPECTOR GENERAL 

Catalyst for Improving the Environment 

Audit Report 

EPA Effectively Reviewed 

Recovery Act Recipient Data but 

Opportunities for Improvement 

Exist 

Report No. 10-R-0234 

September 27, 2010 
Report Contributors: Andrés Calderón 

 Nancy Dao 

 Denise Darasaw 

 Doug LaTessa 

 Les Partridge 

Abbreviations 

EPA U.S. Environmental Protection Agency 

GAO U.S. Government Accountability Office 

OARM Office of Administration and Resources Management 

OIG Office of Inspector General 

OMB Office of Management and Budget 
 

U.S. Environmental Protection Agency 10-R-0234 

September 27, 2010 Office of Inspector General 

At a Glance 

Catalyst for Improving the Environment 

Why We Did This Review 

We conducted this review as 

part of a national review 

coordinated by the U.S. 

Department of Agriculture 

Office of Inspector General. 

The effort was designed to 

respond to concerns raised by 

Members of Congress and the 

U.S. Government 

Accountability Office 

regarding reporting errors in 

the October 2009 recipient 

reports. 

Background 

The American Recovery and 

Reinvestment Act of 2009 

states that the use of Recovery 

Act funds should be 

transparent and reported 

clearly, accurately, and in a 

timely manner. The Office of 

Management and Budget 

(OMB) issued governmentwide guidance for carrying out 

the reporting requirements 

included in Section 1512 of 

the Recovery Act. 

For further information, 

contact our Office of 

Congressional, Public Affairs 

and Management at 

(202) 566-2391. 

To view the full report, 

click on the following link: 

www.epa.gov/oig/reports/2010/ 

20100927-10-R-0234.pdf 

EPA Effectively Reviewed Recovery Act 

Recipient Data but Opportunities for 

Improvement Exist

 What We Found 

The U.S. Environmental Protection Agency’s (EPA’s) controls for reviewing 

recipient-reported data pursuant to the Recovery Act resulted in low error rates. 

For the fields that OMB identified as those for which there are major concerns for 

significant reporting errors, we identified errors in 3 percent of recipient entries. 

While EPA did not identify any of these errors as significant, we believe two of 

the errors are significant. We also identified errors in other fields that OMB did 

not identify as major concerns for significant reporting errors. Significant errors 

could mislead the public about how much money the recipients are receiving. 

OMB guidance requires federal agencies to provide Recovery Act recipients with 

a list of key award information. EPA prepared a reference guide that instructed 

recipients where to find this information. However, the reference guide was not 

specific for some key data fields, leaving recipients to interpret how to report 

information. As a result, some recipients reported inaccurate data. 

OMB guidance identified the award amount data element as a major concern for 

significant reporting errors. Instead of adopting an Agency-wide action limit for 

identifying errors, EPA allowed program offices to adopt their own action limits. 

As a result, there were some discrepancies between recipient-reported data and 

EPA award amounts that were not corrected. 

What We Recommend 

We recommend that the Assistant Administrator for Administration and 

Resources Management develop an Agency-wide threshold for identifying 

significant errors for those fields OMB identified as major concerns, clarify the 

reference guide to reduce the incidence of varying interpretations, and adopt a 

policy to investigate all award amount differences. EPA agreed with the findings 

and provided corrective action plans or acceptable alternatives for addressing the 

recommendations in the report. 
 

 

 

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

WASHINGTON, D.C. 20460 

THE INSPECTOR GENERAL 

September 27, 2010 

MEMORANDUM 

SUBJECT:	 EPA Effectively Reviewed Recovery Act Recipient Data but 

Opportunities for Improvement Exist

 Report No. 10-R-0234 

FROM:	 Arthur A. Elkins, Jr. 

Inspector General 

TO:	 Craig E. Hooks, Assistant Administrator 

Office of Administration and Resources Management 

This is our report on the subject audit conducted by the Office of Inspector General (OIG) of the 

U.S. Environmental Protection Agency (EPA). This report contains findings that describe the 

problems the OIG has identified and corrective actions the OIG recommends. This report 

represents the opinion of the OIG and does not necessarily represent the final EPA position. 

EPA managers, in accordance with established resolution procedures, will make final 

determinations on matters in this report. 

The estimated cost of this report – calculated by multiplying the project’s staff days by the 

applicable daily full cost billing rates in effect at the time – is $278,859. 

Action Required 

In responding to the draft report, the Agency provided corrective action plans for addressing all 

of the recommendations. Therefore, a response to the final report is not required. The Agency 

should track corrective actions not implemented in the Management Audit Tracking System. We 

have no objections to the further release of this report to the public. The report will be available 

at http://www.ega.gov/oig. 

If you or your staff have any questions regarding this report, please contact Melissa Heist at 

(202) 566-0899 or heist.melissa@epa.gov; or Janet Kasper, Product Line Director, at 

(312) 886-3059 or kasper.janet@epa.gov. 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EPA Effectively Reviewed Recovery Act Recipient Data but 10-R-0234 

Opportunities for Improvement Exist 

Table of Contents 

Chapters 

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

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

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

 Noteworthy Achievements........................................................................... 2 

 Scope and Methodology.............................................................................. 2 

 Prior Audit Coverage ................................................................................... 3 

2 EPA’s Internal Controls Resulted in Low Error Rate ...................................... 4 

OMB Guidance Focused on Significant Reporting Errors and 

Material Omissions ................................................................................. 4 

EPA’s Controls for Reviewing Data Effective .............................................. 4 

EPA Did Not Define What Constitutes a Significant Error........................... 6 

Recipient-Reported Data Were Generally Accurate.................................... 6 

 Recommendation ........................................................................................ 6 

Agency Comments and OIG Evaluation...................................................... 6 

3 EPA Guidance Requires Recipients to Interpret Reporting Instructions ..... 8 

Recipients Responsible for Finding Key Award Information........................ 8 

Improved Guidance Needed to Ensure Accuracy of Recipient Reporting... 8 

Guidance Should Be More Specific............................................................. 9 

 Recommendation ........................................................................................ 9 

Agency Comments and OIG Evaluation...................................................... 10 

4 EPA Should Define Standard Action Limits .................................................... 11 

OMB Cites Amount of Award as a Data Element of Major Concern ........... 11 

EPA Program Offices Selected Varying Action Limits................................. 11 

Inaccurate Award Amounts Could Mislead Public....................................... 12 

 Recommendation ........................................................................................ 12 

Agency Comments and OIG Evaluation...................................................... 12 

Status of Recommendations and Potential Monetary Benefits.............................. 14 

Appendices 

A Details on Scope and Methodology.................................................................. 15 

B Agency Response to Draft Report.................................................................... 16 

C Distribution ......................................................................................................... 19
 
 10-R-0234 

Chapter 1

Introduction 

Purpose 

Our audit was part of a multiagency effort coordinated by the U.S. Department of 

Agriculture Office of Inspector General (OIG) at the request of the Recovery 

Accountability and Transparency Board. The effort was designed to respond to 

concerns raised by Members of Congress and the U.S. Government 

Accountability Office (GAO) regarding reporting errors in the October 2009 

recipient reports. Our objective was to determine whether EPA has implemented 

an internal control structure that effectively ensures that recipient data are 

reported completely, accurately, and in a timely manner; and that any material 

omissions and/or significant errors are identified and corrected. 

Background 

EPA awards multimillion-dollar assistance agreements and contracts under the 

American Recovery and Reinvestment Act of 2009. The Recovery Act states that 

the use of Recovery Act funds should be transparent and reported clearly, 

accurately, and in a timely manner. The Recovery Act requires federal agencies 

to review recipient reporting. The Office of Management and Budget (OMB) 

issued OMB M-09-21, Implementing Guidance for the Reports on Use of Funds 

Pursuant to the American Recovery and Reinvestment Act (Recovery Act) of 2009, 

on June 22, 2009. OMB M-09-21 provides government-wide guidance for 

carrying out the reporting requirements included in Section 1512 of the Recovery 

Act. Section 1512 requires recipients to report on the use of Recovery Act 

funding by the tenth day of each calendar quarter. Federal agencies then have an 

opportunity to review and comment on the recipient-reported data before they are 

made public. 

Recipient-reported data are made available to the public at www.Recovery.gov. 

The reports are designed to provide the public with an unprecedented level of 

transparency with respect to how Recovery Act money is being spent and will 

help drive accountability for the timely, prudent, and effective spending of 

Recovery Act dollars. 

GAO issued a report titled Recovery Act: Recipient Reported Jobs Data Provide 

Some Insight into Use of Recovery Act Funding, but Data Quality and Reporting 

Issues Need Attention, on November 19, 2009. In this report, GAO recommended 

that OMB and federal agencies reexamine review and quality assurance 

processes, procedures, and requirements in light of issues identified in the first 

round of recipient reporting. As a result, OMB issued OMB M-10-08, Updated 

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Guidance on the American Recovery and Reinvestment Act – Data Quality, NonReporting Recipients, and Reporting of Job Estimates, on December 18, 2009. 

This guidance incorporates GAO guidance and lessons learned from the first 

quarter of recipient reporting, specifically those related to the quality of data 

collected and the reporting of jobs created and retained. 

Noteworthy Achievements 

EPA was proactive about ensuring data quality. During its review of recipientreported data, EPA identified four recipients that did not report information 

related to their Recovery Act awards. EPA considered this nonreporting as 

material omissions. In three cases, technical issues prevented the recipients from 

reporting in a timely manner. In the fourth case, the recipient had also not 

reported in the first reporting period. EPA tried to work with that recipient, but 

the recipient did not respond to EPA’s efforts and did not report during the quarter 

ending December 31, 2009. The regional grants office tried to work with the 

recipient to resolve issues relating to the assistance agreement, but eventually 

determined that it needed to initiate a process for terminating the agreement 

because the recipient did not comply with the terms and conditions of the award. 

Scope and Methodology 

We performed our work in accordance with generally accepted government 

auditing standards, issued by the Comptroller General of the United States. These 

standards required 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 

provides a reasonable basis for our findings and conclusions based on our audit 

objectives. 

We reviewed recipient-reported data for the quarter ending December 31, 2009. 

For our analysis, we compared two data sets. The first data set was an extract of 

recipient-reported data from www.FederalReporting.gov. The second data set 

was a spreadsheet of Recovery Act awards EPA submitted to OMB as a result of 

a February 26, 2010, information request. We compared all of the recipientreported data to all of the EPA data for the data fields listed in Table 1-1. 

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Table 1-1: Contract and Assistance Agreement Data Fields 

Contracts Assistance Agreements 

Award Type Award Type 

Award Number Award Number 

Funding Agency Code Funding Agency Code 

Awarding Agency Code Awarding Agency Code 

Amount of Award Award Date 

Amount of Award 

Catalogue of Federal Domestic Assistance Number 

Activity Code 

Program Source (Treasury Account Symbol) Code 

Source: OMB guidance M-10-08. 

After identifying discrepancies between EPA data and recipient-reported data, the 

audit team independently verified the data. The audit team then asked EPA staff 

to explain the discrepancies noted with respect to assistance agreements and 

contracts. Based on the explanations received, the audit team determined whether 

the discrepancy was due to an EPA error or a recipient error, or whether no error 

occurred (i.e., the discrepancy was due to a timing issue). 

Further details on scope and methodology are in Appendix A. 

Prior Audit Coverage 

We issued a related report, EPA Recovery Act Recipient Reporting and Data 

Review Process, Report No. 10-R-0020, in October 2009. The purpose of that 

review was to determine whether EPA established a process to perform limited 

data quality reviews intended to identify material omissions and/or significant 

reporting errors, and to notify the recipients of the need to make appropriate and 

timely changes. No recommendations were identified in that report. 

3 
 10-R-0234 

Chapter 2

EPA’s Internal Controls Resulted in Low Error Rate 

EPA developed procedures to assist Agency staff in reviewing Recovery Act 

recipient quarterly reports, which resulted in an error rate of 3 percent in the fields 

OMB identified as major concerns for significant reporting errors. During our 

review, we identified 23 errors pertaining to award amount and award number. 

We considered two of these errors to be significant, although EPA did not. OMB 

guidance requires federal agencies to establish data review processes that focus on 

significant reporting errors and material omissions, and report significant errors to 

OMB each quarter. EPA did not regard as significant the errors we identified 

because it did not define what constitutes a significant error. Significant errors 

could mislead the public about how much money the recipients are receiving. 

OMB Guidance Focused on Significant Reporting Errors and Material 

Omissions 

OMB guidance states that federal agencies should establish data review processes 

that focus on significant reporting errors and material omissions, and report 

significant errors to OMB. OMB identified several data elements, including 

award amount and award number, as major concerns for significant reporting 

errors. Significant reporting errors are instances in which inaccurate reporting of 

required data could mislead or confuse the public. However, OMB did not define 

for agencies what the margin of error threshold should be. After federal agencies 

review Recovery Act recipient quarterly reports, agencies are to report on any 

significant errors to OMB. 

EPA’s Controls for Reviewing Data Effective 

EPA’s low error rate in recipient-reported data can be attributed to the process the 

Agency instituted pursuant to the Recovery Act. For the data fields OMB 

identified as major concerns for significant reporting errors, we found errors in 

23, or 3 percent, of the 764 recipient reports for the period ending December 31, 

2009 (Table 2-1). For the other fields that we tested, we found 48 errors in the 

recipient reports. 

4 
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Table 2-1: OMB-Identified Fields of Major Concern for Significant Reporting Errors 

Data field 

Number of 

errors in 

recipient data 

Recipient errors 

EPA identified 

as significant 

Recipient errors 

OIG identified as 

significant 

Award Amount 

Assistance Agreements 3 0 1 

Contracts 9 0 1 

Award Number 

Assistance Agreements 8 0 0 

Contracts 3 0 0 

Source: OIG analysis. 

EPA’s process for reviewing recipient data for the reporting period ending 

December 31, 2009, included two areas of emphasis. First, EPA conducted a 

macro review of all recipient reports. The macro review was designed to identify 

missing reports, missing data elements, clear anomalies, and reported information 

that exceeded preestablished thresholds for action. Next, program offices 

conducted a separate review to ensure completeness of recipient data and to 

identify anomalies and obvious errors. EPA received 764 recipient reports (for 

585 assistance agreements and 179 contracts) and made 178 formal comments to 

recipients regarding their reports. 

We considered 2 of the 12 errors we found in the award amount field for 

assistance agreements and contracts to be significant. The other 10 errors were 

below the OIG’s judgmental threshold of 5 percent. When we called attention to 

the two award amount errors that were over 5 percent, EPA told us it did not 

consider these errors to be significant. In one case, the recipient underreported 

the award amount by 37.9 percent, or $30,600. This ecipient did not report an 

amendment, which accounted for the entire error. EPA did not identify the error 

during its review process. In the other case, the contractor only reported the 

amount that had been awarded on approved work plans, and not the amount that 

had been obligated. Thus, the contract was underreported by 7.9 percent, or 

$171,787. 

We found 11 award number errors for assistance agreements and contracts. EPA 

told us that it did not consider any of them to be significant because the Agency 

could still track those awards. Recipient errors included an extra hyphen or a onecharacter error in the award number. In two cases, the recipient did not report the 

correct award number because EPA had not updated the contract number 

correctly. 

We identified 48 errors in other fields that we reviewed. However, none of these 

fields were considered of major concern for significant reporting errors by the 

terms of the OMB guidance (Table 2-2), and we did not find the differences 

sufficiently significant to mislead the public. 

5 
 

 

 10-R-0234 

Table 2-2: Fields Not Identified by OMB as of Major Concern for Significant 

Reporting Errors 

Data field 

Number of 

errors in 

recipient data 

Assistance Agreements 

Award Type 1 

Award Date 32 

Funding Agency Code 0 

Awarding Agency Code 0 

Catalogue of Federal Domestic Assistance 0 

Program Source (Treasury Account Symbol Code) 13 

Contracts 

Award Type 0 

Funding Agency Code 1 

Awarding Agency Code 1 

Source: OIG analysis. 

EPA Did Not Define What Constitutes a Significant Error 

EPA did not consider significant the two errors for the award amount field that we 

considered to be significant. OMB provided a broad definition of significant 

errors. Based on that broad definition, EPA developed various reports and 

procedures to assist Agency staff in reviewing recipient-reported data. Although 

the procedures were generally effective in identifying recipient errors, EPA did 

not provide its staff with specifics for what should be considered a significant 

error. 

Recipient-Reported Data Were Generally Accurate 

Recipient-reported data were generally accurate, ensured transparency, and 

provided the public reliable information about Recovery Act projects. However, 

errors in the award amount field may mislead the public about how much money 

recipients are receiving. 

Recommendation 

We recommend that the Assistant Administrator for Administration and 

Resources Management: 

2-1	 Develop an Agency-wide threshold to identify significant errors for those 

fields OMB identified as major concerns for significant reporting errors. 

Agency Comments and OIG Evaluation 

In responding to the draft report, the Office of Administration and Resources 

Management (OARM) agreed to tighten the threshold for acceptable variances for 

key data elements identified in OMB M-09-21. EPA also noted that the 

6 
 10-R-0234 

multiagency audit of data quality review processes conducted by the U.S. 

Department of Agriculture OIG, dated June 25, 2010, recommended that the 

Recovery Accountability and Transparency Board provide additional guidance to 

agencies to ensure consistency and uniformity in addressing significant errors. 

EPA stated that it supports that recommendation and is prepared to apply the 

board’s guidance when issued to its future Section 1512 reviews. 

We followed up with EPA to clarify the response and obtain a milestone date for 

implementation of the corrective action. The Director, Office of Grants and 

Debarment, stated that EPA will tighten the threshold for the following data 

elements by September 15, 2010: award date, award amount, jobs created and 

retained, and recipient name. The planned corrective action meets the intent of 

the report recommendations. 

The Agency’s full response is in Appendix B. 

7 
 10-R-0234 

Chapter 3

EPA Guidance Requires Recipients to 

Interpret Reporting Instructions 

EPA’s guidance to recipients on what to report in certain fields in the Recovery 

Act reporting system was not always sufficient to ensure that recipients reported 

the correct information. OMB guidance requires federal agencies to provide 

Recovery Act recipients with a list of key award information, such as award date, 

activity code, and order number. EPA prepared a reference guide for recipients to 

instruct them where to find this key award information. However, certain fields 

of the reference guide were not specific and required recipients to interpret how to 

report information. Improved guidance will reduce recipient-reported errors and 

improve EPA’s ability to verify the accuracy of recipient-reported data. 

Recipients Responsible for Finding Key Award Information 

OMB guidance requires federal agencies to provide Recovery Act recipients with 

a list of key award information. EPA prepared a reference guide for recipients 

that instructed recipients where to find key award information, such as award 

date, activity code, and order number. 

Improved Guidance Needed to Ensure Accuracy of Recipient 

Reporting 

EPA guidance to recipients for Recovery Act reporting should be more specific so 

as to improve reporting. Below are examples of key data fields for which we 

found that EPA can improve guidance to ensure that accurate and consistent 

information is reported by recipients. 

	 Award Date: For the award date data field, EPA guidance for assistance 

agreements instructs recipients to enter the date that EPA signed the 

award. However, we noted several agreements in which EPA awarded an 

amendment after the original award. EPA’s guidance does not address 

whether recipients should enter the award date for an amendment or the 

original award. Because EPA’s guidance did not specify which date to 

use, we were not able to determine whether the recipient-reported 

information was correct. 

	 Activity Code: For the activity code data field, EPA’s reference guide for 

assistance agreements identifies the activity codes that the recipient should 

use for three programs. For the other eight programs, the reference guide 

requires the recipients to navigate to the Office of Grants and Debarment 

8 
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Website. From there, recipients open another link that contains a table of 

14 programs. The recipients then must identify their type of assistance 

agreement and select from the codes provided. We were unable to 

electronically verify the activity codes because EPA does not track the 

information in its databases, and the electronic file the Office of Grants and 

Debarment provided to the OIG was not accurate. We did, however, 

manually compare some recipient reports to the guidance information EPA 

provided recipients and found that in some cases, the activity code that was 

used was not one of the options EPA identified in its reference guide. The 

OMB-provided template that recipients use to file their reports includes a 

drop-down menu for the activity code field. However, the drop-down menu 

identifies over 2,000 activity codes, complicating the activity code 

determination process. 

Guidance Should Be More Specific 

The award date and activity code fields found in the reference guide were not 

specific and required recipients to interpret how to report information. In 

explaining how to fill out some of the fields, the guide directed recipients to 

Websites, phone numbers, or other documents for more information. But that 

information in turn was not specific and was open to interpretation. For the 

instances in which the guide told recipients exactly how to fill out fields, few 

errors were noted. 

EPA does not routinely track activity codes, and these codes are not identified 

within EPA’s data systems. Therefore, staff members were not familiar with 

them and thus may not identify errors when reviewing recipient reports. 

Increased specificity in EPA guidance will reduce recipient-reported errors and 

increase EPA’s ability to verify the accuracy of recipient-reported data. Recipient 

reports are designed to provide the public with transparency as to how Recovery 

Act dollars are being spent in their communities. Incorrect data may lead to 

mistaken conclusions about the funding. 

Recommendation 

We recommend that the Assistant Administrator for Administration and 

Resources Management: 

3-1	 Clarify the reference guide to reduce the incidence of varying recipient 

interpretations. The clarifications should: 

a.	 Address whether to use the original date of the award or the date 

of the amendment for assistance agreements. 

b.	 Specify which activity codes to use for assistance agreements. 

9 
 10-R-0234 

Agency Comments and OIG Evaluation 

In responding to the draft report, EPA agreed to take actions to address the 

recommendation and provided milestone dates. OARM stated that the Office of 

Grants and Debarment would work with the EPA Stimulus Tracking and 

Reporting Subcommittee to make appropriate revisions to the Agency’s reference 

guide and the EPA Standard Review Procedure by October 1, 2010. The planned 

corrective action meets the intent of the report recommendations. The Agency’s 

full response is in Appendix B. 

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 10-R-0234 

Chapter 4

EPA Should Define Standard Action Limits 

EPA program offices selected varying action limits for the award amount data 

element reported by Recovery Act recipients. The action limits identify the error 

rate in the award amount data element that EPA program offices will accept as 

accurate. OMB identified the award amount data element as a major concern for 

significant reporting errors. Instead of adopting an Agency-wide action limit, 

EPA allowed program offices to adopt their own action limits. The lack of an 

Agency-wide action limit could affect the error rate in the award amount data 

elements. Recipients that underreport or overreport Recovery Act awards could 

mislead the public because of the significant dollar amounts they receive. 

OMB Cites Amount of Award as a Data Element of Major Concern 

OMB identified the award amount data element as a major concern for significant 

reporting errors. OMB defined significant reporting errors as those instances in 

which required data are not reported accurately and such errors result in 

significant risk that the public will be misled or confused. OMB guidance 

requires federal agencies to establish data review processes that focus on 

significant reporting errors. 

EPA Program Offices Selected Varying Action Limits 

EPA program offices selected varying action limits for the award amount data 

element reported by its Recovery Act funding recipients. These action limits are 

identified in EPA Procedure for Review of ARRA Section 1512 Recipient 

Reported Information, issued in October 2009. The action limits identify the error 

rate in the award amount data field that EPA program offices will accept as 

accurate. 

Instead of adopting an Agency-wide action limit, EPA allowed program offices to 

adopt their own action limits (Table 4-1). The Clean Water State Revolving 

Fund/Drinking Water State Revolving Fund programs set the action limit at 

2 percent, because OMB had not outlined a standard procedure and because the 

programs had no experience reviewing large amounts of data under extremely 

tight deadlines. The Leaking Underground Storage Tank program staff decided 

an action limit of +/-10 percent was reasonable. Representatives from both 

program offices told us that despite these action limits, they investigated any 

difference between the recipient-reported award amount and EPA award amount. 

11 
 

 

 10-R-0234 

Table 4-1: Program-Identified Action Limits 

Program Offices Action Limit 

Clean Water State Revolving Fund 

Drinking Water State Revolving Fund Greater than 2% 

Water Quality Management Planning 

Leaking Underground Storage Tank Greater than +/-10% 

Superfund 

Brownfields 

Any discrepancy 

National Clean Diesel 

Source: EPA Procedure for Review of ARRA Section 1512 Recipient Reported Information, 

October 2009. 

Inaccurate Award Amounts Could Mislead Public 

Recipients that underreport or overreport Recovery Act awards could mislead the 

public. By investigating all differences between what the recipient reported and 

what the EPA data showed for the award amount, EPA may identify systemic 

issues. For example, for the reporting period ending December 31, 2009, we 

identified some contract modifications that were either issued near the end of the 

reporting period or made in the next reporting cycle. Some contract modifications 

issued near the end of the reporting period that we identified were not included in 

the recipient-reported totals, while some contract modifications made in the next 

reporting cycle that we identified were prematurely reported by the recipients in 

the quarter ending December 31, 2009. By investigating all differences, similar 

patterns can be identified and then specifically looked for during future reviews. 

Public confidence increases when recipient-reported data are accurate. 

Recommendation 

We recommend that the Assistant Administrator for Administration and 

Resources Management: 

4-1 Adopt a policy that requires program offices to investigate all differences 

– regardless of dollar amount – between what recipients report for their 

award amount and what EPA has recorded in its information systems. 

Agency Comments and OIG Evaluation 

In response to the draft report, OARM stated that the EPA standard review 

procedure document will be modified to eliminate variances when examining 

award amounts. The written response did not provide a milestone date, so we 

followed up with the Director, Office of Grants and Debarment. EPA indicated it 

will modify the standard review procedure document by September 15, 2010. 

12 
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The planned corrective action meets the intent of the report recommendations. 

The Agency’s full response is in Appendix B. 

13 
 

 

 

 

 

 

 

 

 

 10-R-0234 

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 

2-1 

3-1 

4-1 

6 

9 

12 

Develop an Agency-wide threshold to identify 

significant errors for those fields OMB identified as 

major concerns for significant reporting errors. 

Clarify the reference guide to reduce the incidence 

of varying recipient interpretations. The 

clarifications should: 

a. Address whether to use the original date 

of the award or the date of the 

amendment for assistance agreements. 

b. Specify which activity codes to use for 

assistance agreements. 

Adopt a policy that requires program offices to 

investigate all differences – regardless of dollar 

amount – between what recipients report for their 

award amount and what EPA has recorded in its 

information systems. 

O 

O 

O 

Assistant Administrator for 

Administration and 

Resources Management 

Assistant Administrator for 

Administration and 

Resources Management 

Assistant Administrator for 

Administration and 

Resources Management 

9/15/2010* 

10/01/2010 

9/15/2010* 

O = recommendation is open with agreed-to corrective actions pending 

C = recommendation is closed with all agreed-to actions completed 

U = recommendation is undecided with resolution efforts in progress 

* Although the milestone for Recommendations 2-1 and 4-1 have passed, the Agency has not informed the OIG that the corrective actions for these 

recommendations are completed or provided updated milestones. 

14 

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Appendix A 

Details on Scope and Methodology 

We performed audit field work from March to July 2010. We analyzed the Recovery Act and 

guidance pertaining to EPA’s Recovery Act assistance agreements and contracts. We reviewed 

internal controls related to analyzing and reporting on recipient-provided data. We gained an 

understanding of internal controls through performance of the procedures outlined below: 

	 We gathered recipient data from www.FederalReporting.gov and assistance agreements 

and contracts data from EPA’s internal data systems. We then compared the two sets of 

data using data mining software. After organizing the data discrepancies we found by 

EPA program, we asked the relevant programs about the discrepancies we found for the 

key data fields and documented the results. The information provided from 

Federalreporting.gov, and EPA’s internal data systems were sufficient for the purposes of 

our review. 

	 We interviewed a senior advisor on the Tracking and Reporting Subcommittee of the 

EPA Stimulus Steering Committee and a senior analyst in the Office of Environmental 

Information. We interviewed points of contact in the Clean Water and Drinking Water 

State Revolving Funds as well as in the Offices of Acquisition Management, Grants and 

Debarment, the Chief Financial Officer, Air and Radiation, Solid Waste and Emergency 

Response, and Administration and Resources Management. We also interviewed 

personnel in the Water Quality Management Planning and Construction Grants and 

Territories programs. 

We reviewed relevant criteria documents, such as OMB’s M-10-08 guidance, issued 

December 18, 2009, and the EPA Procedure for Review of ARRA Section 1512 Recipient 

Reported Information, issued in October 2009. 

15 
 

 

 10-R-0234 

Appendix B 

Agency Response to Draft Report 

August 26, 2010 

MEMORANDUM 

SUBJECT: Draft Audit Report: 

EPA Effectively Reviewed Recovery Act Recipient Data but 

Opportunities for Improvement Exist 

(Project No. 2010-1222) 

FROM: Craig E. Hooks 

 Assistant Administrator 

TO: Janet Kasper 

 Director, Contracts and Assistance Agreement Audits 

Thank you for the opportunity to comment on the draft audit report, “EPA Effectively 

Reviewed Recovery Act Recipient Data but Opportunities for Improvement Exist (Project No. 

2010-1222).” 

I am pleased that the report recognizes the steps EPA has taken to carry out our 

responsibilities to review recipient-reported information in accordance with Section 1512 of the 

American Recovery and Reinvestment Act (ARRA). The report also recognizes the Agency’s 

proactive approach to reviewing recipient information and concludes that EPA’s system of 

controls resulted in low error rates. Additionally, I want to commend the OIG for the analytical 

method used in the report to compare authoritative Agency master list information to recipientreported extracted data. This method provides an extra macro-level check of Section 1512 data 

to identify potential deficiencies, and has been adopted by our Stimulus Tracking and Reporting 

Subcommittee. 

The report contains three recommendations designed to improve the process for 

identifying significant reporting errors, clarify guidance to recipients and establish a more 

stringent threshold for identification of errors. OARM’s response to these recommendations is 

presented below. 

Recommendation #1: Develop an Agency-wide threshold for identifying significant errors for 

those fields OMB identified as significant. 

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OARM Response: EPA is required to follow the guidance issued to all agencies and 

departments contained in OMB M-10-08 as well as supplemental instructions contained in OMB 

M-09-21 to identify significant errors. The threshold established by OMB in this guidance 

suggests significant errors are instances where incorrect data results in “significant risk the 

public will be misled.” As agencies implement this threshold, OMB has indicated they must 

make a judgment regarding the materiality of any data discrepancy and its potential to present a 

significant risk of misleading the public. Rather than attempt to redefine OMB’s definition of a 

significant error as suggested by the OIG recommendation, EPA will tighten the threshold for 

acceptable variances for key data elements identified in OMB M-09-21. The tightened action 

limits are discussed further in our response to Recommendation #3. 

OARM also notes a relevant recommendation of the United States Department of Agriculture’s 

(USDA) OIG multi-agency audit of data quality review processes dated June 25, 2010. In that 

audit, which also addressed EPA’s processes, the USDA OIG recommended that the Recovery, 

Accountability and Transparency Board provide additional guidance to agencies to ensure 

consistency and uniformity in addressing significant errors. We support this recommendation 

and are prepared to apply the Board’s guidance when issued to our future Section 1512 reviews. 

Recommendation #2: Clarify guidance to reduce the need for recipients to interpret the 

reference guide for their specific award. The clarifications should (1) address whether to use the 

original date of the award or the date of the amendment for assistance agreements, and (2) 

specify exactly which activity codes to use for assistance agreements. 

OARM Response: OARM agrees with this recommendation. EPA’s Office of Grants and 

Debarment (OGD), working with the EPA Stimulus Tracking and Reporting Subcommittee, will 

make appropriate revisions to the Agency’s reference guide and the EPA Standard Review 

Procedure document prior to the next Section 1512 review cycle beginning October 1, 2010. 

Recommendation #3: Adopt a policy that requires program offices to investigate all differences 

– regardless of dollar amount – between what recipients report for their award amount and what 

EPA has recorded in its information systems. 

OARM Response: OARM agrees with this recommendation. The EPA Standard Review 

Procedure document will be modified to eliminate variances when examining award amounts. 

Thank you for the opportunity to comment on the report. If you have any questions about 

these comments, please contact Howard Corcoran, Director, OGD, at (202) 564-1903 or Don 

Flattery, Chair, Stimulus Tracking and Reporting Subcommittee, at (202) 564-4677. 

cc: Nanci Gelb 

Renee Wynn 

 Sheila Frace 

Jerry Kurtzweg 

Don Flattery 

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 John Showman 

Marian Cooper 

Howard Corcoran 

 Denise Benjamin-Sirmons 

Catherine Vass 

John Bashista 

John Oliver 

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Appendix C 

Distribution 

Office of the Administrator 

Assistant Administrator for Administration and Resources Management 

Assistant Administrator, Office of Environmental Information and Chief Information Officer 

Director, Office of Acquisition Management, Office of Administration and 

Resources Management 

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

Management 

Agency Follow-up Official (the CFO) 

Agency Follow-up Coordinator 

General Counsel 

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 

Audit Follow-up Coordinator, Office of Acquisition Management, 

Office of Administration and Resources Management 

Inspector General 

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