Office of Inspector General

Briefing Report

 

Increased Region 8

Involvement Would Improve

Tribal Program Results

Report No. 100370-2002-1-000100 March 29, 2002
Inspector General Resource Center

 Conducting the Audit: Central Audit and Evaluation Resource Center

Denver, Colorado Office

EPA Region Covered: Region 8

Program Offices Involved: Tribal Assistance Program

Grants, Audit, and Procurement Program

Audit Conducted by: Larry Dare

Thomas Herrod

Cover: The illustration is part of an EPA poster that depicts Tribes’

sovereign right to protect the water, land, and air. The cover

illustration represents air.
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

OFFICE OF INSPECTOR GENERAL

CENTRAL AUDIT AND EVALUATION RESOURCE CENTER BRANCH OFFICES:

901 NORTH 5TH STREET 1445 Ross Avenue, Suite 1200

KANSAS CITY, KANSAS 66101 Dallas, Texas 75202-2733

913-551-7878 214-665-6621

FAX: 913-551-7837 FAX: 214-665-6589

March 29, 2002 999 18th Street Suite 300

Denver, Colorado 80202-2405

303-312-6872

FAX: 303-312-6063

MEMORANDUM

SUBJECT: Briefing Report: Increased Region 8 Involvement Would Improve Tribal Program

Results

Briefing Report No. 100370-2002-1-000100

FROM: Jeff Hart

Branch Manager

Denver Office

TO: Jack McGraw

Acting Regional Administrator

EPA Region 8

This is our briefing report titled Increased Region 8 Involvement Would Improve Tribal Program

Results. As you know, we held a briefing with you and your staff on March 25, 2002. We have made

changes to the draft briefing report we sent you on February 15, 2002, based on your comments during

our briefing and on your written response. A copy of the presentation slides is included as Appendix I

and your complete response is included as Appendix II.

We recently issued separate financial audit reports for each of the four Tribes we audited (Northern

Cheyenne, Rosebud, Crow, and Lower Brule). See Appendix III for report titles, numbers, and dates. 

This report presents our performance audit findings and recommendations for Region 8 based on our

audits of those four Tribes.

Action Required

In accordance with Environmental Protection Agency (EPA) Order 2750, you, as the action official,

are required to provide this office with a proposed Management Decision within 90 days of the report

date. For corrective actions planned but not yet completed, providing a corrective action plan with

specific milestone dates will assist us in deciding whether to close this report.
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We have no objection to the release of this report to any member of the public. This report contains

findings that the Office of Inspector General (OIG) has identified and corrective actions OIG

recommends. This report represents the opinion of OIG and the findings in this report do not

necessarily represent the final EPA position. Final determinations on matters in this report will be made

by EPA managers in accordance with established EPA audit resolution procedures.

Findings

Although Region 8 has taken some important steps to help Tribes comply with grant requirements

during the last several years, three of the four Tribes we visited had difficulty supporting costs claimed

and managing their environmental grants during the period covered by our audit (1996 through 2000). 

The Region has recently taken some additional positive, proactive steps to help Tribes improve

performance and has shown a willingness to take strong steps when it deems necessary. Even so, three

of the four Tribes we visited had difficulty managing their environmental grants.

Region 8's positive, proactive steps have included improving communication with and support for some

Tribal environmental staff, raising performance issues with Tribal Chairpersons, holding its third annual

training session for Tribal grant managers, and conducting 24 on-site reviews during the past 6 years. 

The Region has also taken strong steps to bring Tribes into compliance with grant requirements. The

Region has withheld grant payments for some grants, terminated four grants, demanded repayment of

grant funds, designated two Tribes as high risk, and required one Tribe to implement a financial

management action plan.

However, three of the four Tribes we visited still had significant internal control and accounting system

weaknesses, did not always comply with grant regulations, and did not consistently accomplish grant

objectives. We questioned approximately $1.37 million of the approximately $1.97 million we audited

primarily for three reasons: (1) Tribal accounting systems could not produce a complete, accurate list

of costs charged to the grant, (2) Tribal payroll systems did not meet Office of Management and

Budget Circular A-87 requirements, and (3) Tribes could not support costs claimed. Generally, three

of the four Tribes we visited did not file required financial and program progress reports timely, two

Tribes did not understand or did not follow recipient match requirements, and two Tribes used General

Assistance Program grant funds inappropriately. Additionally, some programs did not fully accomplish

grant objectives. For example, one Tribe's General Assistance Program coordinator completed the

Tribe's water project but charged her time to the General Assistance Program grant; another Tribe

produced no final product under its General Assistance Program; and a third Tribe hired and paid a

General Assistance Program coordinator who was not physically present at the reservation and

produced virtually no work.
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Recommendations

We recommend that the Acting Regional Administrator, Region 8:

1. Continue to actively participate with the National EPA Grants and Debarment Tribal

workgroup to develop an EPA/Tribal compliance or review guide for Management Assistance

Program reviews that provides a comprehensive approach to assessing Tribal grant

management capabilities to help improve Tribes':

A. Accounting skills and accounting systems,

B. Record keeping systems (to support costs claimed on environmental grants),

C. Understanding of grant requirements, and

D. Compliance with grant requirements.

2. Continue to actively participate with the National EPA Grants and Debarment Tribal

workgroup to formulate a strategy to address long-standing, systemic issues associated with

Tribal grant management.

3. Continue to work with the Tribes to help improve their:

A. Ability to identify, hire, and train a more skilled workforce;

B. Understanding and appreciation of the value of strong internal controls; and

C. Understanding of the value of a more organized environmental department management

structure.

4. Develop an approach to address noncompliance on program reporting requirements including

the possibility of not making new grant awards until the grantee achieves compliance.

5. Regularly review sources of information such as other agencies' high risk designations and

Tribes' single audits to help identify Tribes that would benefit most from assistance.

6. Continue to take appropriate actions when grant requirements are not met, including grant

termination and designating grantees as high risk.
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Agency Comments and OIG Evaluation

Region 8 generally agreed with our findings and recommendations. Regional staff provided additional

information regarding actions the Region has taken to help improve Tribal grants management and

actions taken when Tribes are unable to comply with grant requirements. Region 8 and EPA Grants

and Debarment managers offered suggestions that, if implemented, we believe will benefit Tribes

nationally as well as in Region 8. The Region also committed to continue its ongoing training and

oversight programs. 

Based on the Region's comments, we modified our report and the accompanying briefing slides where

appropriate. Specifically, we added additional examples of best practices and strong actions taken by

Region 8 to improve Tribal grants management and protect EPA grant funds. We also modified our

recommendations to recognize Region 8's participation on the National EPA Grants and Debarment

Tribal workgroup and the Region's willingness, through the workgroup, to help address longstanding,

systemic Tribal grants management issues by soliciting the help of other Federal agencies.

Objectives

Our overall objective was to determine the validity of allegations regarding the effectiveness of the

Region's and Tribes’ grants management. Specifically, our performance audit objectives were to

answer the following three questions:

• Are Tribes’ internal/management controls sufficient to provide reasonable assurance

that assets are protected?

• Have Tribes substantially complied with legal and grant requirements?

• Have the completed projects accomplished the objective(s) for which grant funds were

awarded?

Scope and Methodology

We initiated this review as a result of a December 7, 1999, anonymous letter addressed to the EPA

Region 8 Regional Administrator alleging grant mismanagement and other issues in the Regional Tribal

program. With Region 8's support, we reviewed allegations in that letter as well as OIG hotline

complaints regarding the Region's Tribal program. We conducted our audit in accordance with

Government Auditing Standards, issued by the Comptroller General of the United States.

We reported on the legality of Region 8's Tribal Assistance Program grant awards and the Tribal

Assistance Program's internal management in our September 29, 2000 report, Increased Focus on
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Would Improve Tribal Program Results

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Grant Management and Internal Relationships Would Improve Region 8's Tribal Assistance Program

(Report No. 2000-P-000615-00021). 

To accomplish our objectives, we audited grants at four Tribes. We selected these Tribes because each

had significant and meaningful involvement with EPA programs, their past performance indicated they

would benefit from an audit, and each Tribe had recently closed grants. We audited grants covering

the period 1996 through 2000. We conducted our fieldwork between March 2001 and March 2002. 

For each transaction we selected to test, we reviewed data from the Tribe’s accounting system and

supporting documentation. We discussed the Tribe’s management system with Tribal environmental

and accounting staff. We also interviewed program staff at each Tribe.

If you have any questions, please call me at (303) 312-6169 or Larry Dare at (303) 312-6969. Please

refer to report number 100370-2002-1-000100 on all correspondence.

Appendices

Appendix I: Briefing Slides

Appendix II: Region 8 Response

Appendix III: Tribal Financial Audit Reports Issued

Appendix IV: Distribution
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Would Improve Tribal Program Results

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Appendix I

Briefing Slides
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Would Improve Tribal Program Results

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Appendix I

Briefing Slides (continued)
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Would Improve Tribal Program Results

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Appendix I

Briefing Slides (continued)
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Appendix I

Briefing Slides (continued)
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Would Improve Tribal Program Results

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Appendix I

Briefing Slides (continued)
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Would Improve Tribal Program Results

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Appendix I

Briefing Slides (continued)
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Would Improve Tribal Program Results

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Appendix I

Briefing Slides (continued)
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Would Improve Tribal Program Results

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Appendix I

Briefing Slides (continued)
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Would Improve Tribal Program Results

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Appendix I

Briefing Slides (continued)
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Would Improve Tribal Program Results

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Appendix I

Briefing Slides (continued)
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Would Improve Tribal Program Results

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Appendix I

Briefing Slides (continued)
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Would Improve Tribal Program Results

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Appendix I

Briefing Slides (continued)
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Would Improve Tribal Program Results

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Appendix I

Briefing Slides (continued)
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Would Improve Tribal Program Results

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Appendix I

Briefing Slides (continued)
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Would Improve Tribal Program Results

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Appendix I

Briefing Slides (continued)
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Appendix II

Region 8 Response
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Would Improve Tribal Program Results

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Appendix II

Region 8 Response (continued)
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Would Improve Tribal Program Results

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Appendix II

Region 8 Response (continued)
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Appendix III

Tribal Financial Audit Reports Issued

EPA Grants Awarded to the Northern Cheyenne Tribe (Report No. 1000370-2002-1-000089)

 dated March 5, 2002

EPA Grants Awarded to the Rosebud Sioux Tribe (Report No. 1000370-2002-1-000096)

 dated March 19, 2002

EPA Grants Awarded to the Crow Tribe (Report No. 100370-2002-1-000098)

 dated March 27, 2002

EPA Grants Awarded to the Lower Brule Sioux Tribe (Report No. 100370-2002-1-000099)

 dated March 29, 2002
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Would Improve Tribal Program Results

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Appendix IV

Distribution

Office of Inspector General

Inspector General

EPA Headquarters Office

Assistant Administrator, Office of Administration and Resources Management (3101A)

Associate Administrator for Congressional and Intergovernmental Relations

 (1301A)

Associate Administrator for Communications, Education, and Media Relations

 (1101A)

Comptroller (2731A)

Director, American Indian Environmental Office (4104)

Director, Office of Grants and Debarment (3901R)

Director, Grants Administration Division (3903R)

Director, Office of Regional Operations (1108A)

Agency Followup Official (2710A)

Agency Audit Followup Coordinator (2724A)

Region 8 Office

Assistant Regional Administrator, Office of Technical and Management Services

Assistant Regional Administrator, Office of Partnerships and Regulatory

 Assistance

Regional Counsel

Associate Assistant Regional Administrator, Office of Partnerships and

 Regulatory Assistance

Director, Tribal Assistance Program

Director, Grants, Audits, and Procurement Program

Director, Financial Management Program

Director, Office of Communication and Public Involvement

Audit Followup Coordinator