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Title: Special Report on Review of "The Department of Energy's Quality Assurance Process for Prime Recipients' Reporting for the American Recovery and Reinvestment Act"

Abstract

The American Recovery and Reinvestment Act of 2009 (Recovery Act) was established to jumpstart the U.S. economy, create or save millions of jobs, spur technological advances in health and science, and invest in the Nation's energy future. The Department of Energy (Department) will receive an unprecedented $37 billion in Recovery Act funding to support a variety of science, energy, and environmental initiatives. The majority of the funding received by the Department will be allocated to various recipients through grants, cooperative agreements, contracts, and other financial instruments. To ensure transparency and accountability, the Office of Management and Budget (OMB) requires that recipients report on their receipt and use of Recovery Act funds on a quarterly basis to FederalReporting.gov. OMB also specifies that Federal agencies should develop and implement formal procedures to help ensure the quality of recipient reported information. Data that must be reported by recipients includes total funding received; funds expended or obligated; projects or activities for which funds were obligated or expended; and the number of jobs created and/or retained. OMB requires that Federal agencies perform limited data quality reviews of recipient data to identify material omissions and/or significant reporting errors and notify the recipients of the need tomore » make appropriate and timely changes to erroneous reports. As part of a larger audit of recipient Recovery Act reporting and performance measurement and in support of a Government-wide review sponsored by the Recovery Accountability and Transparency Board, we completed an interim review to determine whether the Department had established a process to ensure the quality and accuracy of recipient reports. Our review revealed that the Department had developed a quality assurance process to facilitate the quarterly reviews of recipient data. The process included procedures to compare existing information from the Department's financial information systems with that reported to FederalReporting.gov by recipients. In addition, plans were in place to notify recipients of anomalies and/or errors exposed by the quality assurance process. While the Department has made a good deal of progress in this area, we did, however, identify several issues which could, if not addressed, impact the effectiveness of the quality assurance process.« less

Publication Date:
Research Org.:
DOEIG (USDOE Office of the Inspector General (IG) (United States))
Sponsoring Org.:
USDOE
OSTI Identifier:
967388
Report Number(s):
OAS-RA-10-01
TRN: US200924%%69
Resource Type:
Technical Report
Country of Publication:
United States
Language:
English
Subject:
29 ENERGY PLANNING, POLICY AND ECONOMY; US DOE; REPORTING REQUIREMENTS; FINANCING; QUALITY ASSURANCE; ECONOMIC POLICY

Citation Formats

None. Special Report on Review of "The Department of Energy's Quality Assurance Process for Prime Recipients' Reporting for the American Recovery and Reinvestment Act". United States: N. p., 2009. Web. doi:10.2172/967388.
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None. Special Report on Review of "The Department of Energy's Quality Assurance Process for Prime Recipients' Reporting for the American Recovery and Reinvestment Act". United States. doi:10.2172/967388.
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None. Thu . "Special Report on Review of "The Department of Energy's Quality Assurance Process for Prime Recipients' Reporting for the American Recovery and Reinvestment Act"". United States. doi:10.2172/967388. https://www.osti.gov/servlets/purl/967388.
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@article{osti_967388,
title = {Special Report on Review of "The Department of Energy's Quality Assurance Process for Prime Recipients' Reporting for the American Recovery and Reinvestment Act"},
author = {None},
abstractNote = {The American Recovery and Reinvestment Act of 2009 (Recovery Act) was established to jumpstart the U.S. economy, create or save millions of jobs, spur technological advances in health and science, and invest in the Nation's energy future. The Department of Energy (Department) will receive an unprecedented $37 billion in Recovery Act funding to support a variety of science, energy, and environmental initiatives. The majority of the funding received by the Department will be allocated to various recipients through grants, cooperative agreements, contracts, and other financial instruments. To ensure transparency and accountability, the Office of Management and Budget (OMB) requires that recipients report on their receipt and use of Recovery Act funds on a quarterly basis to FederalReporting.gov. OMB also specifies that Federal agencies should develop and implement formal procedures to help ensure the quality of recipient reported information. Data that must be reported by recipients includes total funding received; funds expended or obligated; projects or activities for which funds were obligated or expended; and the number of jobs created and/or retained. OMB requires that Federal agencies perform limited data quality reviews of recipient data to identify material omissions and/or significant reporting errors and notify the recipients of the need to make appropriate and timely changes to erroneous reports. As part of a larger audit of recipient Recovery Act reporting and performance measurement and in support of a Government-wide review sponsored by the Recovery Accountability and Transparency Board, we completed an interim review to determine whether the Department had established a process to ensure the quality and accuracy of recipient reports. Our review revealed that the Department had developed a quality assurance process to facilitate the quarterly reviews of recipient data. The process included procedures to compare existing information from the Department's financial information systems with that reported to FederalReporting.gov by recipients. In addition, plans were in place to notify recipients of anomalies and/or errors exposed by the quality assurance process. While the Department has made a good deal of progress in this area, we did, however, identify several issues which could, if not addressed, impact the effectiveness of the quality assurance process.},
doi = {10.2172/967388},
journal = {},
number = ,
volume = ,
place = {United States},
year = {Thu Oct 01 00:00:00 EDT 2009},
month = {Thu Oct 01 00:00:00 EDT 2009}
}
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DOI:  10.2172/967388
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  • The American Recovery and Reinvestment Act of 2009 (Recovery Act) was established to jumpstart the U.S. economy, create or save millions of jobs, and invest in the Nation's energy future. The Department of Energy received approximately $37 billion through the Recovery Act to support a variety of science, energy and environmental initiatives. The Office of Management and Budget (OMB) issued guidance for carrying out stimulus-related activities which requires, among other things, that recipients ensure funds provided by the Recovery Act are clearly distinguishable from non-Recovery Act funds in all reporting systems and that recipients' actions are transparent to the public.more » To meet these requirements, the Department's recipients must clearly and accurately track and report on 18 separate data elements. In addition, the Department was to develop and implement a process to ensure that recipient information reported to the public was free from material omissions and significant reporting errors. Our recent report (OAS-RA-10-01, October 2009) noted that the Department had developed a quality assurance process to facilitate the quarterly reviews of recipient data and planned to test it during the first quarterly reporting cycle. To determine whether the Department's quality assurance process was effective, we examined information reported by recipients of Departmental funding as of September 30, 2009. We also sought to determine whether the Department's prime contractors were prepared to track and report on Recovery Act activities. The Department had taken a number of actions designed to ensure the accuracy and transparency of reported Recovery Act results. This process identified potential anomalies with information reported by 1,113 of 2,038, or 55 percent of recipients. We view the Department's data quality assurance efforts as both timely and significant. As noted by our audit testing, however, opportunities exist to strengthen the process. In particular: (1) Site officials did not always ensure that anomalies, once identified during the quality assurance process, were actually resolved. For example, the Department's process identified that about 740 of the approximately 10,000 jobs reported in the first quarter of Fiscal Year 2010 as created/retained were for projects reported as having no funds spent. Although these problems were referred to site officials for follow-up and/or correction, the information was never actually changed; (2) The Department did not always utilize the correct basis when evaluating the accuracy of 'funds provided' data submitted by grant recipients. For example, in its analysis process, the Department used data reflecting 'funds obligated' rather than the correct amount of 'total grant awards'. This generated a number of potential false positives; and, (3) Duplicate reports by certain recipients, resulting in overstatements of as much as $137 million of the more than $18 billion obligated, were not corrected. We observed that the Department had taken prompt action to ensure that its prime facility management contractors could properly report Recovery Act information. Notably, the seven contractors in this category included in our review had modified their accounting systems, as necessary, to ensure that they could accurately track and report on Recovery Act activities. The systems at each of these entities had been restructured so that they: (i) could separate Recovery Act and non-Recovery Act funds; and, (ii) had adequate processing capacity to handle the projected increase in transactions. We found the Department's decision to limit its reviews to the four elements that it considered to be critical (award amount, invoiced amount, jobs created/retained, and project status) to be reasonable. We concluded, however, other elements or dependent relationships should not be completely excluded from review. Beyond its initial development and implementation of its quality assurance process, the Department had taken steps to improve its ability to ensure that Recovery Act information was both accurate and transparent to the public. Specifically, officials changed the quality assurance plan based on initial data reviews. Department officials also informed us that they are in the process of updating their quality assurance process to meet new OMB requirements. For example, recent guidance directed agencies to focus on certain data elements, such as award number and recipient name, during their quality assurance reviews. In addition, subsequent to our review, the Department added two more data elements and comparisons to its quarterly assurance process, including an analysis of costs/expenditures and a comparison of the recipient reported project status to the Department's data contained in its financial system.« less

  • The purpose of the American Recovery and Reinvestment Act of 2009 (Recovery Act) was to jumpstart the U.S. economy, create or save millions of jobs, spur technological advances in health and science, and invest in the Nation's energy future. The Department of Energy will receive an unprecedented $38 billion in Recovery Act funding to support a variety of science, energy, and environmental initiatives. The Recovery Act requires transparency and accountability over these funds. To this end, the Office of Management and Budget (OMB) issued guidance requiring the Department to compile and report a wide variety of funding, accounting, and performancemore » information. The Department plans to leverage existing information systems to develop accounting and performance information that will be used by program managers and ultimately reported to Recovery.gov, the government-wide source of Recovery Act information, and to OMB. The Department's iManage iPortal, a system that aggregates information from a number of corporate systems, will serve as the main reporting gateway for accounting information. In addition, the Department plans to implement a methodology or system that will permit it to monitor information reported directly to OMB by prime funding recipients. Furthermore, performance measures or metrics that outline expected outcomes are being developed, with results ultimately to be reported in a recently developed Department-wide system. Because of the significance of funds provided and their importance to strengthening the Nation's economy, we initiated this review to determine whether the Department had taken the steps necessary to ensure that Recovery Act funds can be appropriately tracked and are transparent to the public, and whether the benefits of the expenditures can be properly measured and reported clearly, accurately, and in a timely manner. Although not yet fully mature, we found that the Department's efforts to develop, refine, and apply the control structure needed to ensure accurate, timely, and reliable reporting to be both proactive and positive. We did, however, identify certain issues relating to Recovery Act performance management, accounting and reporting accuracy, and timeliness that should be addressed and resolved. In particular, at the time of our review: (1) Program officials had not yet determined whether existing information systems will be able to process anticipated transaction increases associated with the Recovery Act; (2) System modifications made to the Department's performance management system to accommodate Recovery Act performance measures had not yet been fully tested and verified; (3) The ability of prime and sub-recipients to properly segregate and report both accounting and performance information had not been determined; (4) There was a lack of coordination between Headquarters organizations related to aspects of Recovery Act reporting. For example, we observed that the Offices of Fossil Energy and Program, Analysis and Evaluation were both involved in developing job creation estimates that could yield significantly different results; and, (5) A significant portion (91 of 142, or 64 percent) of the performance measures developed for the Recovery Act activities were not quantifiable. In some instances, Project Operating Plans had not been finalized and we were not able to verify that all needed performance measures had been developed. Furthermore, the Department had not developed specific metrics to measure federal and contractor jobs creation and retention, an essential Recovery Act objective. The Department had devoted a great deal of time and resources to identifying and mitigating Recovery Act-related risks. For example, the Department developed a risk assessment tool that is intended to assist programs in identifying risks that can prevent its Recovery Act projects from meeting their intended goals. We also found that program staff and management officials at multiple levels were actively engaged in designing Recovery Act-related control and accountability programs. These efforts ranged from updating existing information systems to developing matrices designed to ensure that all required reporting and performance elements were addressed. Each of these activities required substantial effort and was accomplished within a relatively short period. Further, we noted that the Office of the Chief Financial Officer had been instrumental in helping impacted program elements identify issues that could adversely affect the Department's ability to execute its accounting, reporting, and performance monitoring responsibilities. While much has been done, additional work is necessary if the Department is to successfully manage Recovery Act-related risks. For example, as previously noted, OMB has issued guidance establishing Recovery Act monitoring and reporting requirements.« less

  • Signed by the President on February 17, 2009, the American Recovery and Reinvestment Act of 2009 (Recovery Act) seeks to strengthen the U.S. economy through the creation of new jobs, aiding State and local governments with budget shortfalls, and investing in the long-term health of the Nation's economic prosperity. Under the Recovery Act, the Department of Energy will receive approximately $40 billion for various energy, environmental, and science programs and initiatives. To have an immediate stimulative impact on the U.S. economy, the Department's stated goal is to ensure that these funds are spent as expeditiously as possible, without risking transparencymore » and accountability. Given the Department's almost total reliance on the acquisition process (contracts, grants, cooperative agreements, etc.) to carry out its mission, enhanced focus on contract administration and, specifically, the work performed by Federal acquisition officials is of vital importance as the unprecedented flow of funds begins under the Recovery Act.« less

  • The Department of Energy's (Department) Office of Energy Efficiency and Renewable Energy (EERE) provides grants to states, territories and the District of Columbia (states) to support their energy priorities through the State Energy Program (SEP). Federal funding is based on a grant formula that considers the population and energy consumption in each state, and amounted to $25 million for Fiscal Year (FY) 2009. The American Recovery and Reinvestment Act of 2009 (Recovery Act) expanded the SEP by authorizing an additional $3.1 billion to states using the existing grant formula. EERE made grant awards to states after reviewing plans that summarizemore » the activities states will undertake to achieve SEP Recovery Act objectives, including preserving and creating jobs; saving energy; increasing renewable energy sources; and, reducing greenhouse gas emissions. EERE program guidance emphasizes that states are responsible for administering SEP within each state, and requires each state to implement internal controls over the use of Recovery Act funds. The State of Louisiana received $71.6 million in SEP Recovery Act funds; a 164-fold increase over its FY 2009 SEP grant of $437,000. As part of the Office of Inspector General's strategy for reviewing the Department's implementation of the Recovery Act, we initiated this review to determine whether the Louisiana State Energy Office had internal controls in place to efficiently and effectively administer Recovery Act funds provided for its SEP program. Louisiana developed a strategy for SEP Recovery Act funding that focused on improving energy efficiency in state buildings, housing and small businesses; increasing Energy Star appliance rebates; and, expanding the use of alternative fuels and renewable energy. Due to a statewide hiring freeze, Louisiana outsourced management of the majority of its projects ($63.3 million) to one general contractor. Louisiana plans to internally manage one project, Education and Outreach ($2.6 million). The remaining funds are allocated to program specific management expenses, including the contractor's fee, a monitoring contract, and Louisiana's payroll expenses ($5.7 million). Louisiana formally approved the general contractor in February 2010. State officials plan to initiate a separate consulting contract for monitoring, verifying and auditing expenditures, energy savings and other metrics as required by EERE for Recovery Act funding.« less

  • The Department of Energy's Office of Energy Efficiency and Renewable Energy (EERE) provides grants to states, territories, and the District of Columbia to support their energy priorities through the State Energy Program (SEP). The SEP provides Federal financial assistance to carry out energy efficiency and renewable energy projects that meet each state's unique energy needs while also addressing national goals such as energy security. Federal funding is based on a grant formula that takes into account population and energy consumption. The SEP emphasizes the state's role as the decision maker and administrator for the program. The American Recovery and Reinvestmentmore » Act of 2009 (Recovery Act) expanded the SEP, authorizing $3.1 billion in grants. Based on existing grant formulas and after reviewing state-level plans, EERE made awards to states. The State of Florida's Energy Office (Florida) was allocated $126 million - a 90-fold increase over Florida's average annual SEP grant of $1.4 million. Per the Recovery Act, this funding must be obligated by September 30, 2010, and spent by April 30, 2012. As of March 10, 2010, Florida had expended $13.2 million of the SEP Recovery Act funds. Florida planned to use its grant funds to undertake activities that would preserve and create jobs; save energy; increase renewable energy sources; and, reduce greenhouse gas emissions. To accomplish Recovery Act objectives, states could either fund new or expand existing projects. As a condition of the awards, EERE required states to develop and implement sound internal controls over the use of Recovery Act funds. Based on the significant increase in funding from the Recovery Act, we initiated this review to determine whether Florida had internal controls in place to provide assurance that the goals of the SEP and Recovery Act will be met and accomplished efficiently and effectively. We identified weaknesses in the implementation of SEP Recovery Act projects that have adversely impacted Florida's ability to meet the goals of the SEP and the Recovery Act. Specifically: (1) Florida used about $8.3 million to pay for activities that did not meet the intent of the Recovery Act to create new or save existing jobs. With the approval of the Department, Florida used these funds to pay for rebates related to solar energy projects that had been completed prior to passage of the Recovery Act; (2) State officials did not meet Florida's program goals to obligate all Recovery Act funds by January 1, 2010, thus delaying projects and preventing them from achieving the desired stimulative economic impact. Obligations were delayed because Florida officials selected a number of projects that either required a lengthy review and approval process or were specifically prohibited. In June 2009, the Department notified Florida that a number of projects would not be approved; however, as of April 1, 2010, the State had not acted to name replacement projects or move funds to other projects; (3) Florida officials had not ensured that 7 of the 18 award requirements for Recovery Act funding promulgated by the Department had been passed down to sub-recipients of the award, as required; and, (4) Certain internal control weaknesses that could jeopardize the program and increase the risk of fraud, waste and abuse were identified in the Solar Energy System Incentives Program during our September 2009 visit to Florida. These included a lack of separation of duties related to the processing of rebates and deficiencies in the written procedures for grant managers to review and approve rebates. From a forward looking perspective, absent aggressive corrective action, these weaknesses threaten Florida's efforts to meet future Recovery Act goals. In response to our review, Florida took corrective action to incorporate the additional award requirements in sub-recipient documents. It also instituted additional controls to correct the internal control weaknesses we identified. More, however, needs to be done with respect to Department oversight. This report details the circumstances surrounding these program issues and outlines actions that, in our opinion, will help Florida achieve its SEP Recovery Act-funded goals.« less