Facing challenges to several of its main sources of funding since being slapped with a "high-risk grantee" designation by the U.S. Fish and Wildlife Service and the U.S. Environmental Protection Agency, the V.I. Department of Planning and Natural Resources has taken steps to improve compliance and accountability.
DPNR relies on federal grants to operate many of its programs, including water sampling, oversight of underground storage tanks, air quality management to fisheries studies and more.
The department was designated a "high-risk grantee" by USFWS in August 2013 after an Office of Inspector General Audit spotlighted funding discrepancies in DPNR. Since then, Planning and Natural Resources has worked with USFWS to improve compliance, and the designation is set to be repealed at the end of this month, explained DPNR Commissioner Alicia Barnes.
"There was a specific finding in the last audit that triggered the ‘high-risk’ designation," said Barnes. "There was a draw request that was made prior to the expenditure occurring which was related to a contract where we had to encumber the funds before we could do the solicitation. I believe that communication to USFWS came after the draw request was made, but the finding in the audit triggered the designation."
The "high-risk grantee" designation actually had little effect on DPNR’s ability to receive grants from USFWS, but the department was required to submit monthly expense reports and accounting documents like receipts and payroll charges as part of a mandated Corrective Action Plan.
"You always have in-house standard operating procedures and it’s important to adhere to those procedures that we have established," said Barnes. "We also met all the compliance issues and we have adhered to the components and procedures of the Corrective Action Plan. USFWS is satisfied with our level of performance and they are slated to lift the designation this month," she said.
DPNR has been working with EPA officials for several years regarding the federal agency’s concerns with the department’s accounting procedures. After deferring its decision for several years to label DPNR "high-risk," the EPA issued a letter to the department on May 23 announcing its intention – a decision DPNR has formally appealed.
In a letter from EPA announcing the decision, the federal agency’s Grant and Audit Management Branch chief, Roch Baamonde, noted that DPNR did not address findings in single audits dating from 2007 and 2008, which noted questioned costs of hundreds of thousands of federal dollars; did not respond to concerns raised after a 2012 onsite evaluation; and did not properly address a lack of fiscal accountability. DPNR failed to take corrective measures for two years after receiving details of management system weaknesses and questionable costs, Baamonde wrote.
"I am writing to convey EPA’s continuing concern regarding DPNR’s lack of progress on addressing the findings and recommendations of EPA’s January 2012 onsite evaluation and other issues identified during EPA’s ongoing reviews of payment requests," Baamonde’s May 23 letter to Barnes reads. "For more than two years, EPA and DPNR have been working together to address these findings, yet we have seen little progress," Baamonde continued.
The letter detailed several main issues EPA found with DPNR’s accounting, as well as the department’s lack of response.
Baamonde wrote that DPNR “has not submitted an acceptable methodology for allocating costs associated with [personnel] nonworking hours charged to the grants,” has not completed “reconciliations and adjustments for personnel charges in the central government accounting system to reflect the correct EPA grant accounts,” and “has not submitted documentation to properly support indirect costs disallowed as a result of the 2007 and 2008 single audits.”
Barnes said that one of the main concerns EPA has with DPNR’s accounting practices is not the department’s fault, but has to do with the governmentwide Enterprise Resource Program, which tracks government funds.
"What is at question is the ability for the ERP to produce detailed information about an employee who is working on five grant programs," Barnes said. "The ERP has to be able to show the percentage breakdown that is supporting the employee’s salary and it wasn’t designed to provide that level of detail and specificity."
"If ‘Employee A’ worked on 10 grant programs, the EPA wants to see where the percentage of the employee’s salary is coming from and the ERP was not designed to provide that," she explained.
Barnes has been in discussion with the V.I. Department of Finance in order to receive detailed reports to provide to the EPA, the commissioner added.
"Speaking with the commissioner of the Department of Finance, he recognizes that DPNR is unique in its level of funding and amount of funding, and there are ancillary components of reports that are needed in order to accommodate an agency such as DPNR," Barnes said.
Barnes also contends that DPNR has been working on its Corrective Action Plan (CAP) throughout the last two years and was not notified by the EPA of any problems with its amended plan.
"At no time prior to the May 23, 2014, correspondence was DPNR formally notified that the revised CAP was not approvable, in whole or in part, coupled with the specific reason on an item by item basis for EPA’s non-acceptance of the corrective measure(s) proffered," Barnes wrote in a June 20 letter to EPA’s Dispute Decision Official Donna Vizian.
As far as the 2007 and 2008 single audits, DPNR officials claim they have been working with the EPA on an ongoing basis to resolve those discrepancies.
"DPNR has provided supporting documentation, detailed explanations and, as applicable, further clarification to auditors and the grantor in an effort to resolve the findings in the single audits for 2007 and 2008," Barnes wrote to Vizian. "DPNR remains committed to working collaboratively with all parties to continue to address audit and related issues individually and holistically."
If the EPA keeps DPNR’s high-risk designation, the department must submit an approvable Corrective Action Plan to address all administrative issues as well as program deficiencies and accounting questions. That plan must include specific actions DPNR plans to take with anticipated milestones and timelines. DPNR will also be required to assign a project lead person for that CAP who would work with EPA officials.
Addressing the EPA’s concerns in order to avoid "high-risk grantee" status is a main priority for DPNR, Barnes said.
"This is not a matter of DPNR not having this as a number one priority," said Barnes. "We are doing all we can to address their concerns. We believe that we have developed an approach that all costs are properly recorded in the financial system and we have revised our Corrective Action Plan and standard operating procedures."
"We are hopeful that the ‘high-risk grantee’ designation will not be approved," Barnes said.
