WASHINGTON – The U.S. Environmental Protection Agency Office of Inspector General today issued a report identifying material weaknesses and a significant deficiency in the EPA’s consolidated financial statements for fiscal years 2024 and 2023 (restated). Although the OIG rendered an unmodified, or “clean” opinion, on the statements, the audit uncovered serious concerns regarding the accuracy and reliability of the Agency’s recording for more than $800 million in funding for the EPA’s Clean School Bus Rebates Program.
The OIG identified three material weaknesses so significant that they could lead to material misstatements in the Agency’s financial statements. Two of these related to the Clean School Bus Rebates Program. The OIG’s primary concern is that that the EPA did not have adequate internal controls in place to record the 2022 Clean School Bus Rebates Program funds for fiscal years 2024 and 2023. Additionally, the Agency did not develop an adequate process for the Rebates Program accrual calculation.
The OIG also identified a third material weakness caused by the EPA’s understating of Superfund State Contract accrual revenue and a significant deficiency regarding the unreliability of its property balances.
While this is not the first time the OIG has identified a material weakness or significant deficiency in the Agency’s consolidated financial statement, the issues related to the Clean School Bus Program rebates are particularly concerning because they affect $828 million in funding from the Infrastructure Investment and Jobs Act, or IIJA. Moreover, these issues could become a problem in other programs funded by the IIJA and the Inflation Reduction Act if the Agency does not address them. The OIG plans to issue a separate report in the coming months that will more directly address these concerns.
“Transparent and bilateral financial reporting of IIJA funds is equally important to programmatic integrity, especially when dealing with large sums of IIJA dollars and novice recipients,” said EPA Inspector General Sean W. O’Donnell. “Our comprehensive oversight provides the public assurance that EPA will be held accountable for proper use and recording of taxpayer dollars.”