USAspending PODCAST

BECKY: Hello! My name is Becky Klingler, and thank you for joining me today for this edition of our podcast series for the U.S. Environmental Protection Agency Office of Inspector General. I’m pleased to have auditor Haidee Lai with me here today to talk about a report we just issued, titled The EPA Needs to Improve the Completeness and Accuracy of the Obligation and Outlay Information It Reports in USAspending.gov. 

HAIDEE: Thanks for inviting me here today, Becky!

BECKY: Haidee, the title of this report is a bit daunting. Can we start by talking about USAspending.gov? What is that, and what is its purpose?

HAIDEE: Sure. USAspending.gov is a website where all federal government agencies are required to report their spending information. Agencies are also obligated to make sure that the spending data they report is both complete and accurate. The public – including members of Congress – can use 
USAspending.gov to find out how agencies are spending money.

BECKY: Thank you! And what, exactly, are obligations and outlays? How do they fit into the USAspending.gov requirements?

HAIDEE: The term spending in the federal space encompasses both obligations and outlays. An obligation is a promise made by the federal government to spend money – think orders, contracts, and grants, for example. An outlay is the money the government actually spends or pays. Our audit looked at whether the EPA accurately and completely reported its obligations and outlays in USAspending.gov. 

BECKY: And did you find that the EPA had done so?

HAIDEE: Well, for its fiscal year 2022 spending, which is the time frame we looked at, no, the Agency didn’t – at least not at first. 

BECKY: How inaccurate or incomplete were the EPA’s data?

HAIDEE: The EPA’s fiscal year 2022 obligations were initially underreported by 1.2 billion dollars, meaning that the Agency actually planned to spend 1.2 billion dollars more than what it reported in USAspending.gov. And its fiscal year 2022 outlays were initially underreported by 5.8 billion dollars, meaning that it spent 5.8 billion more dollars than it initially told the public it spent. To put this another way, 12.9 percent of the EPA’s obligations and 99.9 percent of the EPA’s outlays were not reported in fiscal year 2022.

BECKY: That’s a pretty significant discrepancy. 

HAIDEE: Becky, I’d like to note that when the OIG started this audit, we intended to look only at whether the EPA was accurately reporting how it spent the money it received in fiscal year 2022 as part of the Infrastructure Investment and Jobs Act – a supplemental appropriation that gives the Agency, over the course of five years, an additional 60 billion dollars beyond its annual appropriations. But as we started digging into the IIJA spending data, we noticed that the EPA had actually not reported any of its IIJA outlays, which made us question how such a big gap in reporting could occur and led us to take a closer look at all of the EPA’s spending data in USAspending.gov. 

Becky: How did this happen?

HAIDEE: The reporting requirements and the process for reporting spending data are quite complicated, involving multiple guidance documents both external and internal to the EPA; multiple submission files; and multiple financial systems, again both internal and external to the EPA. Not only that, but most of the systems involved in this process are not connected. In other words, the process for moving the data from system to system is manual, fragmented, and overly complex, and the EPA lacked the procedures to detect errors as it moved along the process. Reporting requirements for USAspending.gov also changed rather frequently – for example, the reporting requirements changed at least three times in as many years, from 2020 to 2022. And each time the reporting requirements for USAspending.com changed, the EPA had to reconfigure its systems. However, the Agency did not always follow its information technology configuration management procedures, and so some necessary configuration changes were either not implemented or incorrectly implemented.

BECKY: These all seem to be highly technical and procedural issues, but they have practical impacts in terms of transparency, right?

HAIDEE: That’s right. Complete and accurate reporting in USAspending.gov is critical, as this site is the primary way that the EPA informs the public about where its funding ultimately goes. If information about obligations and outlays is not complete or accurate, taxpayers and policy-makers will not have the data they need to effectively track the EPA’s spending.

BECKY: You said earlier that the EPA’s initial reporting was not accurate or complete. Does this mean the Agency has fixed the reporting errors?

HAIDEE: Yes, that’s right. In May 2023, after learning about some of our preliminary audit findings, the EPA corrected its fiscal year 2022 reporting in USAspending.gov. Also, in June 2023, the Agency made the necessary configuration changes to its financial and reporting systems to improve the accuracy and completeness of future reporting. In addition, the EPA agreed with the OIG’s five recommendations for improving its USAspending.gov reporting, and it plans to implement all of our recommendations by April 2024.

BECKY: Thank you so much, Haidee. To all of you who joined us today, thank you for your time. For more information on this and other OIG reports, please visit our website at www.epaoig.gov.