WASHINGTON, July 12, 2012 – The Forest Service (FS) needs to review grant recipients’ documentation to ensure the use of American Recovery and Reinvestment Act funds are supported and in accordance with the terms and provisions of the grant agreement, according to a USDA Office of Inspector General (OIG) report released last month.

Under the Recovery Act, FS was provided $1.15 billion in funding; with 
$500 million dedicated for Wildland Fire Management, including up to $50 million for wood-to-energy projects.

According to the report, these wood-to-energy projects were designed to create markets for low-valued trees and small-diameter wood removed during forest restoration projects.

As of May 13, 2010, FS funded 21 projects with more than $48 million in grants. OIG initiated a review of 14 selected projects to determine if FS complied with applicable laws and regulations for the funding, monitoring, and reporting for these projects.

“FS accepted and approved payments to grant recipients without obtaining and reviewing documentation to support the use of Recovery Act funds or ensuring work was completed per the terms of the grant agreement. FS program managers had a practice of using estimates and verbal statements provided by grant recipients rather than obtaining and reviewing supporting documentation,” noted OIG in the investigative report.

For four of the 10 grants OIG reviewed from nine projects, FS paid grant recipients for expenses that were not supported. This finding suggests that FS was statistically projected to have unsupported costs of about $9 million.

For example, the report notes that the “FS reimbursed Grant Recipient B for costs associated with re-opening a previously closed biomass power plant without reviewing documentation to support their payment requests. In December 2009, the grant recipient received $1.4 million to pay vendors for costs associated with maintaining and purchasing equipment. However, we found that the grant recipient had only expended $160,883, and per the terms of the grant agreement, should have only been reimbursed for its actual expenditures.”

OIG concluded that the FS’ current policy for reviewing grant payment requests does not provide adequate assurance that Recovery Act funds are used for actual and allowable expenditures.

Based on their analysis OIG concluded that FS to review grant recipients’ documentation for the remaining wood-to-energy projects to ensure the use of Recovery Act funds was supported and in accordance with the terms and provisions of the grant agreement.

The Chief of FS Thomas Tidwell concurred with the findings and recommendations. In a release in response to the OIG audit, the FS pointed to changes that have already taken place or will take place, including: 

FS obtained supporting documentation to ensure that expenses are adequately supported and allowable under the terms of the grant agreement. FS also determined that there were no excess funds and interests to be recovered.

FS does and will continue to require supporting documentation of equipment expenditures prior to approving the Advanced Liquidation transaction and has obtained copies of the original receipts of the equipment purchased under the advance.

FS will conduct a risk-based review on the four remaining projects (totaling $11.7 million). During the review, FS will ensure that the use of Recovery Act funds were fully supported and were used in accordance with the grant agreement.

To read the full audit report, click HERE.


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