[Final Audit Report on Costs Incurred by the State of Nebraska Game and Parks Commission, under Federal Assistance Grants from the U.S. Fish and Wildlife Service from July 1, 2000, through June 30, 2002]
[From the U.S. Government Printing Office, www.gpo.gov]
Report No. R-GR-FWS-0024-2003
Title: Final Audit Report on Costs Incurred by the State of Nebraska
Game and Parks Commission, under Federal Assistance Grants
from the U.S. Fish and Wildlife Service from July 1, 2000,
through June 30, 2002
Dated: January 9, 2004
**********DISCLAIMER**********
This file contains an ASCII representation of an OIG report. No attempt has been made to display graphic images or illustrations. Some tables may be included, but may not resemble those in the printed version. A printed copy of this report may be obtained by referring to the PDF file or by calling the Office of Inspector General, Division of Acquisition and Management Operations at (202) 219-3841.
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AUDIT REPORT
Memorandum
To: Director, U.S. Fish and Wildlife Service
From: Joe Ansnick, Director of External Audits
Subject: Final Audit Report on Costs Incurred by the State of Nebraska Game and Parks Commission, under Federal Assistance Grants from the U.S. Fish and Wildlife Service from July 1, 2000, through June 30, 2002 (No. R-GR-FWS-0024-2003)
Introduction
This report presents the results of our audit of costs incurred by the State of Nebraska Game and Parks Commission (Commission) under Federal Assistance grants from the U.S. Fish and Wildlife Service (FWS) for the period July 1, 2000, through June 30, 2002.
Background and Scope
The Pittman-Robertson Wildlife Restoration Act, as amended (16 U.S.C. 669), and the Dingell-Johnson Sport Fish Restoration Act, as amended (16 U.S.C. 777) (Acts), authorize FWS to provide Federal Assistance grants to states to enhance their sport fish and wildlife programs. The Acts provide for FWS to reimburse the states up to 75 percent of the eligible costs incurred under the grants. The Acts specify that state hunting and fishing license revenues cannot be used for any purpose other than the administration of the state�s fish and game agencies.
We performed an audit of Federal Assistance grants to the State of Nebraska at the request of FWS. The objective of our audit was to evaluate: (1) the adequacy of the Commission�s accounting system and related internal controls; (2) the accuracy and eligibility of the direct and indirect costs claimed under the Federal Assistance grant agreements with FWS; (3) the adequacy and reliability of the Commission�s hunting and fishing license fee collection and disbursement process; (4) the adequacy of the Commission�s asset management system and related internal controls with regard to purchasing, maintenance, control, and disposal; and (5)�the adequacy of the Commission�s compliance with the Acts� assent legislation requirements. The audit was also to include a review of other issues considered sensitive and/or significant by the FWS. The audit included claims totaling approximately $16.2 million on FWS grants that were open during the State�s fiscal years ended June 30, 2001, and 2002 (see Appendix 1).
Our audit was performed in accordance with the government auditing standards issued by the Comptroller General of the United States. Accordingly, we included such tests of records and other auditing procedures that we considered necessary under the circumstances. Our tests included an examination of evidence supporting selected expenditures charged by the Commission to the grants and interviews with employees to ensure that all personnel costs charged to the grants were allowable. We reviewed the audit work performed by other auditors, including the working papers and summaries for the Commission's (1) certification of hunting and fishing license holders for fiscal years 2001 and 2002, and (2) use of fishing and hunting license revenues for fiscal years 2001 and 2002 to determine whether the revenues had been used for program purposes. No exceptions were reported. We did not evaluate the economy, efficiency, and effectiveness of the Commission�s operations.
Our audit was performed at the Nebraska Game and Parks Commission headquarters in Lincoln, Nebraska. We also visited a hatchery and several wildlife management areas (see Appendix 2).
Prior Audit Coverage
On August 4, 1999, we issued audit report No. 99-E-726, �Audit of U.S. Fish and Wildlife Service Federal Aid Grants to the State of Nebraska Game and Parks Commission for the Fiscal Years Ended June 30, 1996, and 1997.� We reviewed this report and followed up on all findings to determine whether they had been resolved prior to our review. We included one area in this report that had been addressed previously, program income from crops. No other reports on the Commission�s Federal Aid program or license fee collections and disbursements were issued during the last five years.
Results of Audit
Our review disclosed that, except for the conditions reported below, the Commission�s accounting system and related internal controls adequately and accurately accounted for grant and license fee receipts and disbursements; direct and indirect costs were adequately recorded and supported; the asset management system accurately identified and tracked personal and real property with regard to acquisition, maintenance, control, and disposal; and the State had adequate assent legislation in place
* Costs of $11,138 were questioned because supporting documentation was not provided for hours worked for volunteer in-kind contributions ($9,526), and for an expenditure of $1,612.
* The Commission did not report program income of $346,872.
* The Commission did not account for and report as program income the value of work provided by lessees in lieu of rental payments.
The Commission and the FWS responded to a draft of this report on September 30, 2003. Based on the Commission and the FWS responses, we deleted two findings. Based on the Commission�s further responses, we modified the other findings and recommendations as necessary to clarify the issues and to incorporate any additional information provided. We have included the Commission�s responses after our recommendations to resolve each finding.
A. Questioned Costs
1. In-Kind Contributions. The Commission claimed in-kind contributions under an Aquatic Education Program grant (F-82-E-13) for accumulating volunteer hours without documentation to support the hours claimed. The amount of unsupported costs is $9,526. The program coordinator stated that two volunteer instructors claimed to work about one hour each day throughout the year to develop and coordinate a one-day event that included fishing clinics for children and adults and other events for handicapped and veterans groups. The only documentation to indicate the hours worked was the Aquatic Education Program Instructor�s Activity Report for the day of the event showing 300 hours for the head instructor and 300 hours for the volunteer instructor.
Matching or cost sharing requirements, as described in 43 CFR � 12.64 (a)(2), may be satisfied by the value of third party in-kind contributions applicable to the grant period. 43 CFR � 12.64(b)(6) requires that third party in-kind contributions used as a cost sharing or matching requirement must be verifiable from the grantee�s records. In addition, to the extent feasible, volunteer services should be supported by the same methods used to support regular personnel costs.
The unsupported amount of $9,526 consists of the grant agreement hourly rate of $15.877 applied to the 600 hours claimed.
Recommendation
We recommend that the FWS:
a. Resolve the $9,526 of unsupported costs associated with Grant F-82-E-13.
b. Ensure that the Commission verifies the accuracy of volunteer instructor hours claimed for in-kind contributions, and maintains adequate supporting records for those contributions.
Commission Response
The Commission responded that it would continue to verify and use volunteer hours only within the grant period as match. In addition, the Commission stated that one instructor logged 300 hours under Grant F-82-E-13 and another 300 hours under Grant F-82-E-14 for preparation and travel hours for an event held at the end of June each year. The Commission stated that while there was not adequate documentation for all of the hours under Grant F-82-E-13, there were instructor logs to account for the hours charged under Grant F-82-E-14. The Commission added that there was unused match of $20,923 for both Grants and no excess Federal funds were reimbursed.
Office of Inspector General Comments
The finding pertained to two instructors (the head instructor and a volunteer instructor) who claimed to work 300 hours each on the day of the event, June 24, 2000, as identified on the Instructor�s Activity Report. The 600 hours were charged to Grant F-82-E-13. None of the hours in question here were charged to Grant F-82-E-14. Only one time and attendance report for June 24, 2000, was used to support the 300 hours claimed for each instructor. Accordingly, FWS should resolve the finding and implement the recommendations.
2. Expenditure Testing. Our testing of 99 disbursement transactions and journal entries, totaling $2.9 million, identified four documents totaling $70,952 (Federal share $53,214) for which the State of Nebraska Department of Administrative Services (Department) was initially unable to provide supporting documentation. Subsequently, the Department provided supporting documentation for three of the transactions totaling $69,340. The remaining transaction for $1,612 (Federal share $1,209) is for a disbursement under Grant F-86-D-13 and continues to be classified as an unsupported cost.
Recommendation
We recommend the FWS resolve the unsupported costs of $1,612 (Federal share $1,209) claimed under Grant F-86-D-13.
Commission Response
The Commission stated that the $1,612 remains unsupported.
Office of Inspector General Comments
The Commission concurs with the finding. Accordingly, FWS should resolve the finding and implement the recommendation.
B. Additional Findings
1. Program Income. During the audit period, the Commission did not report $346,872 of program income from crops raised on Wildlife Management Areas (WMAs) operated and maintained through Federal Assistance Grants FW-21-D-2, FW-21-D-3, and FW-21-D-4. Overall, crop program income from these three WMAs during the audit period was $490,141 ($234,891 in State fiscal year 2001 and $255,250 in State fiscal year 2002), but the Commission reported crop program income of only $143,269 for the two-year period.
Program income is defined in 43 CFR � 12.65 (b) as gross income received by a grantee directly generated by a grant-supported activity during the grant period. Program income includes income from the sale of commodities [43 CFR � 12.65 (a)], and crops are considered commodities. Income from the sale of crops, or the value of crops raised on WMAs, if provided to the Commission in kind instead of in cash, is considered program income. Program income should be reported in grant proposals and on each grant�s Financial Status Reports (SF-269s); and, unless otherwise specified, program income should be deducted from total outlays reported on the SF-269s.
A Wildlife Division employee provided us with a document titled �Federal income and expenses on WMA�s.� According to this document, expenses and income associated with crops that will be harvested and sold should be coded as �State� instead of �Federal.� We concluded that the policy and practice of at least one employee was to exclude crop income from program income on the WMA operation and maintenance grants. In addition, it appears that it was also a practice of at least one employee to exclude the costs associated with crop lease activities from Federal Assistance grant reimbursement claims.
As a result, the Commission did not report $346,872 of program income derived from crop agreements on three grants (Grants FW-21-D-2, FW-21-D-3, and FW-21-D-4). We did not identify the dollar amount associated with each grant.
Recommendations
We recommend that the FWS:
a. Resolve the $346,872 of unreported program income.
b. Instruct the Commission to develop policies and implement practices to identify and report all program income and expenses on grants for the operation and maintenance of wildlife management areas.
Commission Response
The Commission adopted a policy excluding crop income and expenses from the operation and maintenance of Grants W-21-D-3 and W-21-D-4, and received approval of this policy from the FWS Region 6 office. As a result, income from the sale of the commodities was not credited to Federal Assistance.
Office of Inspector General Comments
The project description for the Grants states that some income-producing activities are expected to occur as a byproduct associated with achieving project objectives. It also stated that the activities would include the sale of commodities such as small grains. We believe that the Commission should disclose the types of activities expected to occur on WMA�s and report the revenue generated from those activities as program income. We recommend that FWS resolve the finding and implement the recommendations.
2. Conservation Lease Accounting. The Commission awarded crop and pasture leases that contained both rental and work terms. The rental terms represented what the lessee paid for the right �to crop, hay, or graze� on Commission lands. The work terms represented tasks (e.g.,�establish food plots, mowing, plant native grass, maintain an irrigation ditch) that the lessee performed for the benefit of Commission lands. The lessee received credit for the value of the work applied against the rental owed. We found that the Commission was not adequately disclosing anticipated rental income and work terms from leases in its grant applications and not reporting the value of the work completed on its SF-269s as program income.
The Commission practice was to make accounting entries for the amount collected, generally rental income less work credits. However, we identified $346,872 of unreported program income in finding B.1 above which may be understated because of netting the value of work completed against the amount of lease rental owed.
Program income is defined in 43 CFR � 12.65 (b) as gross income received by a grantee directly generated by a grant supported activity, or earned only as a result of the grant agreement during the grant period. We are unable to determine the total cost to operate and maintain WMAs because accounting entries were not made for all expenses. Total cost information is needed to adequately plan, budget and evaluate programs and projects.
Recommendation
We recommend that FWS require the Commission to adopt procedures to report total gross income generated by program activity and any reductions to income on its grant proposals and its Financial Status Reports.
Commission Response
The Commission stated that the current practice is to include the value of rental and work items agreed to in the lease and will determine a way to track lease and work item values in the grant records. Leases will identify the value of the lease, work items performed, and supporting information used to establish the value of the work items. As exchanges are completed, the Division of Federal Aid will be provided documentation identifying that the exchange agreed to in the lease has be satisfied (or partially satisfied) and the monetary value of the lease is reported
Office of Inspector General Comments
The Commission agreed with the recommendation and we consider the action appropriate. FWS should sustain the finding and implement the recommendation.
In accordance with the Departmental Manual (360 DM 5.3), please provide us with your written response by April 12, 2004, to the recommendations included in this report. Your response should include information on actions taken or planned, including target dates and titles of officials responsible for implementation. If you have any questions regarding this report, please contact me or Mr. Lawrence Kopas, Audit Team Leader, at (703) 487-5345.
cc: Regional Director, Region 6, U.S. Fish and Wildlife Service
APPENDIX 1
NEBRASKA GAME AND PARKS COMMISSION
FINANCIAL SUMMARY OF REVIEW COVERAGE
Grant Number
Grant
Amount
Costs
Claimed
Questioned Costs
Federal Share
Notes
Exceptions
Unsupported
F-6-B-1
$50,000
$25,429
F-6-B-2
50,000
18,673
F-75-R-18
245,000
179,610
F-75-R-19
190,300
190,282
F-75-R-20
159,260
64,067
F-77-R-15
20,000
20,000
F-82-E-13
528,200
168,785
$9,526
1
F-82-E-14
664,428
184,913
F-82-E-15
585,916
9,849
F-84-D-12
490,650
268,181
F-84-D-13
501,750
256,801
F-84-D-14
483,460
100,416
F-86-D-13
835,208
500,164
$1,612
$1,209
2
F-86-D-14
821,892
821,892
F-86-D-15
1,143,876
271,715
F-87-R-12
458,000
371,634
F-87-R-13
462,000
460,093
F-87-R-14
476,000
49,251
F-112-R-6
184,208
126,038
F-112-R-7
120,200
67,593
F-114-B-2
61,100
52,346
F-115-B-2
250,000
114,796
F-118-R-3
114,572
83,506
F-118-R-4
108,643
79,777
F-118-R-5
52,671
1,589
F-123-B-3
74,526
2,045
F-126-R-4
100,740
15,509
F-126-R-5
74,740
27,496
F-129-DB-1
467,000
61,548
F-129-DB-2
1,377,500
292,010
F-130-D-1
1,751,792
906,045
F-131-D-1
830,000
198,971
F-132-B-1
62,000
7,725
F-133-R-2
142,635
90,608
F-133-R-3
139,925
88,135
F-137-B-1
207,855
151,040
F-138-B-1
246,850
224,833
F-139-DB-1
75,000
480
F-139-DB-2
800,000
1,239
F-140-B-1
213,660
171,844
F-141-R-1
194,400
135,000
F-141-R-2
194,400
135,000
F-142-B-1
94,300
75,662
F-143-B-1
255,830
209,711
F-144-B-1
120,000
90,173
F-148-B-1
213,000
5,386
F-149-O-1
72,288
72,288
F-155-R-1
65,347
2,574
FW-6-C-60
200,000
168,762
FW-6-C-61
185,000
152,863
FW-12-T-27
105,000
87,711
FW-12-T-28
110,000
79,693
FW-15-L-52
1,310,000
871,820
FW-16-D-23
177,000
1,048
FW-16-L-24
182,000
182,000
FW-16-L-25
189,500
184,850
FW-19-T-15
101,951
41,565
FW-19-T-16
114,274
41,697
FW-21-D-2
2,942,290
919,209
FW-21-D-3
2,575,071
1,948,822
FW-21-D-4
1,997,033
928,735
W-15-R-57
820,000
747,487
W-15-R-58
535,050
535,050
W-15-R-59
615,425
169,092
W-40-E-27
382,664
189,531
W-40-E-28
389,063
350,898
W-40-E-29
493,370
106,671
W-41-T-26
618,000
223,665
W-41-T-27
340,000
340,000
W-78-L-30
283,500
283,336
W-78-L-32
168,000
162,567
V-2-1
56,000
15,973
$31,721,313
$16,185,767
$11,138
$1,209
Notes:
1. Questioned costs that pertain to the Aquatic Education Program�s in-kind hours that were unsupported (see Questioned Costs, 1. In-Kind Contributions)
2. We classified this amount as unsupported because documentation was not provided for the transaction (see Questioned Costs, 2. Expenditure Testing).
APPENDIX 2
NEBRASKA GAME AND PARKS COMMISSION
SCHEDULE OF SITES VISITED
Headquarters, Lincoln, Nebraska
District I Office, Alliance, Nebraska
Ponderosa Wildlife Management Area
Peterson Wildlife Management Area
Fort Robinson State Park
Gilbert-Baker Wildlife Management Area
District IV Office, North Platte, Nebraska
Cedar Valley Wildlife Management Area
North River Wildlife Management Area
Medicine Creek Wildlife Management Area
Medicine Creek Reservoir State Recreation Area
Red Willow State Recreation Area
Red Willow Wildlife Management Area
District V Office, Lincoln, Nebraska
Wagon Train Wildlife Management Area
Wagon Train State Recreation Area
Branched Oak Wildlife Management Area
Branched Oak State Recreation Area
Branched Oak Wildlife Shop
Calamus Hatchery, Burwell, Nebraska
AK-SAR-BEN Aquarium, Gretna, Nebraska