[Final Audit Report on the U.S. Fish and Wildlife Service Federal  Assistance Grants Administered by the Commonwealth of Massachusetts, Executive  Office of Environmental Affairs Department of Fish and Game, Division of Marine  Fisheries, from January 1, 2003, through December 30, 2004]
[From the U.S. Government Printing Office, www.gpo.gov]

Report No. R-GR-FWS-0006- 2005

Title: Final Audit Report on the U.S. Fish and Wildlife Service
       Federal  Assistance Grants Administered by the Commonwealth
       of Massachusetts, Executive  Office of Environmental Affairs,
       Department of Fish and Game, Division of Marine  Fisheries,
       from January 1, 2003, through December 30, 2004

  
Date:  September 8, 2005

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AUDIT REPORT

Memorandum

To:  Director, U.S. Fish and Wildlife Service	

From:  Andrew Fedak, Director of External Audits

Subject:  Final Audit Report on the U.S. Fish and Wildlife Service Federal 
Assistance Grants Administered by the Commonwealth of Massachusetts, Executive 
Office of Environmental Affairs, Department of Fish and Game, Division of Marine 
Fisheries, from January 1, 2003, through December 30, 2004 (No. R-GR-FWS-0006-
2005)

This report presents the results of our audit of outlays reported by the 
Commonwealth of Massachusetts, Executive Office of Environmental Affairs, 
Department of Fish and Game, Division of Marine Fisheries (Division) from 
January 1, 2003, through December 30, 2004, under Federal Assistance grants from 
the U.S. Fish and Wildlife Service (FWS).  The audit included reported outlays 
that totaled approximately $2.1 million on FWS grants that were open during 
calendar years 2003 and 2004 (see Appendix 1).  The audit also covered the 
Divisionï¿½s compliance with applicable laws, regulations, and FWS guidelines.  

We found that the Division was not adequately monitoring a cooperative agreement 
with a non-profit organization, and as a result, the organization significantly 
increased its permit fees without obtaining Division and FWS formal approval.

FWS Region 5 provided a response to the draft of this report dated August 10, 
2005, which included a copy of the Divisionï¿½s August 2, 2005 response to FWS.  
FWS concurred with the recommendations and indicated that the Divisionï¿½s 
proposal to implement the recommendations will be considered in the corrective 
action plan.  We summarized the FWS and the Divisionï¿½s responses after the 
recommendations, and added our comments regarding the responses.  The status of 
the recommendations is summarized in Appendix 2.

In accordance with the Departmental Manual (361 DM 1), please provide us with 
your written response to the recommendations included in this report by December 
7, 2005.  Your response should include the information requested in Appendix 2.  
If you have any questions regarding this report, please contact Mr. Lawrence 
Kopas, Audit Team Leader, or me at (703) 487-5345.

cc:  Regional Director, Region 5, U.S. Fish and Wildlife Service


Introduction

Background

The Dingell-Johnson Sport Fish Restoration Act  (Act) authorizes the U.S. Fish 
and Wildlife Service (FWS) to provide Federal Assistance grants to states to 
enhance their sport fish programs.  The Act provides for FWS to reimburse the 
states up to 75 percent of the eligible costs incurred under the grants.

Scope, Objective, and Methodology

We conducted our audit at the Massachusetts Division of Marine Fisheries 
(Division) headquarters in Boston, Massachusetts. The audit included reported 
outlays that totaled approximately $2.1 million on 14 of the 171 FWS grants that 
were open during calendar years 2003 and 2004 (see Appendix).  We also visited 
the Annisquam River Station field office in Gloucester, Massachusetts.  The 
objective of our audit was to determine:

> the adequacy of the Divisionï¿½s accounting systems and related internal 
controls; 
> the accuracy and eligibility of the direct and indirect costs claimed under 
the Federal Assistance grant agreements with FWS; and
> the adequacy of the Divisionï¿½s asset management system and related internal 
controls with regard to purchasing, control, and disposal. 

Since the Division does not sell fishing licenses, we did not perform a review 
of the collection and use of license revenues or the license certification 
process.

We performed our audit 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 Division to the grants 
and interviews with employees to ensure that personnel costs charged to the 
grants were supportable.  We did not evaluate the economy, efficiency, or 
effectiveness of the Divisionï¿½s operations.

Prior Audit Coverage

On July 23, 2001, we issued audit report No. G-GR-FWS-009-98-DC, ï¿½Audit of the 
Commonwealth of Massachusetts Federal Aid Program Grants Active in Fiscal Years 
1996 and 1997 Awarded by the U.S. Fish and Wildlife Service, Division of Federal 
Aidï¿½ which 

transmitted a report prepared by the Defense Contract Audit Agency.  We followed 
up on all significant findings and determined they had been resolved.  In 
addition, the State Auditor issued Single Audit reports on the Commonwealth for 
the Stateï¿½s fiscal years (SFY) 2003 and 2004.  However, the Division was not 
audited as a major program, and the reports did not include any findings 
regarding Federal Assistance funds or programs.


Results of Audit

We found that: 

> The Divisionï¿½s accounting system was adequate to account for grant 
disbursements.
> The Divisionï¿½s asset management system and related internal controls with 
regard to purchasing, control, and disposal of assets was adequate.  

However, we also found that the Division was not adequately monitoring a 
cooperative agreement with a non-profit organization, resulting in the 
organization significantly increasing its permit fees without Division or FWS 
approval.

A.  Public Access Fees

The Division did not approve fee increases for annual permits for off-road 
vehicle (ORV) access onto Leland Beach by the terms and conditions of a 
cooperative agreement between FWS, the Division, and the Trustees of 
Reservations (Trustees) (a non-profit organization).  The Division acquired the 
Leland beach property in 1993 under FWS Grant No. F-59-L-1.  

In February 1994, the Division entered into a Cooperative Management Agreement 
(Agreement) with the Trustees, which permits public access over the Trusteesï¿½ 
property onto Leland Beach. The Agreement also provides for the Trustees to 
manage and protect the endangered species and fragile resources of Leland Beach.  
Section 2.2 of the Agreement allows the Trustees to charge public access fees to 
offset its management expenses, as follows:

ï¿½Trustees agree that any increase in such fees from those charged by Trustees as 
of the date of this Agreement as applied to the general public desiring access 
to Leland Beach only a) shall not be assessed without at least 30 days prior 
public notice, and b) must be approved by DMF (Division of Marine Fisheries) and 
the United States Fish & Wildlife Service (USF&WS), such approval not to be 
unreasonably withheld. Trustees agree that such fees as applied to such persons 
will not unreasonably discriminate between residents of Martha's Vineyard and 
persons who reside elsewhere. If DMF and the USF&WS neither approve nor 
disapprove the proposed fees within 30 days, the proposed fees will be deemed 
approved and Trustees may assess such fees as if approval had been granted.ï¿½ 
[Emphasis added]

The Division did not adequately monitor the Agreement to ensure that the 
Trustees submitted proposed fee increases for FWS and Division review and 
approval or that it acted on any proposals received from the Trustees. The 
Divisionï¿½s Federal Assistance Coordinator and FWS Region 5 officials told us 
that they have not been notified of any planned fee increases since the 
Agreement was signed in February 1994, and are concerned that the fees may 
discriminate between local residents and the general public.

We obtained and compared the latest fee increases as posted on the Trustees Web 
site on April 7, 2005, to the fee schedule from 1993, which was in effect prior 
to and incorporated into the February 1994 agreement.  The differences in fees 
are based on two factors:  Trustee membership and Marthaï¿½s Vineyard island 
residency.  Overall, as shown in the following table, the fees for ORV2 and the 
percentage increases were lower for members than non-members.  We noted that the 
fees have increased by 100 percent (i.e., doubled) for non-members but have 
increased at lesser rates for Trustees members.  Regarding residency, the 
percentage increases were the same (100 percent) for residents and non-residents 
who were non-members, but were higher for non-resident members (63 percent) than 
resident members (33 percent).  We believe that the fee structure should 
consider, in part, the amount of annual use by individual permittees, which 
impact amount of visits, rather than membership or residency.  The following 
table shows the fee increases since 1993:

1993 Fee
Schedule2005Percentage IncreaseDollar IncreaseTrustees MemberIsland 
Resident$60$8033  $20Non-Resident$80$13063  $50Non-MemberIsland 
Resident$75$150100  $75Non-Resident$100$200100$100
Since the Trustees did not comply with terms of the Agreement when it increased 
its fees, we believe that the Division should require the Trustees to provide 
information on the basis for each increase.  Both the Division and FWS should 
review the information to ensure that the increases were appropriate.

Recommendations

We recommend that FWS:

1.  Ensure the Division adopts procedures to ensure compliance with the 
requirements in the Agreement that the Trustees submit all proposed fee 
increases to the Division for review and approval by FWS and the Division.

2.  Determine whether existing fees are reasonable and do not discriminate 
unreasonably between residents and non-residents of Marthaï¿½s Vineyard, and 
require the Trustees to make any adjustments, if necessary.


Division Response

The Division agreed with the recommendations, but said that it has now 
determined that the Trustees had notified the Division of the proposed fee 
increases prior to implementation. The Division further said that there is no 
record that the Division ever notified FWS of the proposed fee increases.  The 
Trustees will submit proper notification to the Division and the FWS on fee 
increases and request both the Division and FWS agreement on all future 
adjustments to the fees.

FWS Response

FWS stated that it concurred with the recommendations and that the Divisionï¿½s 
proposals to implement them would be considered in the corrective action plan.

OIG Comments

FWS concurred with the recommendations, and stated that ï¿½The Stateï¿½s proposal to 
implement the recommendations will be considered in the corrective action plan.ï¿½  
Therefore, additional information is needed concerning the resolution of the 
finding and implementation of the recommendations. 

Appendix 1

MASSACHUSETTS DEPARTMENT OF FISH AND GAME DIVISION OF MARINE FISHERIES FINANCIAL 
SUMMARY OF REVIEW COVERAGE JANUARY 1, 2003, THROUGH DECEMBER 31, 2004


Grant No.Amount Reported Outlays F-48-R-17$100,500 $71,712 F-48-R-18116,000 
58,814 F-49-T-17330,000 457,285 F-49-T-18330,000 375,807 F-56-R-13310,000 
254,854 F-56-R-14310,000 236,037 F-57-R-12209,500 168,904 F-57-R-13200,000 
171,244 F-63-R-610,000 4,216 F-63-R-710,000 7,739 F-63-R-810,000 0 F-64-C-
6133,000 47,237 F-64-C-7121,500 67,552 F-64-C-8120,000 0 F-66-O-697,500 62,763 
F-66-O-797,500 76,912 F-116-D-1     365,000     0 $2,870,500 $2,061,076 

Appendix 2

MASSACHUSETTS DEPARTMENT OF FISH AND GAME DIVISION OF MARINE FISHERIES STATUS OF 
AUDIT FINDINGS AND RECOMMENDATIONS 

Recommendations:  A.1 and A.2

Status:  Management Concurs; Additional Information Needed

Action Required:  Provide a corrective action plan that identifies the actions 
taken or planned to resolve the finding and implement the recommendations.  The 
plan should also include the target date and the official responsible for 
implementation of each recommendation.  The unimplemented recommendations 
remaining at the end of 90 days (after December 7, 2005) will be referred to the 
Assistant Secretary for Policy, Management and Budget for resolution and/or 
tracking of implementation.