oversight

U.S. Fish and Wildlife Service Wildlife and Sport Fish Restoration Program Grants Awarded to the State of West Virginia, Division of Natural Resources, From July 1, 2016, Through June 30, 2018

Published by the Department of the Interior, Office of Inspector General on 2020-07-30.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                                                                    AUDIT




                 OFFICE OF
                 INSPECTOR GENERAL
                 U.S.DEPARTMENT OF THE INTERIOR




  U.S. Fish and Wildlife Service Wildlife and
  Sport Fish Restoration Program Grants
  Awarded to the State of West Virginia,
  Division of Natural Resources, From
  July 1, 2016, Through June 30, 2018




  In recognition of Secretarial Order No. 3380, we are providing estimated costs
  associated with certain work products. Applying a formula involving prior salary and
  benefit expenses, we estimate the cost of preparing this report to be $59,000.



                - -
Report No.: 2019-CR-041                                                          July 2020
                OFFICE OF
                INSPECTOR GENERAL
                U.S.DEPARTMENT OF THE INTERIOR


Memorandum

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

From:          Amy R. Billings
               Regional Manager, Central Region

Subject:       Final Audit Report – U.S. Fish and Wildlife Service Wildlife and Sport Fish
               Restoration Program Grants Awarded to the State of West Virginia, Division of
               Natural Resources, From July 1, 2016, Through June 30, 2018
               Report No. 2019-CR-041

        This final report presents the results of our audit of costs claimed by the State of West
Virginia, Division of Natural Resources, under grants awarded by the U.S. Fish and Wildlife
Service (FWS). The FWS provided the grants to the State under the Wildlife and Sport Fish
Restoration Program. The audit included claims totaling approximately $46.2 million on 29
grants that were open during the State fiscal years that ended June 30, 2017, and June 30, 2018
(see Appendix 1). The audit also covered the Division’s compliance with applicable laws,
regulations, and FWS guidelines, including those related to the collection and use of hunting and
fishing license revenues and the reporting of program income.

        We found that the Division complied, in general, with applicable grant accounting and
regulatory requirements. The Division, however, did not report barter transactions on the
financial reports to the FWS as required. In addition, the Division and the FWS did not complete
a required reconciliation of their respective real property inventories.

       We provided a draft of this report to the FWS. The FWS concurred with all three
recommendations and will work with the Division to implement corrective actions. In this report,
we summarize the Division’s and FWS Region 5’s responses to our recommendations, as well as
our comments on their responses. We list the status of the recommendations in Appendix 3.

       Please provide us with a corrective action plan based on our recommendations by
October 28, 2020. The plan should provide information on actions taken or planned to address
each recommendation, as well as target dates and titles of the officials responsible for
implementation. Please send your response to aie_reports@doioig.gov.

      The legislation creating the Office of Inspector General requires that we report to
Congress semiannually on all audit reports issued, actions taken to implement our
recommendations, and recommendations that have not been implemented.

        If you have any questions regarding this report, please contact me at 303-236-9243.



                       Office of Audits, Inspections, and Evaluations | Lakewood, CO
Table of Contents

Introduction......................................................................................................................................1

       Background...............................................................................................................................1
       Objectives .................................................................................................................................1
       Scope ........................................................................................................................................1
       Methodology.............................................................................................................................2
       Prior Audit Coverage................................................................................................................3
Results of Audit ...............................................................................................................................4

       Audit Summary ........................................................................................................................4
       Findings and Recommendations...............................................................................................4
Appendix 1.......................................................................................................................................6
Appendix 2.......................................................................................................................................8
Appendix 3.......................................................................................................................................9
Introduction
Background
The Pittman-Robertson Wildlife Restoration Act and the Dingell-Johnson Sport Fish Restoration
Act 1 established the Wildlife and Sport Fish Restoration Program. Under the Program, the U.S.
Fish and Wildlife Service (FWS) provides grants to States to restore, conserve, manage, and
enhance their wildlife and sport fish resources. The Acts and Federal regulations contain
provisions and principles on eligible costs and allow the FWS to reimburse States up to
75 percent of the eligible costs incurred under the grants. The Acts also require that hunting and
fishing license revenues be used only for the administration of the States’ fish and game
agencies. Finally, Federal regulations and FWS guidance require States to account for any
income they earn using grant funds.

Objectives
In June 2016, we entered into an intra-agency agreement with the FWS to conduct audits of State
agencies receiving grant funds under the Wildlife and Sport Fish Restoration Program. These
audits fulfill the FWS’ statutory responsibility to audit State agencies’ use of these grant funds.

We conducted this audit to determine if the State of West Virginia, Division of Natural
Resources:

       •    Claimed the costs incurred under the Program grants in accordance with the Acts and
            related regulations, FWS guidelines, and grant agreements

       •    Used State hunting and fishing license revenues solely for fish and wildlife program
            activities

       •    Reported and used program income in accordance with Federal regulations

Scope
Audit work included claims totaling approximately $46.2 million on the 29 grants open during
the State fiscal years (SFYs) that ended June 30, 2017, and June 30, 2018 (see Appendix 1). We
report only on those conditions that existed during this audit period. We performed our audit at
the Division headquarters in South Charleston, WV, and visited three district offices, four fish
hatcheries, five wildlife management areas, three boat ramps, two shooting ranges, and the State
Wildlife Center (see Appendix 2).

We performed this audit to supplement—not replace—the audits required by the Single Audit
Act.



1   16 U.S.C. §§ 669 and 777, as amended, respectively.


                                                                                                   1
Methodology
We conducted this performance audit in accordance with generally accepted government
auditing standards. Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions
based on our audit objectives. We believe that the evidence obtained provides a reasonable basis
for our findings and conclusions based on our audit objectives.

We assessed whether internal control was significant to the audit objective. We determined that
the Division’s control activities and the following related principles were significant to the audit
objective:

   •   Management should design control activities to achieve objectives and respond to risks.

   •   Management should design the entity’s information system and related control activities
       to achieve objectives and respond to risks.

   •   Management should implement control activities through policies.

We tested the operation and reliability of internal control over Program activities as related to
our audit objective. Our tests and procedures included:

   •   Examining the evidence that supports selected expenditures charged to the grants by the
       Division

   •   Reviewing transactions related to purchases, direct costs, drawdowns of reimbursements,
       in-kind contributions, and program income

   •   Interviewing Division employees to ensure that personnel costs charged to the grants
       were supportable

   •   Visiting sites to inspect equipment and other property

   •   Determining whether the Division used hunting and fishing license revenue solely for the
       administration of fish and wildlife program activities

   •   Determining whether the State passed required legislation assenting to the provisions of
       the Acts

   •   Evaluating State policies and procedures for assessing risk and monitoring subawards

We found deficiencies in internal control resulting in our two findings of unreported barter
transactions and unreconciled real property.

Based on the results of our initial assessments, we assigned a level of risk and selected a
judgmental sample of transactions for testing. The degree of testing performed in each area was


                                                                                                       2
based on auditor judgment and considered risk levels relative to other audit work performed. Our
sample selections were not generated using statistical sampling, and therefore we did not project
the results of our tests to the total population of transactions.

We relied on computer-generated data for other direct costs and personnel costs to the extent that
we used these data to select Program costs for testing. Based on our test results, we either
accepted the data or performed additional testing. For other direct costs, we took samples of
costs and verified them against source documents such as purchase orders, invoices, receiving
reports, and payment documentation. For personnel costs, we selected Division employees who
charged time to Program grants and verified their hours against timesheets and other supporting
data.

Prior Audit Coverage
On December 17, 2015, we issued U.S. Fish and Wildlife Service Wildlife and Sport Fish
Restoration Program Grants Awarded to the State of West Virginia, Division of Natural
Resources, From July 1, 2011, Through June 30, 2013 (Report No. R-GR-FWS-0013-2014).

We followed up on all recommendations in the report and found that the U.S. Department of the
Interior, Office of the Assistant Secretary for Policy, Management and Budget considered 14
recommendations resolved and 1 recommendation related to real property resolved but not
implemented.

We reviewed single audit reports for SFYs 2017 and 2018. Neither of these reports contained
any findings that would directly affect the Program grants.




                                                                                                 3
Results of Audit
Audit Summary
We found that the Division complied, in general, with applicable grant agreement provisions and
requirements of the Acts, regulations, and FWS guidance. We identified, however, the following
conditions that resulted in our findings.

A. Unreported Barter Transactions. The Division did not report barter transactions on the
   financial reports.

B. Unreconciled Real Property Records. The Division did not reconcile its Program-funded
   real property records with those of the FWS.

Findings and Recommendations
A. Unreported Barter Transactions

The Division annually enters into noncash agreements (i.e., barter agreements) that allow
farmers to grow crops on State wildlife and game areas in exchange for leaving a percentage of
the crop to improve and maintain wildlife habitat for a variety of species, which directly relates
to grant-supported wildlife management activities. The Division provided documentation of
barter transactions that occurred during our audit period but did not report the barter transactions
on its Federal Financial Reports (SF-425s) as required. Federal regulations require each State to
report any barter transactions and what those transactions entail on its SF-425s. Title
50 C.F.R. § 80.98 details that a State fish and wildlife agency must report the transactions in the
“Remarks” section of its financial report. Division personnel told us they were not aware that
barter transactions must be reported on the SF-425s. Because the Division did not report the
barter transactions, the FWS was unaware that the Division had entered these agreements.
Therefore, the FWS did not have the opportunity to review any barter transactions that occurred
on Division-managed property that received Program funds to ensure that the agreements were
equitable, which impacts the FWS’s ability to effectively monitor program grants.

 Recommendations


 We recommend that the FWS work with the Division to:

     1. Ensure all barter transactions are recorded on its SF-425s

     2. Develop policies and procedures for reporting barter transactions on its
        SF-425s in accordance with regulations




                                                                                                   4
Division Response
The Division concurred with the finding and recommendations.

FWS Response
The FWS concurred with the finding and recommendations and will work with the Division on a
corrective action plan.

OIG Comment
Based on the Division and FWS responses, we consider the recommendations resolved but not
implemented (see Appendix 3).

B. Unreconciled Real Property Records

We found the Division and the FWS did not reconcile the real property records of land
purchased with Program grant funds. The Division should reconcile its land records with the
FWS to ensure that its database of real property purchased with Program funds is accurate and
complete and that Program grant-funded real property continues to serve the purpose for
which it was acquired. Both the FWS and the Division agreed that they had not completed
the required land record reconciliation. Federal regulation, 2 C.F.R. § 200.311(b), requires
that the Division use assets acquired under Program grants for the originally authorized
purpose. In order to do so, it must have a comprehensive list of real property that was
purchased with grant funds. In addition, 2 C.F.R. § 200.329 states that if the Federal interest in
real property extends 15 years or longer, the State must report the status of the property to the
FWS at least every 5 years. The Division and the FWS did not commit sufficient resources to
complete the reconciliation, and therefore cannot ensure that lands acquired under the
Program are being used for their intended purposes.

 Recommendation

 We recommend that the FWS work with the Division to:

     3. Reconcile their respective records of lands purchased with Program funds
        and resolve any identified acreage and cost differences


Division Response
The Division concurred with the finding and recommendation.

FWS Response
The FWS concurred with the finding and recommendation and will work with the Division on a
corrective action plan.

OIG Comment
Based on the Division and FWS responses, we consider the recommendation resolved but not
implemented (see Appendix 3).




                                                                                                 5
Appendix 1
                      State of West Virginia
                 Division of Natural Resources
             Grants Open During the Audit Period
              July 1, 2016, Through June 30, 2018

        FBMS Grant           Grant           Claimed
        Number           Amount ($)         Costs ($)

        F13AF01144            530,000           6,268

        F13AF01145            465,000        431,467

        F14AF01267             25,343          18,738

        F15AF00121            840,000        896,920

        F15AF00123             30,000          11,025

        F15AF00824          4,544,200       4,330,596

        F15AF00840            570,500        626,901

        F15AF00841            635,357        511,145

        F15AF00997         22,736,333     16,453,000

        F16AF00142             75,000           9,477

        F16AF00143            560,000        178,987

        F16AF00144            660,000        892,686

        F16AF00840            350,000        324,675

        F16AF00849          1,322,900       1,400,202

        F16AF00864          3,602,126       2,914,790

        F16AF00897          1,197,272        818,220

        F16AF01230          1,357,300       1,352,075

        F16AF01268          1,336,000        143,328

        F17AF00124          1,283,594        826,255

        F17AF00125            610,000        166,897



                                                        6
FBMS Grant       Grant         Claimed
Number       Amount ($)       Costs ($)

F17AF00126     10,175,163     6,298,921

F17AF00127       550,000        740,802

F17AF00644       544,606        249,675

F17AF00679        98,375         37,647

F17AF00810      1,538,724       897,071

F17AF00811      2,779,394     1,445,453

F17AF00855      6,547,908     3,211,861

F18AF00140       412,006        118,670

F18AF00142       775,000        853,221

Total        $66,152,100    $46,166,973




                                          7
Appendix 2
                State of West Virginia
             Division of Natural Resources
                      Sites Visited

                    Headquarters
                 South Charleston, WV

                   District Offices
                    Beckley, WV
                  French Creek, WV
                    Romney, WV

                   Fish Hatcheries
                       Bowden
                     Reeds Creek
                     Spring Run
                      Tate Lohr

             Wildlife Management Areas
                    Bluestone Lake
                 Plum Orchard Lake
               Stonewall Jackson Lake
                      Tate Lohr
                     Wardensville

                     Boat Ramps
                       Buffalo
                       Palatine
                     Warden Lake

                   Shooting Ranges
                     Plum Orchard
                   Stonewall Jackson

                        Other
                 State Wildlife Center




                                             8
Appendix 3
                       State of West Virginia
                   Division of Natural Resources
                    Status of Recommendations

Recommendation   Status                           Action Required

                                                  Complete a corrective action
                                                  plan that includes information
                                                  on actions taken or planned to
                                                  address the recommendations,
                 Resolved but not                 target dates and titles of the
                 implemented:                     officials responsible for
                                                  implementation, and
                 U.S. Fish and Wildlife Service   verification that FWS
                 (FWS) regional officials         headquarters officials reviewed
                 concurred with these             and approved the actions the
1–3
                 recommendations and will         State has taken or planned.
                 work with staff from the West
                 Virginia Division of Natural     We will refer the
                 Resources to develop and         recommendations not
                 implement a corrective           implemented at the end of 90
                 action plan.                     days (after October 28,
                                                  2020) to the Assistant
                                                  Secretary for Policy,
                                                  Management and Budget to
                                                  track implementation.




                                                                                    9
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