Audit Report: DOE-OIG-20-03

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October 24, 2019

Office of Indian Energy Policy and Programs

The Department of Energy’s Office of Indian Energy Policy and Programs (Indian Energy) is authorized, through the Energy Policy Act of 2005 (Public Law 109-58, Title V), to fund and implement a variety of programmatic activities that assist American Indian Tribes and Alaska Native villages with energy development, capacity building, energy cost reduction, and electrification of Indian lands and homes.  Indian Energy’s mission is to maximize the development and deployment of energy solutions for the benefit of American Indians and Alaska Natives.  To accomplish its mission, Indian Energy’s goals are to promote Indian tribal energy development, efficiency, and use; reduce or stabilize Indian tribal energy costs; strengthen Indian tribal energy infrastructure; and provide electricity to Indian land, housing, and businesses.

Indian Energy issues Funding Opportunity Announcements through which financial assistance agreements are awarded to qualified recipients.  The financial assistance agreements, also referred to as awards, specify the requirements established in the Funding Opportunity Announcements as well as other Federal and departmental provisions to be followed by the recipient.  From October 2012 to July 2018, Indian Energy issued a total of 76 awards totaling $81.8 million, including the Department’s cost share of $38.5 million.  To support the Office of Indian Energy project management staff, Indian Energy entered into a Memorandum of Understanding with the Department’s Office of Energy Efficiency and Renewable Energy, Office of Business Operations, Golden Service Center.  Specifically, the Golden Service Center provided support from the Financial Assistance Office, Office of Chief Counsel, Financial Oversight Office, and Environmental Oversight Office.  Support included environmental and financial oversight, legal guidance, project execution, and award administration.

Given its significant role in supporting initiatives for the development and deployment of energy solutions to benefit American Indian Tribes and Alaska Natives, we initiated this audit to determine if Indian Energy was meeting its mission goals and objectives and managing the program in accordance with applicable laws, regulations, policies, and procedures.  Although we found that Indian Energy had generally met its mission goals and objectives, it had not always appropriately managed the financial aspects of its awards.  Our review of documentation from 15 selected awards found instances where Indian Energy approved and reimbursed award recipients without adequately reviewing invoices and detailed supporting documentation to ensure all costs claimed for reimbursement were allowable in accordance with applicable regulations.  This occurred because Indian Energy had not always provided effective monitoring and oversight of its award recipients and/or sufficient guidance to ensure proper adherence to financial and accounting policies and procedures.

We made three recommendations to address identified risk and implement formal policies and procedures to enhance financial monitoring in order to reduce Indian Energy’s risk that questionable and/or unallowable costs are being charged to the projects.  As a result of our review, Indian Energy officials indicated that they were in the process of or had already completed (1) adding a fringe and indirect rate calculation to their existing Invoice Tracker, which was created to more consistently track costs by categories; (2) elevating the priority of the invoice review policy; and (3) instituting a tiered approach to their risk assessment to address the level of supporting documentation required for award recipients with significant deficiencies or material weaknesses identified in prior financial audits.  We consider Management’s comments and corrective actions to be responsive to our recommendations.  We commend management for being proactive and taking action before the issuance of our final report.  

Topic: Management and Adminstration