A Performance Audit
An Audit Report on The Commission on Environmental Quality’s Administration of the Texas Emissions Reduction Plan Grants
The Commission on Environmental Quality (Commission) had processes and controls in place for awarding grants, ensuring that grantees comply with program requirements, and recovering funds from noncompliant grantees for the Texas Emissions Reduction Plan (TERP) grants. In addition, the Commission made appropriate eligibility determinations for Emissions Reduction Incentive Grants (ERIG). However, the Commission should strengthen certain processes and controls. Specifically, the Commission should:
- Ensure that it accurately completes its application reviews and applies its scoring criteria consistently and correctly.
- Strengthen controls to ensure that the grantee-reported usage data it captures in its TERP Data Management System is accurate.
- Ensure that it accurately completes its disposition reviews and approvals in accordance with its internal procedures.
- Strengthen its processes for monitoring and following up with noncompliant grantees.
For the fiscal year 2017 Emissions Reduction Incentive Grants (ERIG), the Commission evaluated 831 project applications and awarded 659 grants totaling $60,274,365. The Commission had documented processes for opening a grant round and performing reviews of all applications received. For all 25 project applications from the fiscal year 2017 grant round that auditors tested, the Commission made appropriate eligibility determinations.
While the Commission Had Documented Scoring and Selection Criteria, It Had Weaknesses in Its Application Review and Scoring Processes That Resulted in Scoring Errors and Awards That Did Not Meet Its Criteria
The Commission had documented processes and criteria for scoring applications and awarding grants. However, the Commission had systemic weaknesses in its reviewing and scoring processes because it did not ensure that it consistently and correctly applied the scoring criteria. Specifically, of 764 project applications for the fiscal year 2017 ERIG grant round, auditors identified 460 (60 percent) that the Commission did not score correctly. For nearly all of the project applications, those errors, if corrected, would not have changed the award outcome. However, the Commission incorrectly awarded grants to applicants for 4 project applications (0.6 percent of the 659 grants awarded) totaling $345,000.
In addition, auditors identified inconsistencies within and among the spreadsheets the Commission uses to track project applications, document eligibility determinations, calculate scores, and document scoring results and decisions. As a result, the information in those scoring tools did not always support the Commission’s final scoring decisions and eligibility determinations.
The Commission Should Strengthen Its Processes to Ensure That Grantee-reported Usage Data Is Accurate
The Commission requires grantees to report certain usage information for grant-funded vehicles and equipment, such as the hours they operate the equipment annually in various areas of the state. The Commission had weaknesses in its data entry controls that resulted in inaccurate usage information in its TERP Data Management System (DMS), such as incorrect usage amounts, duplicate reports, and reports for overlapping usage periods.
It is important that the usage data in TERP DMS is accurate because the Commission uses it to periodically evaluate and update standard default usage rates for various vehicle classes and equipment types. The Commission uses the standard default usage rates to (1) project usage for grant-funded vehicles and equipment and (2) calculate the cost-effectiveness of projects, which accounts for 80 percent of an ERIG project application’s initial score. The Commission also uses standard default usage rates to help calculate and report performance measures.
The Commission Had Guidelines and Processes for Reimbursing Grantees and Approving Disposition Documentation; However, It Should Ensure That It Accurately Completes Its Disposition Reviews and Approvals
The Commission had external guidelines and internal policies and processes in place to reimburse grantees for new vehicles or equipment and verify that grantees disposed of old vehicles or equipment. For all 25 reimbursements that auditors tested, the Commission reimbursed the grantees for eligible amounts in accordance with its guidelines.
However, the Commission did not obtain all applicable required documentation for 16 (27 percent) of the 60 dispositions tested. For 14 of those 16 dispositions, there was still adequate documentation to demonstrate that the old vehicle or equipment was destroyed. For the other two dispositions, the Commission did not obtain required photos of the engine serial numbers needed to verify that the correct engines were destroyed. If old vehicles or equipment remain in service, they continue to create emissions, which negates the emissions reduction benefits of the new grant-funded vehicles or equipment.
While the Commission Had Processes for Monitoring and Following Up With Noncompliant Grantees, It Should Strengthen Those Processes to Help Increase Compliance, Recover Grant Funds, and Track Invoices
The Commission had processes in place for monitoring and following up with grantees that failed to comply with program requirements. Those processes have helped the Commission bring grantees back into compliance or recover grant funds from noncompliant grantees. However, the Commission should strengthen its processes for consistently following up with noncompliant grantees and tracking invoices. Specifically, the Commission should:
- Send reminders consistently and on a timely basis to grantees that do not submit required usage reports.
- Establish timelines for invoicing grantees and referring invoices to its General Law Division.
- Establish (1) timelines for processing cases referred to the General Law Division and (2) processes for monitoring the status of cases referred to the Office of the Attorney General.
- Strengthen controls to capture accurate and sufficiently detailed invoice information.
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