Posted: Thursday, October 21, 2010 11:00 AM
Audit probles lack of documentation for wood-to-energy plant
Auditors from USDA have raised concerns about a $3.9 million wood-to-energy project in Washington state funded by federal stimulus dollars.
Officials from the U.S. Forest Service, which oversaw the grant, have agreed to further review project expenditures and may seek to recover funds from the recipients.
The federal stimulus bill, approved by Congress in 2009 to help revive the economy, included about $50 million for projects that make beneficial use of woody debris and other forest biomass.
According to the audit, the Upper Columbia Resource Conservation and Development Council of Spokane Valley, Wash., has received $3.9 million for a combined heat-and-power facility.
Those funds were passed through to an unnamed sub-recipient that actually owns and operates the plant, the location of which is not specified in the audit.
The USDA's Office of Inspector General randomly selected the project to audit earlier this year as part of its ongoing probe into how stimulus money has been spent. Following are some of the audit's findings:
* The grant recipient hasn't backed up expenditures with adequate documentation, such as canceled checks, paid bills and detailed payroll information.
"Due to the lack of documentation, we are questioning the entire $3.9 million in disbursements," the audit said.
* As part of grant agreement, the recipient could be reimbursed for prior research and development costs, as long as the activities occurred after April 1, 2009.
In this case, the recipient obtained more than $1.65 million in such "pre-award costs" -- including more than 6,000 hours billed at $90 per hour for research and design -- without documenting "the date of work completed, justifications for the hourly rate, the types of materials purchased, dates of purchases, number of employees working on the project, or any payment information," the audit said.
Without such data, the auditors couldn't verify that the pre-award costs were actually incurred after April 1, 2009.
* The grant recipient requested and received an advance of money even though previous funds hadn't yet been spent, contrary to federal regulations.
* The grant was intended to pay for the initial stages of the project, such as site planning and building of a wood-burning system, but the recipient directed some funds toward a later stage of the project -- getting a sawmill up and running -- that wasn't covered by the agreement. Such changes are not allowed unless the original agreement is officially modified.
Donna Carmical, chief financial officer of the Forest Service, said the agency would try to find the missing documentation, according to a response letter to the audit. Any funds that were impermissibly disbursed, plus interest, will be recovered by the agency, the letter said.
The Upper Columbia Resource Conservation and Development Council could not be reached for comment.