Audit of Compliance with the Clean Water and Drinking Water State Revolving Fund Financial Statement Audit Requirements
October 15,2025
Why We Did This Report
The U.S. Environmental Protection Agency Office of Inspector General conducted this audit to determine whether the states and the Commonwealth of Puerto Rico had an annual audit of their Clean Water State Revolving Fund and Drinking Water State Revolving Fund financial statements for fiscal year 2022 in accordance with requirements.
Summary of Findings
The majority of states and the Commonwealth of Puerto Rico, respectively, had an annual audit of their Clean Water State Revolving Fund and Drinking Water State Revolving Fund financial statements for fiscal year 2022 prepared in accordance with requirements. The remaining states provided other documentation for their FY 2022 CWSRF and DWSRF programs that did not specifically include audited financial statements. This occurred because Office of Water guidance is not consistent with the Clean Water Act and the Safe Drinking Water Act statutory requirements. The EPA awarded over $490 million in total funding in FY 2022 to the states that provided other documentation. Without audited financial statements of the state revolving fund programs, the EPA and the OIG lack sufficient clarity on the programs’ operations to identify potential fraud, waste, and abuse.
Report No. 26-P-0001