EPA has not closed out IAs that have at least $4.2 million of unneeded funds that should be deobligated. Further, EPA had deobligated an additional $2.3 million between January 7, 2008, and April 25, 2008, as a result of our audit. These funds could be used for other environmental projects. Controls for identifying funds for deobligations were not always effective. We found that EPA Project Officers, the Grants and Interagency Agreements Management Division, and Grants Management Offices did not effectively monitor IAs to ensure they were closed out timely and unneeded funds were deobligated. The annual unliquidated obligation review was not effective and did not identify funds that should have been deobligated and used for other environmental purposes. Project Officers cited various reasons for untimely close-out of IAs, including unfamiliarity with close-out procedures and difficulties working with other agencies.