Receiving $35 billion in stimulus funds proved both a boon and a bane to the Department of Energy, which was able to fund dozens of new projects but forced to deflect criticism over its handling of the sudden influx of cash.

The agency's inspector general has been one of the harshest critics, pointing out weaknesses in more than 70 reviews of various stimulus projects. But in a report released today, IG Gregory Friedman applauded DOE officials for using "teachable moments" to improve its policies -- and pointed out several areas where the agency could improve.

"The goal of rapidly deploying funds of this magnitude and ensuring that the funds were expended efficiently and effectively, created a number of challenges for the Department," he wrote in a memo to Energy Secretary Steven Chu. "Resources were strained, the existing infrastructure was stretched, institutional barriers had to be overcome, and new programs were established on an expedited basis."

But, he added, DOE took "a number of significant actions to carry out its programs to meet the goals and objectives of" the 2009 American Recovery and Reinvestment Act.

Friedman reviews his office's audits over the past couple of years, categorizing them into specific "lessons learned." A few IG reports, for example, highlighted the need for better risk management practices.

The loan guarantee program's difficulties are perhaps better-known, thanks to the controversy surrounding the funding for the solar firm Solyndra. In a March 2011 memo, Friedman wrote that the agency's records did not always document how DOE officials mitigated risks of the guarantees.

Today's report also highlights the need for continuous evaluation of staffing levels and employees' skill sets to ensure the necessary work can be performed. The Recovery Act pumped an unprecedented amount of money into the agency -- and employees struggled to keep up. An August 2010 IG report found that one DOE office has assigned more than 200 grants to each project officer to monitor; another office assigned 10 per employee.

Regulations also proved tricky, with state and local entities sometimes lacking backup plans if their projects did not overcome regulatory hurdles. Such planning was important for stimulus funds, where missed timelines could mean lost money. But preparing recipients for regulatory requirements could help DOE ensure better program performance throughout the agency, Friedman wrote.

DOE has acted on many recommendations, according to the report, including improving risk assessment practices and moving quickly to reallocate staff when necessary. But the harshest criticism may be yet to come. DOE has yet to spend about $14 billion of stimulus funds, and IG officials are actively investigating the loan guarantee program.

Click here to read the IG report.