905R94102
o
Office of Inspector General
Report of Audit
Fiscal 1993
Superfund Performance Measures
Region 5
Audit Report E1SFL4-05-0017-4TO0196
March 3, 1994
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905R94102
f. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
s ^9g^j\ OFFICE OF THE INSPECTOR GENERAL
\ ^fcMV^ ° NORTHERN DIVISION
% wo^ T* WEST JACKSON BOULEVARD
CHICAGO, IL 60604-3590
March 3, 1994
MEMORANDUM
SUBJECT: Audit Report E1SFL4-05-0017-4100196
FY 1993 Region 5 Superfund Performance Measures
FROM: Anthony C/ Carrollo'
Divisional Inspector General for Audits
Northern Division
TO: Valdas V. Adamkus
Regional Administrator
Region 5
This audit report contains findings that describe the
results of our review and corrective actions the Region has taken
regarding the tracking of Superfund performance measures. This
audit report represents the opinion of the DIG. Final
determinations on matters in this audit report will be made by
EPA managers in accordance with established EPA audit resolution
procedures. Accordingly, the findings described in the audit
report do not necessarily represent the final EPA position.
Action Required
Your office took corrective actions to address the finding
in the report prior to issuance of the draft report. As a
result, your response to the report is adequate in accordance
with EPA Order 2750. Therefore, we are closing out this report
in our tracking system effective March 3, 1994. Since the
corrective actions have been completed, the report does not need
to be tracked in the Management Audit Tracking System.
We have no objections to the further release of this report
to the public. Should you or your staff have any questions,
please contact Charles Allberry at 3-4222.
cc: Howard Levin (MFA-10J)
William Muno, Director,
Waste Management Division (H-7J)
Mike Simmons (2421)
Fran Tafer (2423W)
Printed on Recycled Paper
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Region 5 FY 93 Superfund Accomplishments
EXECUTIVE SUMMARY
PURPOSE
We performed this audit as part of the Office of Inspector
General's (OIG) mandatory audits of the Environmental
Protection Agency's (EPA) Chief Financial Officer (CFO) Act
Report. Specifically, the objectives of our audit were to:
(1) assess the internal controls over ensuring the accuracy
of recorded Superfund accomplishments and (2) determine the
accuracy of the fiscal year 1993 Superfund accomplishments
claimed that relate to CFO Act performance measures. Our
review was limited to Region 5.
BACKGROUND
The Superfund program was established by the Comprehensive
Environmental Response, Compensation, and Liability Act of
1980. The program was revised and expanded in 1986 by the
Superfund Amendments and Reauthorization Act (SARA). Under
Superfund, EPA is responsible for managing the cleanup of
hazardous waste sites that threaten human health and the
environment.
The CFO Act, enacted in 1990, requires each Federal agency to
prepare (1) consolidated financial statements or financial
statements covering its trust funds, revolving funds, and
commercial activities and (2) a performance report. As part
of the performance report, EPA is required to provide
information on selected Superfund performance measures. The
OIG is required to audit the information reported under the
CFO Act. The OIG must also assess the risk that a material
misstatement in the items reported as performance measures
would not be prevented or detected by the Agency's internal
controls.
One of the primary sources of information for the performance
measures in the CFO Act Report is EPA's Comprehensive
Environmental Response, Compensation, and Liability
Information System (CERCLIS). This database is the required
source of Superfund planning and accomplishment information.
Region 5 uses WasteLAN, a local area network, to enter and
collect Superfund data and accomplishments. The Region
periodically transfers the data from WasteLAN into CERCLIS.
The Superfund Comprehensive Accomplishments Plan (SCAP) is
the central mechanism for planning, budgeting, tracking, and
i
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Region 5 FY 93 Superfund Accomplishments
evaluating progress toward Superfund site cleanup. SCAP
describes the activities needed to meet a program
accomplishment. For example, an accomplishment definition
might require a report on the work done, or approval of the
report, before the accomplishment can be claimed. For fiscal
1993, there were nine Superfund performance measures reported
in the performance report.
RESULTS-IN-BRIEF
During 1993, Region 5 took action to improve its internal
controls over the accuracy of accomplishments recorded in
CERCLIS. Our review of Region 5's internal controls over the
input of data into CERCLIS (through WasteLAN) concluded that
there is a low risk that accomplishments could be materially
misstated. This represents an improvement from the 1992
CERCLIS data audit when we found a moderate risk of
misstatement. The risk of misstatement decreased because of
the additional controls Region 5 implemented subsequent to
our 1992 audit.
The accomplishments Region 5 claimed in fiscal 1993 were
generally accurate. We questioned some accomplishments
because the compliance codes for unilateral administrative
orders were not up-to-date. This resulted in an
overstatement of the estimated value of the work responsible
parties are performing. Our review found no other
significant problems with how Region 5 claimed
accomplishments reported in the performance report of the
financial statements.
We are not expressing an opinion on the reasonableness of the
estimated value of future responsible party work reported as
part of performance measure nine because there are no
guidelines for preparing these estimates. We are not making
a recommendation to Region 5 since this is a national issue
which needs to be resolved by the Office of Solid Waste and
Emergency Response. Thus, we are referring this matter to
our Headquarters Audit Division for consideration in their
consolidated report.
AGENCY COMMENTS AND ACTIONS
Overall, the Region was satisfied with the review and the
findings. Region 5 took action during our review to correct
the specific data errors which we identified. It also agreed
to review all compliance codes for accuracy and implement
ii
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Region 5 FY 93 Superfund Accomplishments
steps to periodically update these codes. As a result, we
are not making any further recommendations.
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TART.K OF CONTENTS
Page
EXECUTIVE SUMMARY i
CHAPTERS
1 INTRODUCTION 1
PURPOSE 1
BACKGROUND 1
SCOPE AND METHODOLOGY 3
PRIOR AUDIT COVERAGE 5
2 INTERNAL CONTROLS OVER CERCLIS DATA ARE ADEQUATE . . 7
CONCLUSION 9
AGENCY COMMENTS AND ACTIONS 9
3 REGION 5 ACCURATELY CLAIMED MOST ACCOMPLISHMENTS . . 11
ESTIMATED VALUE OF FUTURE WORK OVERSTATED 12
COMPLIANCE CODES NEED TO BE UPDATED 12
SITE INCORRECTLY INCLUDED IN UNIVERSE 13
DATA ENTRY ERRORS RESULTED IN UNDERREPORTING ... 14
NO OPINION EXPRESSED ON THE REASONABLENESS OF
ESTIMATES FOR FUTURE WORK 15
CONCLUSION 15
AGENCY COMMENTS AND ACTIONS 15
4 CALCULATION OF ESTIMATES FOR FUTURE
RESPONSIBLE PARTY ACTIVITIES 17
CONCLUSION 18
AGENCY COMMENTS AND ACTIONS 18
V
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Region 5 FY 93 Superfund Accomplishments
TABLE OF CONTENTS (continued)
APPENDICES
APPENDIX 1 REGION 5 REGIONAL ADMINISTRATOR'S
RESPONSE TO THE DRAFT REPORT 19
APPENDIX 2 ABBREVIATIONS 23
APPENDIX 3 DISTRIBUTION 24
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CHAPTER 1
INTRODUCTION
PURPOSE
We performed this audit as part of the Office of Inspector
General's (OIG) mandatory audits of the Environmental
Protection Agency's (EPA) Chief Financial Officer (CFO) Act
Report. Specifically, the objectives of our audit were to:
(1) assess the internal controls over ensuring the accuracy
of recorded Superfund accomplishments and (2) determine the
accuracy of the fiscal year 1993 Superfund accomplishments
claimed that relate to CFO Act performance measures. Our
review was limited to Region 5.
BACKGROUND
The Superfund program was established by the Comprehensive
Environmental Response, Compensation, and Liability Act of
1980. The program was revised and expanded in 1986 by the
Superfund Amendments and Reauthorization Act (SARA). Under
Superfund, EPA is responsible for managing the cleanup of
hazardous waste sites that threaten human health and the
environment.
The CFO Act, enacted in 1990, requires each Federal agency to
prepare (1) consolidated financial statements or financial
statements covering its trust funds, revolving funds, and
commercial activities and (2) a performance report. As part
of the performance report, EPA is required to provide
information on selected Superfund performance measures. The
OIG is required to audit the information reported under the
CFO Act. The OIG must also assess the risk that a material
misstatement in the items reported as performance measures
would not be prevented or detected by the Agency's internal
controls.
One of the primary sources of information for the performance
measures in the CFO Act Report is EPA's Comprehensive
Environmental Response, Compensation, and Liability
Information System (CERCLIS). This database is the required
source of Superfund planning and accomplishment information.
Region 5 uses WasteLAN, a local area network, to enter and
collect Superfund data and accomplishments. The Region
periodically transfers the data from WasteLAN into CERCLIS.
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The Superfund Comprehensive Accomplishments Plan (SCAP) is
the central mechanism for planning, budgeting, tracking, and
evaluating progress toward Superfund site cleanup. SCAP
describes the activities needed to meet a program
accomplishment. For example, an accomplishment definition
might require a report on the work done, or approval of the
report, before the accomplishment can be claimed.
For fiscal 1993, there were nine Superfund performance
measures reported in the performance report:
1. The ratio of the number of sites on the National
Priority List (NPL) where cleanup has started to the
total number of sites on the NPL.
2. The number of non-NPL sites with hazardous releases
where EPA has begun cleanup action.
3. The ratio of the number of sites on the NPL where a
decision has been made about how to proceed with the
cleanup (remedial or removal activity) of at least a
significant portion of the site to the total number of
sites on the NPL.
4. The ratio of fhe number of sites on the NPL where
remedial action has been completed for at least a
significant portion of the site to the total number of
sites on the NPL.
5. The ratio of the number of sites on the NPL where
cleanup construction is completed to the total number
of sites on the NPL.
6. The ratio of the number of enforcement actions EPA has
taken at sites on the NPL against the parties
responsible for contaminating the site to the total
number of sites on the NPL.
7. Past costs achieved in settlement.
8. The ratio of the amount of money EPA has collected from
parties responsible for contaminating sites on the NPL
to the total amount achieved in settlements and
judicial actions.
9. The ra.«o of the amount of money parties responsible
for contaminating Superfund sites have agreed to spend
on site cleanup to the total amount of money spent by
Superfund in site cleanup.
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Region 5 PY 93 superfund Accomplishments
SCOPE AND METHODOLOGY
We reviewed a sample of 26 percent (53/202) of Region 5
fiscal year 1993 accomplishments.1 We randomly selected 50
from SCAP 13, SCAP 14, and Enforcement-03 reports provided by
the Agency. We also judgmentally selected three
accomplishments because they appeared to be incorrectly
claimed. Our results are not projectable to the Region 5
universe because we did not select a statistical sample. We
did not audit performance measure 8 because the information
for the performance measure is taken from Department of
Treasury records. The OIG's Headquarters Audit Division will
perform this work.
For each sampled item, we compared the source documentation
Region 5 provided to the appropriate SCAP definition of each
accomplishment. These definitions are listed in the Fiscal
Year 1993 Superfund Program Implementation Manual. We did
not evaluate the appropriateness of the SCAP definitions used
by the Agency.
The scope of our review was limited to the following portions
of the performance measures and their related types of
accomplishments:
Performance measure 9 includes all accomplishments reported
in measure 6 and 7, and some additional accomplishments. Each of
the accomplishments included in our sample for performance
measures 6 and 7 were also included in our sample for performance
measure 9.
3
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Region 5 FY 93 Superfund Accomplishments
Performance Measure
Accomplishment
Number of sites on the
NPL where cleanup has
started.
Remedial
investigation/feasibility
study starts, or removal
starts.
Number of non-NPL sites
with hazardous releases
where EPA has begun
cleanup action.
First non-NPL removal
starts.
Number of sites on the
NPL where a decision has
been made about how to
proceed with the cleanup
(remedial or removal) of
at least a significant
portion of the site.
First remedies selected and
first action memos signed.
Number of sites on the
NPL where Remedial Action
has been completed for at
least a significant
portion of the site.
First remedial action
completions.
Number of sites on the
NPL where cleanup
construction is
completed.
NPL site construction
completions.
Number of enforcement
actions EPA has taken at
sites on the NPL against
the parties responsible
for the contamination.
Response settlements only
final NPL only (excluding
state lead).
Past costs achieved in
settlement.
Cost recovery settlements
only.
8. (Not included in our
review).
Amount of money parties
responsible for
contaminating Superfund
sites have agreed to
spend on site cleanup.
Response settlements and
cost recovery settlements -
NPL and non-NPL (excluding
state lead).
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We also reviewed Region 5's internal controls related to
entry of data into CERCLIS through the WasteLAN system. We
did not review internal controls within the CERCLIS or
WasteLAN systems.
We performed our audit in accordance with the Government
Auditing Standards issued by the Comptroller General of the
United States (1988 revision). Our fieldwork was conducted
at Region 5 from October 25, 1993, to January 12, 1994.
We provided a draft report to the Regional Administrator,
Region 5, on January 26, 1994. The Regional Administrator
responded on February 24, 1994. The response is incorporated
into the report and included as Appendix 1. Since the Region
agreed with the report, the Region agreed an exit conference
was not needed.
PRIOR AUDIT COVERAGE
The OIG previously conducted and reported the results of a
similar review of Region 5 Superfund accomplishments claimed
for fiscal year 1992 (Report No. 3100287, dated July 30,
1993). Our assessment of the Region's internal controls over
input of data into CERCLIS during fiscal year 1992 showed
that there was a moderate risk that the items could be
materially misstated. Our review also concluded that 71
percent (111/156) of the accomplishments reviewed were
adequately supported. The OIG questioned the remaining 29
percent (45/156) of the accomplishments reviewed because: (l)
SCAP definitions were not met and (2) accomplishments were
not achieved during fiscal year 1992. The review of Region
5's accomplishments for fiscal 1992 showed that those claimed
in CERCLIS were not always reasonable and accurate.
Subsequent to the 1992 fiscal year review, the Waste
Management Division took several steps to correct weaknesses
identified during our audit, as well as generally improve its
internal controls over CERCLIS data. In October 1993, an in-
house internal review of Superfund accomplishments was
conducted to ensure accomplishments claimed were accurate and
supported by the requisite documentation. Region 5 also had
an on-going effort to provide updated guidance and training
on accomplishment definitions to ensure the correct
documentation exists to support the accomplishment. The site
Assessment section implemented a standard approval procedure
beginning in fiscal year 1994 that ensures that final reports
are reviewed and approved. The Region also continued to work
with Headquarters to clarify definitions and has formed a
SCAP definition workgroup.
5
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Region 5 had also planned or taken corrective actions to
improve the reliability of internal controls over input of
data into the CERCLIS database. The Region planned to
continue to improve the use of automation tools in auditing
event and activity accomplishments. Branch or section chiefs
are required to approve, review, and audit Remedial Project
Manager's (RPM) data entered into CERCLIS in order to provide
quality control and quality assurance of accomplishment data.
The Region agreed to ensure that appropriate Superfund staff
received information on data quality issues and coding from
Headquarters. Also, beginning in October 1993, the Region
implemented a program of quarterly internal reviews of site
files to ensure dates entered into CERCLIS are properly
documented in the site files. The Region agreed to continue
to revise and further develop current policy on data input
and data ownership. Finally, the Region has scheduled
WasteLAN training in February 1994.
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CHAPTER 2
INTERNAL CONTROLS OVER CERCLIS DATA ARE ADEQUATE
Our review of Region 5's internal controls over the input of
data into CERCLIS (through WasteLAN) concluded that there is
a low risk that accomplishments could be materially
misstated. This represents a improvement from the 1992
CERCLIS data audit when we found a moderate risk of
misstatement. The risk of misstatement decreased because of
(1) the additional controls Region 5 implemented as a result
of our 1992 audit and (2) the Region's ongoing efforts to
improve data quality.
Region 5 Office of Superfund has a decentralized system of
data input for CERCLIS. The Office of Superfund consists of
five branches: the Emergency Response Branch, three Remedial
Response Branches, and the Superfund Program Management
Branch. Various personnel in each of the branches input data
into WasteLAN, a local area network for entering data into
CERCLIS. Because of the large number of people entering
data, a decentralized system has a greater potential for
input errors and to differing interpretations of definitions.
To control access to WasteLAN, the Region requires users to
attend a training session and pass a test before being
allowed to use the system. Also, within each of the
branches, Region 5 had established controls to prevent and
detect data entry errors and to ensure consistency in
applying SCAP definitions.
In the Remedial Response Branches, the RPMs or section chiefs
input data about their sites. RPMs enter data directly into
WasteLAN and review it for accuracy and completeness on a
real-time basis. As the RPMs are the individuals most
familiar with what has occurred on a site, there is a low
risk that data entry errors will occur. In addition,
WasteLAN has built-in edit checks to improve data accuracy
and a "pop-up" menu for most fields, that lists valid data
entry values. The section chiefs also conduct monthly
reviews of CERCLIS printouts, so there is a good chance that
if inaccurate data were entered, it would be found and
corrected.
In the Emergency Response Branch, two individuals are
responsible for entering data into WasteLAN. The information
entered into WasteLAN is taken from reports prepared by the
on-scene coordinator. The on-scene coordinators themselves
do not review the WasteLAN data to ensure its accuracy.
7
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Region 5 FY 93 Superfund Accomplishments
However, the branch and section chiefs review quarterly
printouts for accuracy.
The Superfund Program Management Branch is responsible for
monitoring and controlling WasteLAN data. One section in the
branch, Program Management and Information Section, has four
staff members devoted to ensuring the input quality of SCAP
data and related planning and reporting information. The
section also reviews the information entered into WasteLAN to
find missing codes and data that could impact the
accomplishments reported.
In addition to the controls described above that will detect
data entry errors, Region 5 has controls to ensure (l) the
consistent interpretation of SCAP definitions, and (2) the
accomplishments are documented. As part of the WasteLAN
training manual, staff are given a copy of the SCAP
definitions. Supervisors also have a copy of the SCAP manual
that staff can use to review definitions. As a result of our
audit of 1992 CERCLIS data (Report No. 3100287), Region 5
implemented the following procedures to strengthen internal
controls:
• Conducting internal reviews of Superfund
accomplishments to ensure accomplishments claimed are
accurate and supported by required documentation,
« Performing quarterly reviews of site files to ensure
dates entered into CERCLIS are properly documented in
site files, and
o Continuing to provide updated guidance and training in
regards to accomplishment definitions to ensure the
correct document supports the accomplishment.
In October 1993, Region 5 conducted its own internal review
of 1993 SCAP accomplishments. The Region selected 82
accomplishments from the fiscal year 1993 SCAP 13 and 14
reports (Targets and Accomplishments). The 82
accomplishments represented 30 percent of the total SCAP 14
accomplishments and 30 percent of the Preliminary Assessment
and Site Inspection accomplishments in SCAP 13. The Region
targeted these accomplishments since they are reported in the
Superfund Annual Report to Congress. The Region verified the
date claimed to the appropriate documentation. The Region
found minor discrepancies in the accomplishment dates for
three sites, and corrected the accomplishment dates in
CERCLIS.
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Region 5 FY 93 superfund Accomplishments
CONCLUSION
The Region has taken steps to ensure accurate and complete
data entry into CERCLIS and consistent application of the
SCAP definitions. These actions help to ensure that
accomplishments claimed are not materially misstated. Thus,
we perceive a low risk to a material misstatement of
accomplishments.
AGENCY COMMENTS AND ACTIONS
Region 5 accepted our finding that there was a low risk that
accomplishments would be materially misstated. The Region
stated that it will continue the actions it started in
response to our review of 1992 CERCLIS data. While we did
not make any recommendations, the Region stated that, in
April 1994, it would conduct an internal review of FY 1994
accomplishments to ensure the accomplishments were accurate
and supported by the required documentation. The Region is
also working to develop a system that will enable the Office
of Superfund to review site files to ensure dates entered
into CERCLIS are supported by the required documentation.
9
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Region 5 FY 93 Superfund Accomplishments
CHAPTER 3
REGION 5 ACCURATELY CLAIMED MOST ACCOMPLISHMENTS
For 96 percent (48 of 50) of the accomplishments we randomly
selected for review, Region 5 accurately recorded the
accomplishment in CERCLIS. We questioned two accomplishments
because the compliance codes for unilateral administrative
orders were not updated. We questioned all three
judgementally selected accomplishments because the compliance
codes for two sites were not updated and one site was
incorrectly included in the universe. We also found two data
entry errors that we did not question because they resulted
in an understatement of accomplishments. While most
accomplishments were accurately recorded in CERCLIS, we are
not expressing an opinion on the reasonableness of the
estimated dollar values of future responsible party work at
sites (performance measure 9) because there are no guidelines
for preparing these estimates.
Measure*
No. 1
No. 2
No. 3
No. 4
No. 5
No. 6
No. 7
No. 9
Total
Universe
5
35
13
14
15
16
37
69
202
Random Sample
Selected
2
7
3
3
4
4
9
18
50
Verified
2
7
3
3
4
4
9
16
48
Questioned
0
0
0
0
0
0
0
21
2
Judgmental Sample
Selected
_
.
.
-
.
.
.
3
3
Questioned
.
.
.
-
.
.
.
31
3
•See pages 2 and 4 for definitions.
Measure*
No. 7
No. 9
Universe
$ 31,894,344
$168,647,037
Sanple
$ 8,619,724
$44.722,030
Verified
$8,619,7242
$8.619, 7242
See pages 2 and 4 for definitions.
Questioned
$ 0
$5,629,153'
No Opinion
Expressed
$ 0
$30,473, 1533
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Region 5 FY 93 Superfund Accomplishments
NOTE 1: Estimated Value Of Future Work Overstated
Performance measure 9 is defined as the amount of money
responsible parties have agreed to spend on cleanup. This
includes both (1) cost recovery cases, in which responsible
parties will reimburse EPA's past costs and (2) settlement
cases, in which the responsible parties have agreed to
conduct future work. Our sample for performance measure 9
included several unilateral administrative orders for which
the responsible parties had not agreed to conduct work. The
estimated future cost of cleanup for these sites should not
be included in performance measure 9. As a result, the
performance report in the financial statements overreported
the estimated value of responsible party work.
The reasons why these sites were included in the performance
measure, and the associated dollar amounts, are:
Compliance codes need to
be updated $3,629,153 (see Note la)
Site incorrectly included
in universe 2.000.000 (see Note ib)
Total questioned S5.629.153
NOTE la: Compliance Codes Need To Be Updated
Region 5 did not update the compliance codes in CERCLIS
for unilateral administrative orders for removals when
a change in the sites' compliance status occurred. As
a result, sites where responsible parties were not
performing work were included in performance measure 9,
which represents the amount of money responsible
parties have agreed to spend on site cleanups. Region
5 needs to regularly review compliance codes for
unilateral administrative orders to ensure they
accurately reflect the current status of responsible
party work at a site.
Seven of the 21 accomplishments we reviewed for
performance measure 9 were for sites where Region 5
claimed that responsible parties would be conducting
removal cleanup activities.2 However, for 4 of the 7
2 Five of the accomplishments were randomly selected and 2
were judgementally selected.
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sites ($3,629,153) the responsible parties had not
agreed to conduct any removal activities. As a result,
we questioned the value of the following response
settlements:
Estimated
Site Name Value
Automatic Die Casting $1,146,000
General Die Casting 393,610
Impact Stamping 1,089,543
Penta Wood Products 1.000.000
Total questioned costs $3.629.153
When coding unilateral administrative orders for
removals in CERCLIS, Region 5 assumes that the
responsible parties will comply with the order. The
order gives the responsible parties a certain number of
days, 90 for example, to start removal work at a site.
During this time, the responsible parties are assumed
to be in compliance with the order, and the entry in
CERCLIS is coded as such. If, after the time set in
the order, the responsible parties do not start work,
they are then in noncompliance. Our review found that
Region 5 does not regularly update the compliance
status for unilateral administrative orders for
removals. Thus, for some sites, CERCLIS indicates that
the responsible parties are in compliance when in fact
they are not conducting the work. These sites are then
included in performance measure 9, which results in an
overstatement of the value of responsible party work at
sites. Region 5 needs to regularly review and update
the compliance status of responsible parties on
unilateral administrative orders.
Region 5 agreed that compliance codes need to be
regularly reviewed and updated. The Region has begun
reviewing the compliance status codes and will make
appropriate corrections in CERCLIS.
NOTE Ib: Site Incorrectly Included In Universe
We found one site the Agency had included in the
universe for performance measure 9 that did not meet
the criteria for the performance measure. Region 5 had
correctly identified in CERCLIS that the responsible
parties had not responded to the administrative order
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Region 5 FY 93 Superfund Accomplishments
requiring them to cleanup a removal site. By including
the site in the universe for performance measure 9, the
Agency is claiming that responsible parties have agreed
to conduct work at the site. The Agency needs to
delete this site from the universe for performance
measure 9.
The universe for performance measure 9 is taken from
CERCLIS printout entitled, Enforcement-03: FY93
Settlements Master Report. The printout is to include
all settlements where (1) responsible parties have
agreed to perform site activities, or (2) past costs
were recovered from responsible parties. The
compliance code for one site, Xxkem Company, is "N",
which represents no response, and therefore should not
appear on the printout. The estimated value of future
work for this site, as recorded in CERCLIS, was
$2,000,000. The Agency needs to review the selection
criteria for the Enforcement-03 printout to determine
why this site is included if it intends to use this
printout as the basis for performance measure 9.
NOTE 2: Data Entry Errors Resulted In Underreporting
We found two data entry errors related to the past costs
achieved in settlements which resulted in underreporting
performance measures 7 and 9 by more than $5 million. Region
5 officials stated that the errors should have been found
during quality control reviews. Even when internal controls
provide for a low risk of misstatement, it can be expected
that there will be data entry errors. We believe no
additional controls are needed as a result of the errors we
found.
For two sites, reported under both performance measures 7 and
9, the value of past costs achieved as recorded in CERCLIS
was less than the amount included in orders as repayment of
past costs.
Recorded Value
Site Name in CERCLIS in Order Difference
Bowers Landfill $ 200,000 $5,200,000 $5,000,000
Eau Claire Well Field 3,893,030 3,953,573 60.543
Total underreporting $5.060.543
Region 5 has corrected the amounts in CERCLIS.
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NOTE 3: No Opinion Expressed On The Reasonableness of
Estimates For Future Work
Region 5 accurately recorded the estimates for future
responsible party work in CERCLIS. However, we are not
expressing an opinion on the reasonableness of the estimates
as discussed in Chapter 4.
CONCLUSION
The accomplishments Region 5 claimed in fiscal 1993 were
generally accurate. We questioned some accomplishments
because the compliance codes for unilateral administrative
orders were not up-to-date. This resulted in an
overstatement of the estimated value of the work responsible
parties are performing. Our review found no other
significant problems with how Region 5 claimed
accomplishments reported in the performance report of the
financial statements.
AGENCY COMMENTS AND ACTIONS
Region 5 agreed that the compliance status codes need to be
regularly reviewed to ensure they accurately reflect the
current status of work at a site. During the second quarter
of FY 1994, the region developed and implemented procedures
for reviewing compliance status codes. Concerning the one
site incorrectly included in the universe, the Region has
discussed with Headquarters developing a new CERCLIS report
which would accurately reflect settlement compliance status.
Lastly, the Region has corrected the data entry errors in
CERCLIS.
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Region 5 FY 93 Superfund Accomplishments
CHAPTER 4
CALCULATION OF ESTIMATES FOR FUTURE
RESPONSIBLE PARTY ACTIVITIES
Performance measure 9 is defined as the amount responsible
parties have agreed to spend on cleanup. This includes both
(1) cost recovery cases, in which the responsible parties
will reimburse EPA's past costs, and (2) settlement cases, in
which the responsible parties have agreed to conduct future
work. The amounts included in performance measure 9 related
to cost recovery cases are firm amounts that the responsible
parties have agreed to pay EPA. However, the amounts
associated with the settlement cases are estimates of future
work. We are not expressing an opinion on the reasonableness
of these estimates because there are no guidelines for
preparing these estimates.
The documentation Region 5 provided as support for the
estimates of future work that were recorded in CERCLIS varied
for the sites we reviewed. Where the responsible party was
to conduct removal activities, Region 5 used the estimate of
what it would have cost the Agency to perform the removal.
This estimate was generally found in an action memorandum.
Where the responsible party agreed to conduct remedial
activities, the support for the estimate was from either the
record of decision or an internal memorandum summarizing the
agreement between EPA and the responsible party.
In the past, the Region did not place significant emphasis on
the estimates of future responsible party activities which it
recorded in CERCLIS. However, the Agency is now using the
estimates of future responsible party work in the performance
report of the financial statements as a way of measuring the
cost avoidance resulting from enforcement activities. With
the growing significance of these estimates, the Agency needs
to place more emphasis on how the estimates are calculated.
There are also no guidelines on how the estimates should be.
prepared and supported. As a result, we are not expressing
an opinion on the reasonableness of these estimates.
Without the guidelines,, we were unable to evaluate the
Region's method for developing the estimates and the
reasonableness of the estimate. The amount of our audit
sample for which we are not expressing an opinion was
calculated as follows:
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Region 5 FY 93 Superfund Accomplishments
The amount the Agency has reported that
responsible parties have committed to
pay for site response $44,722,030
Less: Cost recovery settlements 8.619.724
Estimated value of future
responsible party work $36,102,306
Less: Cost questioned (see Chapter 3,
Note 1) 5.629.153
Amount for which no opinion
is expressed S30.473.1533
Region 5 agreed that there should be guidelines for preparing
these estimates and stated that EPA Headquarters is
responsible for developing such guidelines. Region 5 stated
that EPA Headquarters plans to have guidelines in place for
incorporation into the fiscal year 1995 guidance.
CONCLUSION
We are not expressing an opinion on the reasonableness of the
estimated value of future responsible party work because
there are no guidelines for preparing these estimates. We
are not making a recommendation to Region 5 since this a
national issue which needs to be resolved by the Office of
Solid Waste and Emergency Response. Thus, we are referring
this matter to our Headquarters Audit Division for
consideration in their consolidated report.
AGENCY COMMENTS AND ACTIONS
The Region agreed that documentation for calculations of
estimates for future responsible party work should be
addressed at the national level. Headquarters has stated to
the Region that supplemental guidance will be issued during
1994.
3 Our opinion disclaimer relates to only the estimates of
future work for the accomplishments in our sample. However,
since the region's process for recording these estimates is the
same for all sites, we do not believe the reasonableness of the
Agency's estimates included in this performance measure can be
validated.
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APPENDIX 1
Page 1 of 3
Date I
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
REGION V
FB 24 1994
Subjects OIG Draft Audit Report E1SFL4-05-0017 of Region 5
FY 1993 Superfund Performance Measures - WMD Response
Tromi Valdas V. Adamkus
Regional Administrator
Tot Anthony C. Carrollo
Divisional Inspector General for Audits
Northern Division
Attached please find the comments of staff in the Office of
Superfund, Waste Management Division, Region 5, on the Draft
Audit Report prepared by your office and transmitted to me on
January 26, 1994. The comments address the findings and confirm
the actions completed or planned, as described in the subject
report. If you have any questions, please address these to
Howard Levin, Regional Audit Coordinator.
Valdas V.
Attachment
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APPENDIX 1
Page 2 of 3
WABTB HXmtOEMMT DIVIIIOW'i RBSPOM8B
010'• DRAFT AUDIT REPORT OM FY'93 SUPBRFUND FERPORMAIICB MBABURB8
He have reviewed the findings of the Office of Inspector
General's (OIG) January 26, 1994, Draft Audit Report on Region 5
Fiscal Year 1993 Superfund Chief Financial Officer (CFO) Act
Performance Measures. The Office of Superfund (OSF) accepts the
OIG's finding that there is a low risk that accomplishments could
be materially misstated. We also agree that this represents an
improvement from the FY 1992 Comprehensive Environmental
Response, Compensation and Liability Information System (CERCLIS)
data audit when the OIG found a moderate risk of misstatement.
The risk of misstatement decreased due to the Region's continued
improvement of internal controls. In April 1994, the Region will
conduct another internal review of the OSF FY 1994 accomplish-
ments to ensure accomplishments claimed are accurate and
supported by the requisite documentation. The Region continues
to provide the OSF staff with periodic updates and clarification
to the Superfund Comprehensive Accomplishments Plan (SCAP) manual
regarding accomplishment definitions. The Region will continue
to work with Headquarters (HQ) to clarify definitions. The
Region has also convened a work group to improve SCAP
definitions. The Region continues to improve the use of
automation tools such as definitional help screens, reports to
audit event and activity accomplishments, and edit checks in
WasteLAN to improve data accuracy. Section Chiefs continue to
approve, review, and audit Remedial Project Managers' data in
order to provide quality control and quality assurance of
accomplishment data. In addition to the above improvements
relating to internal controls, the Region is now focusing on a
workable system to track and keep documentation. This system
will enable the OSF to review site files to ensure dates entered
into CERCLIS are properly documented in site files and supported
by the required documentation.
Per the draft report, most of the Region's accomplishments were
accurately recorded in CERCLIS. The report questioned five
accomplishments under performance measure /9, which is defined as
the amount of money responsible parties (RP) have agreed to spend
on cleanup/total amount of money spent by Superfund in site
cleanup. Four of the questioned accomplishments needed the
compliance status codes updated, and one site was incorrectly
included in the universe. The OIG also found two data entry
errors, which they did not question because they resulted in an
understatement of accomplishments.
The Region agrees with the OIG's finding that the compliance
status codes need to be reviewed regularly to ensure they
accurately reflect the current status of work at a site. The
Region also acknowledges that there are no guidelines for
preparing estimates, which results in questionable values for
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Region 5 FY 93 Superfund Accomplishments
APPENDIX 1
Page 3 of 3
response settlements. As of FY'94, quarter two, the Region has
developed and implemented procedures for reviewing compliance
status codes. Changes to the CERCLIS compliance status codes
have been made as needed.
In addition, the draft report stated that one site (Xxkem
Company) was incorrectly included on the Enforcement-3 report.
The Enforcement-3 report tracks all settlements including those
for which RPs don't comply. He agree that the value of RP work
should reflect only those settlements in compliance. However, we
would recommend since the report is not used exclusively for the
CFO measures, that adjustments by the OIG be made for these
exception* (i.e. settlements without compliance). HQ has
discussed developing a new version of the Enforcement-3
exclusively for CFO measures, that would include this adjustment.
The region agrees with the finding of two data entry errors
related to past costs achieved in settlements. The data entry
errors have been corrected in CERCLIS.
We agree that documentation for the calculation of estimates for
future RP activities should be addressed at the national level.
We also agree that there should be guidelines for preparing these
estimates. Although not incorporated into the FY'94 guidance, HQ
stated that supplemental guidance will be issued in FY'94.
Conelusion
Overall, the Region is satisfied with the review and findings of
Region 5's accomplishments claimed in FY'93. We are also pleased
that no recommendations will be made with regard to our FY'93
Superfund accomplishments based on Region 5's corrective actions
already in place and currently implemented.
If you should have any questions, please feel free to contact
Debra Potter, Chief, Program Management and Information Section
who can be reached at 353-6318. In her absence, contact
Earlene Rhodes-Gunne11 at 353-1247.
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APPENDIX 2
Page 1 of 1
ABBREVIATIONS
CERCLIS Comprehensive Environmental Response,
Compensation, and Liability Information System
CFO Chief Financial Officer
EPA Environmental Protection Agency
NPL National Priorities List
OIG Office of Inspector General
RPM Remedial Project Manager
SARA Superfund Amendments and Reauthorization Act
SCAP Superfund Comprehensive Accomplishments Plan
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APPENDIX 3
Page 1 of 1
DISTRIBUTION
Inspector General (2410)
Assistant Administrator for Solid Waste and Emergency
Response (5101)
Director, Office of Emergency and Remedial Response (5201)
Associate Administrator for Regional Operations and
and State/Local Relations (1501)
Associate Administrator for Congressional and
Legislative Affairs (1301)
Region Administrator Region 5
Region 5 Followup Coordinator (Chief, FAS) (MFA-10J)
Region 5, Director, Public Affairs Office (P-19J)
Agency Followup Official (3101)
Attention: Assistant Administrator for the Office of
Administration and Resources Management
Agency Followup Coordinator (3304)
Attention: Director, Resource Management Division
Region 5 Intergovernmental Relations Officer (R-19J)
Region 5 Library (PL-12J)
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