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V
Report of Internal and
Management Audit
Interim Rerx>ct of Audit of the
Environmental Protection Agency's Portion of the
Hazardous Substance 3cs!X>nso Trust Fund
as of: .^pto'nber 30,
Audit Report H5eH2-i1-0012-20703
JIarch 31, 1982
U.S. Environmental protection
LltT.vi-". Room ?404 PM-211-A
401 M Street, S.W.
Washington. DO 80460
. .l-MVlii'*
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3^7 I UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
"~ H1NGTON. O.C. 2<
March 31, 1982
r. J WASHINGTON. O.C. 20460
% «*!*
SUBJECT? Interim Beport of Audit of the aivironmental Protection Agency's
Portion of the Hazardous Substance Besponse Trust Fund, Audit
Iteport E5'eH2-ll-0012-20708
FSCMs Matthew N. Novidc (A-109) /
TO: Anne M. Gorsuch
x Administrator (Ar-100)
Enclosed are two copies of our report for your use in administering the
CEPCLA program. We have incorporated your comments on our draft i«pott
after each finding and included the entire response-as"Attachment~Zi —
Where we consider appropriate,' yte have included our own comments «after
those which you provided. ' • -
•
We met with senior Agency officials to discuss the response. We concluded
that the comments you provided us were responsive to our recommendations..
I request that within 120 days, you provide us information concerning the
actions undertaken to implement our recommendations. This also should
include the results of the review to determine the legal and technical
feasibility of implementing certain of the recommendations.
As required by section Ul(k) of the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, we have submitted this t'epott
and your response to the Congress.
We have no objection to the further release of-this report at your
discretion.
If you have any questions concerning the report, we will be pleased to
discuss them with you at your convenience.
Enclosures
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TABLE OF UUMl'ENTS
Page
PART I - DIGEST. • 1
PURPOSE AND SCOPE OF AUDIT 1
.*
BACKGROUND 2
SUMMARY OF AUDIT RESULTS 4
Accounting System and Procedures 4
Other Areas Requiring Management Attention .. 5
Financial Results of Audit 5
MANAGEMENT RESPONSE 6
OIG'S COMMENTS .6
PART II - FINDINGS AND REO3W-1ENDATICNS 7
ACCOUNTING SYSTEM AND PROCEDURES 7
Need for Agencywide Guidance .....'......7
Personnel Compensation 10
Non-CERCLA Salary Costs Charged to Superfund 11
CERCLA Salary Costs Not Charged to Superfund 12
Rent, Communication, and Utilities 15
Equipment, Supplies, and Materials 17
Other Miscellaneous Charges Unrelated to CERCLA 19
OTHER AREAS REQUIRING MANAGEMENT ATTENTION 21
Def initizing Contracts .21
Property Management 23
Discounts Lost 24
Year-End Spending. 26
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TABLE OF CONTENTS (Continued)
Exhibit A - Status of Hazardous Substance
Response Trust Fund, 9-30-81 28
Schedule A-l - Environmental Protection Agency,
Status of Hazardous Substance Response
Trust Fund, Transfer from U.S. Coast
Guard 30
Exhibit B - Hazardous Substance Response Trust Fund,
Statement of Financial Activity, Audit
Sample Defined by Location 31
Exhibit C - Hazardous Substance Response Trust Fund,
Statement of Financial Activities and Results
of Audit by Object Classification 33
Exhibit D - Hazardous Substance Response Trust Fund,
Schedule of Personnel Compensation and Benefits 34
Exhibit E - Hazardous Substance Response Trust Fund,
Schedule of Transportation of Persons and
Things 37
Exhibit F - Hazardous Substance Response Trust Fund,
Schedule of Rent, Communication, and Utilities 38
Exhibit G - Hazardous Substance Response Trust Fund,
Schedule of Other Contractual Services 41
Exhibit H - Hazardous Substance Response Trust Fund,
Schedule of Equipment, Supplies, and Materials.. 43
Exhibit I - Hazardous Substance Response Trust Fund,
Schedule of Interagency Agreements 48
Schedule 1-1 - Hazardous Substance Response Trust Fund,
Schedule of Amounts Obligated and Disbursed
by Site Under the Interagency Agreement
With the U.S. Coast Guard.... ....49
Exhibit J - Hazardous Substance Response Trust Fund,
Schedule of Contracts.... 51
Schedule J-l - Emergency Response Contracts ...53
Attachment I - Administrator's Response
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o UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
INSPECTOR GENERAL
Audit Report E5eH2-ll-0012-20708
Interim Report of Audit of the
Environmental Protection Agency's Portion of the
Hazardous Substance Response Trust Fund
as of September 30, 1981
PART I— BIGEST-
PURPOSE AND SCOPE -OF AUDIT
We have .completed an audit of the Environmental Protection Agency's (EPA)
portion of the Hazardous Substance Response Trust Fund (Superfund)
established under the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980 (CERCLA). Our audit was mandated by CERCLA
(section lll(k)), which states that the Inspector General must audit
all payments, obligations, reimbursements, or other uses of the "Superfund"
to ensure that the fund was being properly administered and that claims
were being*appropriately considered. This mandate required audit tests
to determine that the costs to administer Superfund were "necessary for"
and "incidental to" the implementation of CERCLA (section 111(a)). The
audit included an evaluation of internal and management controls as well
as an audit of costs charged to the Superf und appropriation (68-20X8145)
for fiscal 1981.
We selectively tested transactions amounting to $26,350,059, or 66 percent
of the $40,143,028 charged (obligated) to Superf und. The objectives of
this audit were to determine:
1. compliance with applicable laws, regulations, and guidelines;
2. the adequacy of internal controls to ensure reliability of
accounting and management records; and
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3. The accuracy and fairness of financial reports on EPA's
portion of Superfund as of September 30, 1981.
We performed the audit in accordance with the Standards for Audit of
Governmental Organizations, Programs, Activities, and Functions issued by
the Comptroller General of the United States. Our audit included tests
of the accounting records pf eight regional offices, two major laboratory
facilities, and EPA Headquarters; evaluations of internal and management
controls; reviews of property management activities at a number of the
Agency's property accountable areas; and other auditing procedures we
considered necessary. The specific audit locations are shown in Exhibit
B. This report represents a consolidation of the information and findings
obtained in each of these component audits and overall recommendations
to SPA management. The findings and recommendations developed during
each component audit were previously discussed with and provided to
appropriate responsible officials for comment. We did not analyze program
results. Contract, grant, and interagency agreement costs were accepted
only to the extent that valid obligation and disbursement records were
maintained. Final audits of contracts, grants, and interagency agreements
performed at a later date may.disclose questioned costs.
BACKGROUND
On December 11, 1980, the Comprehensive Environmental Response, Compen-
sation, and Liability Act of 1980 (Public Law 96-510) was signed into
law. It provides for liability, compensation, cleanup, and emergency
response for hazardous substances released into the environment and
uncontrolled and abandoned hazardous waste sites. The CEPCLA program
represents a new approach to environmental law, as demonstrated by several
features of the legislation:
»•
0 It is nonregulatory in nature. There are no standards or permits,
but the liability of "responsible parties" provides the incentive
for a higher standard of care.
0 It is financed by those who impose the risks of hazardous
chemicals on society.
0 It makes government the actor of last resort. If cleanup is
provided by those responsible, the government cannot act. If
those responsible fail to clean up or are unknown, the government
is authorized to clean up first and litigate later.
0 It encourages close cooperation between Federal, State, and
local governments. States rank their own priorities for hazardous
site cleanup and may veto a federally endorsed cleanup plan by
withholding the required cost-sharing (10 to 50 percent of total
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cleanup costs). When a State or municipality is capable of
responding appropriately, EPA may enter into a cooperative
agreement or contract with them for emergency cleanup or
. remedial action. . . -
CERCLA provides for the establishment of a program to control and clean
up hazardous substances released or left to dissipate into the environment.
CERCLA broadly defines two types of response actions: removal and remedial.
The former term represents relatively short-terra responses, while the
latter represents actions of longer duration leading to permanent resolution.
To fund removal and remedial actions, title II, subtitle B, of CERCLA
established the Hazardous Substance Response Trust Fund. The $1.6
billion fund will be collected over a period of five years, financed by
an imposed tax ($1.38 billion) on the manufacturers, producers, and
importers of petroleum, petroleum products, and certain "taxable* chemicals,
and from general tax revenue ($220 million). On February 25, 1981, the
Coast Guard transferred $6,742,875 to Superfund. In addition, the
Supplemental Appropriations and Rescission Act (Public Law 97-12), which
was passed on June 5, 1981, appropriated $68,000,000 from Superfund for
EPA. The Office of Management and Budget apportioned the funds to EPA
on July 1, 1981. The Agency issued advices of allowance totalling
$63,742,900 to 22 allowance holders on July 7 and 8, 1981, and held $11
million in reserve, bringing the total amount available to EPA to
$74,742,900.
The Comptroller of EPA determined that CERCLA expenses incurred after
June 8, 1981, could be charged to Superfund. Section 111(a) of CERCLA
limits the use of the money in Superfund to response costs; claims
asserted and compensable but unsatisfied under section 311 of the Clean
Water Act; claims for injury to, or destruction or loss of, natural
resources; and related costs described in section lll(c). When cleanup
costs are charged to Superfund, EPA may recover the costs from the responsible
parties through litigation. Section 111(a) further limits administrative
costs or expenses in that they may not be paid out of the fund unless
such costs and expenses are "reasonably necessary for" and "incidental
to" the inplementatiori of CERCLA.
«
On August 14, 1981, President Reagan delegated to Federal agencies, via
Executive Order 12316, the authority vested in him by CERCLA. The
Administrator of EPA received authority to use the money in Superfund,
settle claims asserted against Superfund, and designate Agency officials
who may obligate funds.
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SUMMARY OF AUDIT RESULTS
EPA obligated $40,143,028 of Superfund monies during fiscal 1981. Nearly
$34 million (84 percent) of this amount was for contracts, grants, and
interagency agreements. Vfe found very few problems with respect to
EPA's ability to account for these extramural costs. However, there was
a need for improved accounting and control over the intramural costs
which comprised the remaining $6 million (16 percent). Most of the
problems were in the area of personnel compensation, which at $2.3 million
comprised less than six percent of total costs.
Accounting System and Procedures
EPA's accounting system, like those of most government agencies, is geared
to account for costs on an organizational basis. The organizational
units within EPA are each issued a budgetary allowance at the beginning of
the fiscal year, and their spending actions are recorded against their
budget. The advent of the CERCLA program created new and unique cost-
accounting requirements which previously had not been necessary.
Section 111 (a) of CERCLA requires that Superfund be charged only for
costs which are "reasonably necessary for" and "incidental to" implemen-4
tation of CERCLA. Ihis requirement necessitated enhancements to. EPA's
existing accounting system and procedures to provide essentially what
amounts to job-costing capability. As an example, employees1 labor
costs under the old system were charged entirely to the organization for
which they worked. Now the system must distribute employees' labor
costs between the CERCLA program and any other program on which they
work, as well as between individual hazardous waste sites within the
CERCLA program.
EPA has addressed some of these problems, but additional guidance and
improvements are needed. We recognize that cost accounting requirements
can be expensive and burdensome, and that additional controls must be
evaluated to ensure the cost of implementation does not outweigh the
benefits received. However, we believe there are cost-effective controls
which will place some additional burden on the Agency, but are necessary
to comply with section 111(a) of CERCLA. Due to the absence of such
controls and procedures needed to account for certain costs charged to
Superfund, we set aside $2.9 million of costs pending further analysis
and documentation by the Agency to substantiate the propriety of the
charges. We also questioned costs totalling $368,914 which we believe
are definitely not related to CERCLA and which should have been charged
to other Agency programs.
Cost exceptions noted in fiscal 1981 were not large in relation to total
obligations. However, we have recommended that the Administrator establish
a task force headed by a senior Agency official to ensure that all necessary
improvements are accomplished and to avoid future cost exceptions.
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Other Areas Requiring Management Attention
In addition to the accounting system issues, vie noted the following areas
where increased management attention is needed to ensure that:
0 Contracts awarded under emergency procurement procedures are
definitized in a timely manner.
0 Property purchased with Superfund monies is identified in and
controlled through the property management system.
0 Invoices for payment are processed in a timely manner to avoid
loss of discounts.
0 Hurry-up year-end spending is avoided.
The findings developed during our audit are presented in detail in
Part II - Findings and Recommendations. This initial audit dealt primarily
with financial controls and procedures. Vie are currently conducting
audits of program management and results, which will be topics of future
reports.
»
Financial Results of Audit
The financial results of audit are summarized below and detailed in
Exhibits C through J and referenced schedules.
Total Obligations
Obligations AcceptedQuestioned*Set Aside**
$40,143,028 $36,841,341 $368,914 $2,932,773
*Questioned obligations represent costs that were definitely
not related to CERCT.A; these costs should be deobligated and
transferred to the proper operating appropriation.
**In the absence of policies and procedures to precisely identify
certain costs to the CERCLA program, we have set aside costs
for further analysis and documentation by the Agency.
With the exception of costs questioned, and pending the resolution of
costs set aside, the financial reports fairly present the financial
position of Superfund as of September 30, 1981. As of this date, no
claims were made against the fund.
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MANAGEMENT RESPONSE
We provided a draft copy of our audit report, dated March 11, 1982, to
the Administrator for her review and consideration. The Administrator
generally concurred with our findings and recommendations. She stated
that corrective actions had been initiated regarding some of our recom-
mendations and that, pending certain legal and technical determinations,
action would be taken to address most of the remaining recommendations.
In the few instances where the Administrator disagreed with our specific
recommendations, she has proposed alternatives that we will consider.
We have incorporated the Administrator's comments after the pertinent
findings in the body of the report. We have also included her complete
response as Attachment I.
QIC'S COMMENTS
We have reviewed the Administrator's response to our report and met
with senior Agency staff to obtain some additional information and clari-
fication. We have concluded that management comments were responsive to
our findings and recommendations. Where we considered it appropriate,
we have included our own comments where management took exception with
or offered alternatives to our recomnendations.
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PAST II - FINDINGS AND RECOMMENDATIONS
ACCOUNTING SYSTEM AND PROCEDURES
Implementation of the CERELA program was a massive task and, for an
undertaking of this magnitude, was accomplished by EPA in a relatively
short period of time. To facilitate this implementation, the Agency's
existing accounting system arid procedures, approved by the General
Accounting Office (GAO) in 1977, were used to the maximum extent possible
with little modification.
However, the implementation of CERCLA has imposed new and unique cost-
accounting requirements on EPA. These new requirements, generated by
section lll(a) of CERCLA, require basically that the Agency modify its
present accounting system and procedures to provide job-costing capability.
EPA needs to develop Agencywide guidance for its managers, and make
enhancements to the present system and procedures, to ensure that Superfund
is charged for only those costs which are "reasonably necessary for" and
"incidental to" implementation of CERCLA. We found there was a lack of
uniformity in the charging of similar costs. Costs were charged to
Superfund which were not related to CERCLA, not supported by necessary
supplementary records, or not allocated equitably.
Need for Agencywide Guidance , ' '
EPA needs to take action to issue Agencywide guidance to ensure that
(1) managers make appropriate and uniform decisions on which costs are
"reasonably necessary for" and "incidental to" implementation of CERCLA,
and (2) supplementary records are maintained to evidence and justify
such decisions. Absence of such procedures resulted in a lack of
uniformity in approach to the charging of similar costs, and costs were
charged to CERCLA which were not appropriate or adequately supported.
To provide guidance to Federal agencies and departments in preparing
their budgets, EPA's Office of the Comptroller prepared a statement on
the types of expenses that were chargeable to Superfund. This undated
document, entitled "Superfund Federal Inter-Agency Budget Preparation
Guidance," divided chargeable costs into two categories: (1) direct and
incidental costs and (2) workyear (personnel) costs. It stated that
direct costs were "All non-personnel compensation and benefit costs
directly involved in carryingrout activities mandated by the law and
provided for in the budget ('Superfund activities') which are chargeable
in reasonable and appropriate amounts." Incidental costs were defined as
"rent, communication, facility management, printing, and other incidental
expenses necessary to carry out Superfund activities . . . ."
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In our opinion, this guidance document did not effectively address the
issue of what constitutes a reasonable and allocable cost, nor did it
adequately address what supplemental records need to be maintained to
evidence and justify spending decisions. In addition, the document did
not discuss the need for the development of an acceptable cost allocation
plan, supported by formal records, to substantiate the propriety of incidental
costs charged to Superfund. Based on discussions with Agency managers,
we found that this guidance document was not widely distributed.
Since there was very little Agencywide guidance, the Headquarters CERCLA
program office and some of the support offices with CERCLA responsibilities
drafted and issued their own guidance. Mast of the guidance issued was
administrative in nature, in that it addressed documents and procedures
necessary for processing spending actions as opposed to specifying what
constituted necessary and allocable CERCLA costs.
Ihe Financial Management Officers Users Manual for the Hazardous Substance
Response Program (FMO Users Manual), prepared by EPA* s Financial Management
Division (July 1981), and the Training Manual for Superfund Administrative
Assistants (Training Manual), prepared by the Office of Emergency and
Remedial"Response (September 1981), required individual time distribution
sheets to support site-specific time charges. Neither provided specific
guidance about accounting for other Superfund payroll costs. As a result,
tirnesheets were not prepared or maintained for support offices with CERCLA
responsibilities, and costs were charged to Superfund that did not always
benefit CERCLA activities. Consequently, the procedures in the two manuals
were not sufficient to ensure that managers made appropriate and uniform
decisions on charging salary costs which were not site-specific.
CERCLA guidance entitled Superfund Accounting Procedures (Accounting
Procedures) was drafted bythe Office ofWater ProgramsEnforcement and
issued by the Office of Solid Waste and Emergency Response on August 4,
1981. However, the Accounting Procedures were never officially trans-
mitted to the regional offices for implementation. In our opinion, the
Accounting Procedures could meet the administrative cost requirements
specified in CERCLA. for example, the Accounting Procedures required
that timesheets must be maintained to document time expended for site-
specific and program management work. These time records were intended
to reflect the time expended each day for each activity area (CERCLA and
non-CERCLA activities). The Accounting Procedures required the timesheet
to reflect at least.eight hours per day and to be filled out daily.
Thus, these timesheets would form the basic record to complete the timecards
and the "Bi-weekly Summary for Timecards." The Accounting Procedures
also included instructions for completing timesheets. Several examples
of timesheets that could be used by individuals were also provided.
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When Agency management formulates needed policies and procedures, it
should consider section 111 (a) of CERCLA, which limits the use of
Superfund, and decisions rendered by the Gonptroller General.
Section lll(a) provides: "The President shall not pay for any admini-
strative costs or expenses out of the Fund unless such costs and expenses
are reasonably necessary for and incidental to the implementation of
this title." EPA's Office of General Counsel (OGC) was requested to
render a legal interpretation of this section. In a memorandum on "Use
of Superfund for federal and state administrative expenses," dated
September 15, 1981, it was OGC's "... view that determining what adminis-
trative costs are reasonably necessary is a. matter of administrative
discretion, but that there is some indication that Congress intended
this provision to be read narrowly rather than broadly." In the same
memorandum, OGC also concluded ". . . that sane necessary administrative
costs can be charged against operating funds."
According to a decision rendered-by the Comptroller General (50 Comp.
Gen. 534 (1971)), expenses are "necessary for" or "incidental to" a program
if they are needed for the "proper execution", of that program. The
general rule is that "necessary expenses" must have a direct connection
to or be essential for carrying out the stated general purpose for which
funds are appropriated (52 Comp. Gen. 504, 505 (1973); 38 id. 758 (1959)).
All direct costs (actual costs of removal and-remedial actions) and
administrative costs associated with the performance of CERCLA activities
must meet the above criteria. However, administrative costs that benefit
more than one program objective need to be allocated on an equitable
basis which reflects the relative benefit the program receives. In
general, to be allowable and allocable, costs under CERCLA should: (1)
be authorized (or not prohibited) by CERCLA or Federal regulations; (2)
be necessary and reasonable for proper and efficient administration of
CERCLA; (3J be accorded consistent treatment throughout the Agency; and
(4) not be allocable to or included as a cost of other Agency programs
in either the current or the prior period.
Cnce adequate guidance is drafted which specifies allocable Superfund
costs, all costs charged to Superfund must be accurately recorded and
adequately supported. Specific reconmendations pertaining to accounting
procedures and records are included in subsequent findings of this report.
Recommendations
We recommend that:
1. The Administrator establish a task force headed by a senior
Agency official, such as the Associate Administrator for
Policy and Resource Management (PRM), to oversee and coordinate
the development of Agencywide guidance on accounting for
Superfund costs.
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2. The task force take all necessary actions, including those
recommended in subsequent findings of this report, to ensure
uniform Agencywide accounting policies and procedures are
implemented. '
Management Response
These reconmendations resulted from the Inspector General's (IG) findings
that there was no agencywide guidance that fully detailed the procedures
of documentation necessary to make proper charges to Superfund. Most of
the recommended actions are already being undertaken at the Agency.
Therefore, I believe, the creation of a special task force is unnecessary.
QIC's Comments
In view of the fact that most of the recommended actions have been under-
taken, a task force may not be necessary. However, it is important
that a senior Agency official be assigned responsibility for coordinating
the issuance of Agencywide policies and procedures in a timely manner.
Personnel Compensation
•
4
During fiscal 1981, the Agency obligated $2,424,020 of Superfund monies
for personnel compensation. Of the total amount obligated, we selectively
tested $1,009,418 (42 percent). Except in Region 6, internal controls
over personnel compensation were not adequate and necessary supplemental
records were not always maintained. As a result, there was not a sufficient
basis for expression of an opinion and we have disclaimed any opinion
(set aside) on personnel compensation costs of $2,302,773. Details of
costs set aside are shown in Exhibit D. We found numerous instances
where: (1) budgetary considerations, rather than the actual time spent
on CEPCLA activities, controlled the charging of salary costs; (2) employees
whose entire compensation was charged to Superfund acknowledged that
they worked on non-CERCLA activities; (3) employees working on CERCLA
activities were not charging their time to Superfund; and (4) when
supplementary records (timesheets) were maintained, they were not always
reconcilable to the hours recorded on the employees' Time and Attendance
Reports (timecards).
The Agency utilizes the Department of the Interior's Computer Payroll
System (DIPS). The payroll system is capable of allocating an employee's
personnel compensation between two or more accounts. Each employee is
assigned a fixed account number (FAN). This number appears in the upper
right corner of the reverse side of'the preprinted timecards. The FAN
identifies the program (e.g., CERCLA) to which the employee is assigned, and
all payroll costs are automatically charged to that FAN. However, payroll
costs may be charged to another account number by recording the appropriate
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acoount number and the hours charged on the reverse side of the tinecard.
This practice, referred to as "labor exception," should be used when
an employee's labor benefits an activity other than that related to the
employee's FAN. The cost of the labor is transferred front the employee's
PAN to the benefiting account number. The procedures to be used for
labor exceptions are detailed in the.EPA Timekeeping Manual, chapter 7,
entitled "Labor Cost Distribution."
Non-CEgCTA Salary Costs Charged to Superfund
Salary charges to Superf und result when (1) labor exception procedures
are used or (2) the employee has a Superfund FAN. These salary charges
frequently were not supported by timesheets evidencing the total dis-
tribution of an employee's time among benefiting accounts. Such supple-
mentary records should be maintained to support all salary costs charged
to Superfund, even for, employees with a Superfund FAN who charge 100
percent of their time to Superfund. We found many instances where the
salary costs of employees not working on CERCLA activities were charged
to Superfund. Many of these employees had a Superfund FAN, and 100
percent of their salary was charged to Superf und. Due to the lack of
supporting labor distribution records, the amount of such miscnarging
could not be quantified.
At the majority of audit sites, employees were charging 100 percent of
their time to Superf und but were also working on non-CERCLA activities.
Employees at Headquarters and at Regions 2, 3, 4, and 9 admitted that
although their entire compensation was charged to Superfund, they worked
on non-CERCLA-related activities. At Region 3, 12 of 57 employees in
our sample whose entire compensation was charged to Superfund admitted
that they did not always work on CERCLA activities. .Further, discussion
with these employees, most of whom were administrative personnel, indicated
that as much as 85 percent of their time charged to Superfund was not
proper. . .
We found several instances where senior regional officials, responsible
for many activities, charged 100 percent of their time to Superfund.
Based on their positions and duties, it is doubtful that these employees
worked 100 percent of their time in any given pay period on CERCLA
activities.
In order to ensure the accuracy of future salary charges made to
Superfund, the Agency will need to develop and implement a biweekly
time distribution system. The system should require a full accounting
for all of the time of employees charging to Superfund, on a full or part-
time basis, during any given pay period. Regardless of whether salary
costs are treated as direct or support costs, they must be supported by
timesheets to satisfy the requirements of section lll(a) of CERCLA.
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QERCTA Salary Costs Not Charged to Superfund
Not all CEPCLA salary costs were charged to Superfund. In sane cases
these omissions were intentional? in others they were due to error or
oversight. Although we consider the amounts involved to be material, we
were unable to quantify this situation.
We found numerous instances where material amounts of payroll costs were .
intentionally not charged to Superfund. As an example, employees charged
travel costs to Superfund without charging the corresponding payroll cost.
In most instances, the travel was performed by administrative (e.g.,
Regional Counsel or Financial Management) staff personnel. Since the
travel costs were allocable Superfund charges, the time spent to accomplish
the purpose of the travel would also appear to be an allocable cost. In
our opinion, all CERCLA-related costs should be charged to Superfund.
Failure to record all expenses understates the costs incurred to operate
the•program. Responsible Agency officials told us that some personnel
compensation costs were not charged to Superfund because CERCLA personnel
compensation funds were too limited to absorb all costs. However, at EPA
Headquarters we found that all four of the allowance holders who did not
charge all such costs to Superfund had unobligated personnel compensation
money available at the end of the fiscal year.
EPA's General Counsel issued a memorandum, dated September 15, 1981, on
the "Use of Superfund for Federal and State Administrative Expenses.1'
In this memorandum, General Counsel stated:
"... it is our view that Section lll(a) can be read to permit
charging certain administrative costs against other appropriations.
Congress, recognizing that the Fund might be insufficient to meet
even known problems, sought to preserve the Fund for response
actions. While Congress has limited administrative expenses
chargeable against the Fund, there is no basis for concluding that
Congress either did not recognize that there might be additional
costs associated with the program or intended to make the Fund the
only resource available for administrative costs. It seems
reasonable that Congress intended some Superfund administrative
costs to be included in those costs incurred by agencies in carrying
out their general responsibilities, including Superfund.
"In sum, it is our view that determining which administrative
costs can be charged against the Fund is a matter of administrative
discretion and that some necessary administrative costs can be
charged against operating funds."
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Ihe opinion rendered by EPA's General Counsel addresses the legal
acceptability of charging CERCLA expenses against other appropriations.
However, it is our opinion that as long as CERCLA funds are available to
support offices, all CERCLA-related activity costs should be charged to
Superfund. Chly at the time a support office with CERCLA responsibili-
ties has expended its CESCLA budget should administrative costs be
charged to an operating appropriation. In addition, we believe that
timesheets should be prepared and maintained by all EPA personnel who
work on CERCLA activities whether or not their salary costs are charged
to Superfund. Timesheets provide a record which management can use to
evaluate the allocation of resources and the necessity for any reallocation,
We identified errors of omission totalling approximately $114,000. These
errors occurred because (1) not all hazardous waste site account numbers
were entered into the payroll system and (2) time was not properly
allocated on the timecards. EPA allowance holders should regularly
review the Payroll Distribution Report (RCB^3A) to ensure errors of
omission are identified and corrected in a timely manner. The RCB-3A
report details the name, hours, dollars, and object class of payroll
costs charged to an allowance holder. Reconciliation of the RCB-3A
report to employees' timecards is an important internal control to ensure
that the hours worked on CERCLA, as shown on the timecards, agree with
the hours recorded in the accounting system. Without this- verification
process, there is no assurance that only appropriate expenses are charged
or that all charges are properly recorded to Superfund.
Recorcnendations
We recommend that the task force:
1. Take necessary actions to:
a. develop a time distribution form which employees must use
to distribute actual time worked among two or more accounts;
b. revise chapter 7 of the Timekeeping Manual to require
that the above form, completed by employees and approved
by their supevisor, document time distributed on time and
attendance reports between any accounts, including but not
limited to Superfund accounts;: and
c. inform the applicable program offices and support organi-
zations that only salary costs supported by timesheets can
be charged to Superfund and that salary costs not supported
by timesheets will be questioned in future audits.
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2. Require that:
a. employees who did not maintain time distribution records,
but charged salary costs to Superfund, prepare a written
certification of the percentage of time they performed
CERCIA work;
b. the Division Director of such employees approve the above
certifications; and
c. the personnel compensation obligated for Superfund be
adjusted as necessary to reflect the effect of the above
certifications.
3. Draft and issue guidance requiring that timesheets be prepared
and maintained by all personnel who work on CERCIA activities.
4. Draft and issue guidance stating that offices with CERCLA
responsibilities can charge Superfund salary costs to their
normal operating appropriation only when their Superfund payroll
budget is exhausted. They should emphasize also that any cost
that can be attributed to a specific site must be charged to
Superfund in order for EPA to recover all direct costs from
responsible parties.
5. Issue a directive to all allowance holders, reminding them of
their responsibilities to control funds, including the reconcili-
ation of financial management reports to supplementary records.
Management Response
auditors found that much of the time charged to Superfund in FY 1981
was not documented by timesheets or other methods, that some time charged
was in fact spent on non-Superfund tasks, and that some time that was spent
on Superfund tasks was charged to other appropriations.
Some offices in the Agency have already initiated Superfund timekeeping
procedures, and we are building on this effort. The Agency has recently
developed a new time distribution policy which will be formalized and
submitted to you next week. Subsequent to your review, the Agency will
issue the policy and revise chapter 7 of the Timekeepers Manual. A
statement of this policy will also be included in appropriate allowances
sent to all EPA offices. Where feasible, the proposed time distribution
policy will be consistent with recommendation 4. The proposed policy
will not require documentation of charges to non-Superfund accounts. No
other program in the Agency requires that level of substantiation. Vie
deem it inefficient to spend precious time building an audit trail that
will not be used.
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Recanroendation 2 appears to be a satisfactory method of substantiating FY
1981 charges that did occur, and will be implemented where legally and
technically feasible. It should be noted, however, that it makes no
allowance for charging FY 1981 for work performed on Superfund that was
not previously charged.^ Che problem with reconroendation 4 is that if an
office had site-specific and non-site-specific functions and not enough
Superfund payroll to cover both, strict application of this recownendation
could result in exhaustion of Superfund payroll costs on non-site-specific
efforts if they occurred before the site-specific work. This would leave
only normal operating funds to cover the site-specific work.
QIC's Comments
The proposed policy will not require documentation of charges to non-
Superfund accounts. Discussions with senior Agency personnel revealed
they wanted to continue using the labor exception method to account for
CERCLA salary costs. In our opinion, the labor exception method is not
acceptable to account for salary costs. We recommend that all employees
who work on CERCLA activities maintain timesheets that will account for
all their time within any given day. The maintenance of timesheets is
not a time consuming task, and we will be substantiating that CERCLA
salary costs are supported by timesheets.
Although other program offices are not currently requiring the same level
of substantiation that is required under CERCLA, we believe management
should study and consider making such a requirement. We have not performed
an Agencywide review, but an audit performed in Region 4 pointed out
that employees of other programs frequently worked on activities other
than those covered by their assigned fixed account number. Salary funds
are budgeted and allocated on an account number basis. Comparisons of
actual with budgeted efforts may be distorted if the accounting system
does not always reflect the true distribution of employee labor effort.
We concur with management's comments that CERCLA costs incurred after
June 8, 1981 that were not previously charged should be charged to
Superfund. We also concur with management's comments on recommendation
4; however, a policy statement is needed to address this issue.
Rent, Communication, and Utilities
The Agency needs to develop an acceptable cost allocation plan to recover
support service costs (rent, communication, and utilities) from Superfund.
During fiscal 1981, the Agency obligated $670,190 to reflect Superfund's
share of support service costs. Of the total $670,190 obligated, we
tested $663,315^(99 percent). We have questioned $20,545 and set aside
$630,000 of support service costs because: (1) supporting documentation was
not available for review ($630,000); (2) the allocation was not equitable
($15,927); and (3) the charge was not directly related to the CERCLA
program ($4,618). Details of costs questioned and set aside are shown
in Exhibit F.
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CERCLA states under Section 111 (a) that "The President shall not
pay for any administrative costs or expenses out of the Fund unless such
costs and expenses are reasonably necessary for and incidental to the
implementation of this title." The Agency incurred various expenses
incidental to several programs, including the CERCIA program. A portion
of these costs was allocated to Superfund. To ensure that indirect
costs allocated to a program are fair and reasonable, the Agency needs to
accumulate the actual costs incurred; identify and document the base
which best measures the relative degree of benefit each program received;
and compute each program's share of actual costs using the selected base.
The allocation of rental and communication costs by Headquarters and two
regional offices was not equitable. In two instances, the allocation
was based on budgetary figures. In our opinion, budgetary figures are
not a reasonable base upon which to allocate costs. Space or workyears
would be a more equitable base. Costs should be allocated by means of a
documented base which best measures the relative degree of benefit. We
have set aside $630,000 in this .cost category because the supporting
documentation was not available to substantiate the reasonableness and
equitability of the allocation.
We have questioned $15,927 of obligations charged to Superfund for the
chargeback of support services at the Cincinnati Municipal Environmental
Research Laboratory (MERL). The procedures used by the Cincinnati
Financial Management Office (FMO) to allocate EPA Headquarters support
services to EPA activities in Cincinnati were not equitable. As a result,
the allocation of support services to Superfund was overstated by $15,927.
We have questioned $4,618 obligated and disbursed for utility services for
the lab at Edison, Mew Jersey. The $4,618 utility bill was originally
charged to another program, but was transferred to Superfund by an adjusting
entry made by the Cincinnati FMO. There was no supporting documentation
at the FMO to show why this expense was charged to Superfund. According
to MERL's written response to the draft audit report, this charge was
made to Superfund to offset numerous other unreoovered charges to
Superfund during fiscal 1981. We have questioned the $4,618 because it
was not specifically related to CERCIA activities.
In order to reduce the potential for misallocation of costs to Super-
fund, the Agency needs to develop and implement policies and guidelines
to ensure the consistent allocation of support costs throughout the
Agency. Any allocation plan must reflect the actual degree of benefit
received by each program.
Recommendations
We recommend that: .
1. The Assistant Administrator for Administration reduce Super-
fund obligations by $20,545 and transfer these costs to the
proper operating appropriation.
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2. The task force prepare an equitable cost allocation plan for
rent, communication, and utilities, and then adjust the
Superfund obligations as necessary to reflect the CERCLA
program's share of fiscal 1981 support service costs.
Unless such-an allocation plan is prepared, Superfund obli-
gations should be reduced by the $630,000 of unsupported
charges.
Management Response
The. auditors found two situations that caused these recommendations.
First, support costs were charged based on budgeted amounts or estimates.
Second, costs that were inappropriate were charged to Superfund accounts.
Recommendation 1 corrects these latter charges and will be implemented,
where legally and technically feasible. Recommendation 2 requires that
an allocation plan be prepared to substantiate actual FY 1981 and future
costs. Initial efforts to prepare this plan have begun in the Office of
Administration. Where legally and technically feasible, the plan will
be used to make adjustments to FY 1981 and actual charges for FY 1982.
Equipment, Supplies, and Materials
During fiscal 1981, the Agency obligated $2,617,853 for equipment,
and $273,642 for supplies and materials. Of the total amount obligated
($2,891,495), we selectively tested $1,219,141 (42 percent). We have
questioned equipment, supplies, and materials costs of $125,425 because
(1) there was insufficient documentation to support cost allocations and
(2) the items purchased were for general support of the Agency rather
than primarily for CERCLA activites. Details of questioned costs are
shown in Exhibit H.
The methods used to determine administrative nonpayroll costs applicable
tp Superfund were not always adequate. Generally, these costs were
incurred by support offices with CERCLA responsibilities rather than
the CERCLA program office. In most instances the decision to charge
Superfund for the cost was based on an unsupported workload or usage
estimate. Consequently, there was no basis to determine whether these
costs benefited CERCLA activities in proportion to the amount charged to
Superfund. In some instances, it appeared unlikely that CERCLA benefited
from the expenditures. As cited previously, administrative costs were
limited by section lll(a) of CERCLA to those which were "reasonably
necessary for" or "incidental to" CERCLA. Expenses are "necessary" or
"incidental" to a program if they are needed for the "proper execution"
of that program. The general rule is that "necessary expenses" must
have a direct connection to or be essential for carrying out the stated
general purpose for which funds were appropriated.
Superfund was charged for the cost of certain equipment, supplies,
and materials which, by nature, appeared to be suitable for applications
and uses other than by the CERCLA program. If a cost is incurred that
can benefit more than one objective, procedures must be developed to
determine an equitable share for each objective.
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Fbr example, .the Central Regional Laboratory (Region 5) charged $19,427 for
general purpose equipment, supplies, and materials to Superfund. Because
the Central Regional laboratory provides general analytical and technical
support to various EPA program offices, it appears the equipment and
materials purchased with'Superfund monies will benefit other programs as
well. The Laboratory maintained no records to show the actual utilization
of equipment and supplies by the various programs. Allocation of costs
was based on management's estimate of the workload and budget resources
available. Consequently, there was no assurance that these allocations
were reasonable and proper.
In other cases, items purchased appeared to have no direct benefit to CERCLA
activities. This was evidenced at two regions. In Region 5, ADP terminals
costing $5,874 and office furniture costing $3,086 were purchased with
Superfund monies. In Region 3 a photocopier costing $40,000 and a
video cassette recorder costing $1,200 were charged to Superfund. In our
opinion, these purchases were for the general support of the Agency and
CERCLA received minimal or no real benefit.from these expenditures. In
addition, CERCLA personnel at Region 5 had no knowledge of the office
furniture purchased, and we could not locate the chairs and desks purchased
with Superfund monies.
t • : •
Recommendations
We recommend that:
1.. The Assistant Administrator for Administration reduce Superfund
obligations by $125,425 and transfer these costs to the
. proper operating appropriation.
2. .The task force:
a. establish procedures to ensure that Superfund is charged
in proportion to the benefits received when an item
purchased can benefit more than one objective. Such pro-
cedures might include the maintenance of equipment utilization.
records or the development of fee schedules for laboratory
services.
b. develop and implement policies and guidelines to ensure that
future acquisitions have a direct connection'to or are
essential for carrying out the stated general purpose
for which funds are appropriated. Procedures could
include a Headquarters prior approval requirement for
certain items (camera, video cassette recorders, photocopy.
machines) and items with a unit price in excess of a
, . set financial limit.
t
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Management Response
These reoonroendations resulted from findings that some offices have
charged Superfund for the full purchase cost of certain equipment and
supplies that were only partially, or were not, used for Superfund (or
where Superfund use was undeterminable).
Discussions with the relevant offices will be held by the Office of
Administration to determine the technical and legal feasibility of
implementing recommendation 1. Portions of recommendation 2 have already
been implemented. For example, the Assistant Administrator for Administration
is currently signing off on all Agency equipment purchases in excess of
$5,000. In addition, we are reviewing alternative methods of documenting
purchases made with Superfund money* One method being reviewed was
recently implemented by the Office of Administration for internal use.
It established approval levels and requires the written justification of
the use of Superfund monies.
Other Miscellaneous j^harges Unrelated to CERCIA
We found isolated instances where contract costs unrelated to CERCLA
activities were inappropriately charged to Superfund. At the Research
Triangle Park Environmental Monitoring Systems laboratory (EMSL), $150,000
in unused extramural funds were "escrowed" under a general purpose contract
to avoid returning them to Headquarters at the end of the fiscal year.
The extramural funds of $150,000 were obligated in September 1981 by
modifying an existing contract. The existing contract was a general
purpose contract for quality assurance and technical support for the
State, Local Air Monitoring System (SLAMS). The funds were added to the
contract under the limitation of funds clause to cover the contractor's
performance for the contract period ending December 30, 1981. EMSL
personnel stated that: (1) the extramural funds were obligated under the
contract as a means of escrowing them so that the funds would not be
lost if they were returned to EPA Headquarters at the end of the fiscal
year; and (2) the escrowed funds would be returned to the CERCLA program
when the fiscal 1982 air program allowance was received. Based on the
statements of EMSL personnel, it was apparent that the extramural costs
were not "reasonably necessary for" or "incidental to" the implementation
of CERCLA and, as such, were not chargeable to Superfund. As a result,
we have questioned the $150,000 charged to Superfund by EMSL.
At the Cincinnati MERL, $11,335 was charged to Superfund for a contract
which did not benefit the CERCLA program. This contract was to close
out and remove all exposed force main and electrical conduit at three
pump stations. Program representatives agreed that the obligation should
not have been charged to Superfund. However, they explained that this
contract was obligated to Superfund to offset numerous other costs that
f
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should have been charged but were not because Superfund monies were not
available until the fourth quarter of fiscal 1981. We have questioned
the $11,335 as invalid Superfund costs.
Recommendations -
mend that:
1. The Assistant Administrator for Administration deobligate
EMSL and MERL contract costs that were inappropriately charged
to Superfund and transfer the costs to the proper appropriation.
2. The task force issue a directive to all CERCLA program offices
and support offices with CERCLA responsibilities, limiting
Superfund obligations to only those items which are necessary
for and incidental to CERCLA activities.
Management Response
The auditors contend that two contracts were inappropriately charged to
Superfund accounts. If the auditors' contention is true, which we will
seek to determine, then recommendation 1 should be implemented by the
Office of Research and Development. We will address reocnmendation 2 as
part of our review of alternatives to document Superfund purchases.
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OTHER AREAS REQUIRING MANAGEMENT ATTENTION
During our audit, we noted additional areas where management attention
is needed. Two such areas directly related to CERCLA were timely
definitization of contracts for emergency response actions and controls
over property purchased'with Superfund monies. Two other areas, more .
general in nature, which impacted the Superfund appropriation were
loss of discounts due to untiinely payment of invoices and hurry-up
year-end procurement actions.
Definitizing Contracts
The Procurement and Contracts Management Division (PCMD) needs to
definitize contracts awarded under emergency procurement procedures
in a timely manner. During fiscal 1981, 17 such contracts were awarded
with obligations totalling $3,307,313. None of the contracts were
definitized within 30 days as required by the emergency procedures.
PCMD officials told us. that none had been definitized by the end of
January 1982, at which time all of the awards were at least 123 days old
and some were over 184.days old.
These,emergency awards were made via a Notice to Proceed with Emergency
Response to Hazardous Substance Release, EPA Form 1900-49 (Notice to
Proceed). The Notice to Proceed is. a preliminary contractual instrument
that authorizes the contractor to start work. The initial notice may
obligate up to $50,000. Payments to the contractor are for time and
materials, i.e., on the basis of direct*labor hours at fixed hourly
rates, with material, subcontracts, and travel'reimbursed at actual cost.
The Notice to Proceed must be definitized, i.e., replaced by a negotiated
contract, within 30 days. Article III of the Notice to Proceed states:
B. .This notice to proceed will be superseded by a definitive
contract within thirty (30) calendar days after the effective
date of this notice, unless an extension thereof is granted by
the designated Contracting Officer. Failure to execute a defi-
nitive contract within the time specified above will be treated
as a dispute under the 'Disputes' clause of this notice to proceed.
The contracting officers from PCMD should have conducted negotiations to
definitize these contracts. These type of negotiations should generally
concentrate on the type of contract, the scope of work, and the price.
Within 30 days, the situation usually should have stabilized enough for
the scope of work to be clarified. The contracting officer can then
select the best type.of contract and negotiate the price. Meanwhile,
the work progresses and the contractor is paid. However, the rates of
reimbursement under the Notice to Proceed are from the contractor's
price list. The Agency negotiates these prices only to the extent of
obtaining long-term rates, such as weekly or monthly, and lowering rates
which are obviously unreasonable.
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ttie contracting officers had extended the period of performance for.
these 17 contracts and increased the obligated amount where necessary.
According to PCMD, the contracts were not definitized in a timely manner
because: (1) PCMD lacked sufficient contracting officers; (2) the scope
of work was too variable to definitize it, especially when drums were
involved; and, (3) requested audits of the price lists were not performed.
We did not extend our audit to determine the adequacy of PCMD resources.
Not all sites contain drums, but the scope of work is difficult to specify
when drums are involved. The contents of each drum may or may not have
to be analyzed. Some drums may contain numerous vials, all of which
have to be analyzed. Additionally, drums may be buried at the site.
Each of these situations has occurred. However, the contracting officer
can select a type of contract to suit such variability, for example,
cost-reimbursement contracts could be used.
. ' *
The failure to definitize contracts in a timely manner weakens the
'Agency's negotiating position, a ice the work .has been completed, it may
be difficult to reduce th<=> price since the contractor will probably have
been paid 95 percent or the amount billed the Agency* In addition, on-soene
coordinators (CGCs) informed us their job was made more difficult because
they did r.oc always know what was to be paid under the undef initized
contracts. We are currently performing audits of emergency response
contracts and will be issuing reports detailing any effects of failure .
to definitize the contracts in a timely manner.
Recommendation
We recommend that PCMD take appropriate actions to definitize existing
contracts and ensure future contracts are definitized in a timely manner.
Management Response
During FY 1981 and even now, in each emergency response in which EPA
becomes involved where contractor support is needed immediately, such
support is obtained under an emergency contracting procedure called a
"Notice to Proceed with Emergency Response to Hazardous Substance Release."
This procedure allows a contractor to start work and spend up to $50,000
per site. The Notice to Proceed must be definitized, i.e., replaced with
a negotiated contract, within 30 days unless properly extended. As of
January, when all of the notices issued in FY 1981 were at least 124 days
old, none had been definitized.
While all of the notices have been properly extended, it is in the Agency's
best interest to definitize these contracts as early as possible. In the
short run, the Office of Administration has redirected its Superfund
contracts personnel to address this problem. Progress is being made.
For the long run, the Agency is now in the process of awarding a national
contract to cover emergency responses so that the Notice to Proceed
procedure may be eliminated.
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Property Management
We requested a listing of all CERCLA property at the beginning of our
audit, but were informed such information was not available in EPA's
property management system. The $2,617,853 of property purchased with
Superfund monies was not identified as such in the Agency's property
records. Property purchased for CERCLA was commingled in the property
accounts with all other Agency property.
The Environmental Protection Property Management Regulations (EPPMR)
generally provide that appropriate controls be exercised, and prescribed
procedures followed, to ensure proper accountability over the acquisition,
use, and disposition of all property. However, with the advent of the
CERCLA program, new policies and procedures need to be promulgated and
implemented to govern the acquisition, use, and disposition of property
furnished in whole or in part with Superfund monies.
To adequately identify and account for CERCLA property, separate property
accounts and/or a unique identification number need to be established
for all accountable items of property purchased in whole or in part with
Superfund monies. Accountable items are those which cost over $500 or
are sensitive in nature. Separate identification of and accountability
over CERCLA property would provide "visibility" and enable more effective
management. In addition> if CERCXA property is transferred out of the
CERCLA program or disposed of in any other way, the fund should be credited
with the residual value of the transferred property. We believe such an
adjustment is necessary because of the uniqueness of CERCLA funding and
the limitations placed on CERCLA, expenditures. EPA should be able to
clearly demonstrate that property acquired for CERCLA is being used for
CERCLA, and that Superfund receives appropriate credit for any property
transferred to other programs.
We also found that many of the property accountable areas were not
in compliance with the procedures prescribed in the EPFMRs. Weaknesses
and noncompliance were found in the areas of: (1) tagging of equipment;
(2) input to and update of the property records; (3) transfer of property
between custodial areas; (4) performance of annual inventories; and (5)
followup on missing items of property. These findings were reported to
or discussed with appropriate responsible Agency managers in each of the
applicable component audits.
Recommendations
We recommend that the. task force:
1. Develop and implement guidance to establish and maintain some
means by which CERCLA property can be uniquely identified
through the Agency's property management system.
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2. Promulgate and implement policies and procedures specifically
governing the acquisition, use, and disposition of CERCLA
property. The policies should include a requirement that Super-
fund be credited with the residual value of CERCLA property
transferred to another program.
Management Response
These recommendations result from an audit of all Agency property since
Superfund property could not be separately identified and subjected to
audit. While the recommendations appear reasonable, the Agency needs to
examine the legal and technical feasibility of implementing these changes.
Discounts Lost
The Agency was unable to take advantage of substantial discounts offered
for prompt payment because of delays in processing contractor invoices.
A review of all contractor invoices for emergency response actions
submitted to the Research Triangle Park FHO :*evealed an average processing
tijne of 37 days. Contractors generally offered discounts for payments
made within 15 days. Due to the limited number of payments, there were
no discounts lost in fiscal 1981. However, a limited review of invoices
processed for Region 4 contractors during the first quarter of fiscal
1982 disclosed $14,510 in discounts lost due to processing delays.
According to financial management personnel, processing delays were pri-
marily attributable to the OSCs' failure to approve invoices in a timely
manner and return them to the FMO for further processing. A guidance
document prepared by the Financial Management Division in July 1981,
entitled On-Scene Coodinator User Manual for Financial Reporting in the
Hazardous SubstanceResponse Program, states that the OSC is responsible
for reviewing and certifying contractor invoices prior to payment. In
addition, the OSC must approve and certify the invoices within two workdays
after receipt. Another guidance document, entitled Interim Emergency
Procurement Procedures for Hazardous Substance Response Program (revised),
prepared by the Procurement and Contracts Management Division, December
5, 1981, states: "Within seven (7) calendar days of receipt of the copy
of the invoice or voucher, the OSC shall sign the certification and
forward the certified copy of the invoice or voucher to the paying office."
Compliance with either guidance document would reduce processing time by
a minijTum pf six days. In addition, EPA's accounting Manual/ dated July
1979, requires the FMOs to expedite payments when necessary ~to take
advantage of discounts.
Some contractors are1 offering discounts of five percent for payment within
15 days. The Agency will be unable to take advantage of these discounts
unless substantial improvements in processing time are made by both the
OSCs and the FMOs. If EPA is unable to consistently meet the 15-day
limitation on invoice processing time, the Agency should consider making
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payments based solely on the contractor's certification. This would
enable the Agency to reduce processing tine and take advantage of discounts
offered for prompt payment. The invoices could still be reviewed by the
OSC, and any adjustment could be made against the next invoice submitted
by the contractor. Any risk in this practice could be reduced by increasing
the standard contract retainage. Also, payments could be suspended if
the OSC determines from daily monitoring that the contractor's performance
is unsatisfactory. •
The accounting system has a general ledger account (account number 601.8)
in which discounts lost should be recorded. The use of the discounts lost
account provides a good control for management to quantify the amount of
lost discounts. Upon evaluation of the account, management can prepare
an action plan to eliminate or lessen the loss of discounts.
Recommendations
We recommend that the Assistant Administrator for Administration:
1. Issue guidance to inform OSCs of the need to process
contractor invoices in a timely manner so the Agency
can take advantage of discounts offered for prompt payment.
fe
2. Consider changing current procedures to allow payments based
solely on a contractor's certification, if EPA is unable to
consistently take advantage of discounts offered for prompt
payment.
3. Enphasize to the Financial Management Offices the importance
of expediting the processing of invoices in instances where
discounts are offered for prompt payment.
4. Instruct the Financial Management Offices to use general
ledger account number 601.8, Discounts Lost, to record dis-
counts offered but not taken on vendors' invoices.
Management Response
The auditors found that invoices were not being paid promptly enough to
allow paying offices to take prompt payment discounts offered by Superfund
emergency response contractors.' They cited a requirement that the on-
scene coordinator approve and certify contractor invoices before payment
.is made as one factor that prevents payment from occurring promptly.
Recommendation 2 suggests that this requirement be dropped if the process
cannot be otherwise speeded up through recommendations 1 and 3. I do not
accept recommendation 2 because it is not a good business practice. The
Agency has recently implemented the project officer certification process
on all contracts and grants after finding that one grantee, because no
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one had to certify the appropriateness of his invoices, had drawn the
entire balance from his letter of credit long before he completed work or
expended funds on the grant. Seven to eight years ago, EPA abandoned
project officer invoice certification over this same issue on the grounds
interim audits would be regularly performed. These have not been done on
a timely basis, and it is often years before final audits are completed.
In lieu of prompt interim audits, the most appropriate defense against
this type of abuse is project officer invoice certification.
QIC's Comments
Management, while rejecting recommendation number 2 in its entirety
as a poor business practice, never addressed recommendations 1, 3, and
4. During our conference with senior Agency staff, we were informed
that they are continually sending memos to EPA's Financial Management
Offices directing them to take advantage of discounts offered. A good
control for management to quantify the amount of discounts being lost
would entail recording all lost discounts in a general ledger account.
Management would then have an accurate accounting (dollar value) of
discounts lost. Oily then would management be capable of analyzing the
effect of the lost funds on the program and seriously considering
recommendation number 2.
Year-End Spending
At EPA Regions 9 and 10, "llth hour" expenditures of $46,802 were
charged to Superfund during fiscal 1981. Regional officials told
us they were contacted by EPA Headquarters personnel near the end of the
fiscal year and asked if they could use (obligate and spend) additional
Superfund equipment money, the motive for this action was unclear, but
the possibility exists that some Headquarters personnel believed
Superfund was a one-year appropriation, and perhaps did not want the
funds to revert to the Comptroller's Office at the end of the year.
As a result, Region 9 obligated $4,485 and Region 10 obligated $42,337.
The purchased or ordered equipment was charged to the Headquarters Office
of Emergency and Kernedial Response.
Hurry-up year-end spending does not ensure efficient and economical
procurement actions. Such spending is contrary to the Office of Manage-
ment and Budget (OMB) Policy Letter 81-1, "Procurement Procedures, Advance
Procurement Planning, and Review of End-of-Year Purchases," dated August
13, 1981. OMB Policy Letter 81-1 states;
It is the responsibility of the head of each agency to assure
efficient and economical procurement. Consistent with that
responsibility is an obligation to reduce wasteful practices
resulting from hurried unnecessary end-of-year procurement.
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FGCcran6ndatd.cn
We recommend that the Assistant Administrator for Administration inform
all EPA offices of the limitations OMB Policy Letter 81-1 placed on
hurry-up or unnecessary end-of-year procurements.
.*
Management Response
This recommendation resulted from a finding that Regions 9 and 10 were
allowed to spend headquarters funds late in the fiscal year* The Agency
has internal procedures that meet the requirements set forth in CMS policy
letter 31-1. The Superfund program is funded through a no year appropriation,
with all funds available until expended. Additionally, congressional and
OMB restrictions on fourth quarter expenditures did not pertain to this
program in 1981. As the Agency did not have authorization to obligate
Superfund dollars until the final quarter of fiscal 1981, I do not concur
with the presumption that these expenditures were conducted in a hurry-up
fashion.
Comments
Based on discussions with responsible regional officials, it appeared
that these were "llth hour" expenditures. Regional personnel were
contacted in September 1981 and asked if they could use (obligate
and spend) additional Superfund equipment money before* the end of the
fiscal year. These appeared to be isolated instances and not a part of
a pattern. However, such hurry-up year-end spending does not ensure
efficient and economical, procurement actions.
Matthew N. Jfevick
-------
-28-
Audit Report E5eH2-ll-0012-20708
Exhibit A
Status of Hazardous Substance Response Trust Fund
' September 30, 1981
(Note 1)
Balance-Beginning of Period
Receipts
Transfer from Coast Guard
Excise Taxes
Appropriation from General Fund
Interest Income
Total Receipts
Expenditures
Environmental Protection Agency
Balance-End of Period
Current
Month .
$113,274,861
23,900,000
1,330,456
$ 25,230,456
1,570,639
136,934,678
Fiscal Year
To Date
6,742,875
127,900,000
9,000,000
1,330,456
$144,973,331
8,038,653
136,934,678
Statement of Financial Condition
Assets:
Undisbursed Balance (20X8145)
(68-20X8145)
(15-20X8145)
Investments: MK Bills
Maturing December 11, 1981
Less Unamortized Discount
Total Assets
Liabilities:
Equity:
Excess Assets over Liabilities
Total Liabilities and Equity
8,839,154
49,707
173,280
135,935,000
-0-
136,934,678
References
Schedule A-l
Note 2
9,062,141 I/
135,935,000
8,062,463
136,934,678
136,934,678
I/ Uninvested balance of appropriation is $9,062,141.
-------
Exhibit-A
Page 2 of 2
-29-
Referencest ;
Note 1: This status report was developed by the Department of Treasury.
Note 2: This figure represents the amount which the Department of Treasury
transferred to EPA's Treasury account from Superfund for disbursements
during fiscal year 1981.
-------
-30-
Aiidit Report E5eH2-ll-0012-20708
Schedule A-l
Environmental Protection Agency
Status of Hazardous Substance Response Trust Fund
Transfer From U.S. Coast Guard
September 30, 1981
Tbtal Transfer
Expenditures
(20X8145)
EPA Trust Fund (68-20X8145)
Reimbursement to U.S. Coast Guard
Balance of Transfer from U.S. Coast Guard
(20X8145)
Current
Month
1,524,227
Fiscal Year
. to Date
$6,742,875
5,218,648
1,524,227
Note: The remaining unexpended balance from U.S. Coast Guard Transfer in the
Hazardous Substance Response Trust Fund (20X8145) is pending additional
billing from U.S. Coast'Guard. This statement includes June 1981
billing.
-------
-31- *
Audit Report E5eH2-ll-0012-20708
Exhibit B
Hazardous,Substance Response Trust Fund
Statement of Financial Activity
Audit Sample Defined by Location
Region
1 S
2
3
4
5
6
7
8
9
10
Laboratory—
Cincinnati
Laboratory-
Research Triangle
Park
Laboratory—
Las Vegas
Headquarters
(Wash., D.C.)
Approved
Operating
Plan
307,100
550,000
398,700
499,600
745,100
430,600
240,900
180,200
323,400
187,000
Obligated
(.Universe)
$ 251,974
435,948
218,839
313,581
436,216
300,298
14,664
128,357
133,568
128,716
Audit
Sample
$ 233,590
171,278
209,876
229,426
323,352
131,407
115,606
120,263
Percentage
Sampled
93
39
96
73
74
44
87
93
References
Note 1
Note 1
Total
References:
13,843,415
16,908,054
2,305,600
59,880,300 4,723,798
$63,742,900 $40,143,028
10,017,617
13,472,108
1,325,536
$26,350,059
72
80
28
66
Notes 2 & 3
Notes 2 & 3
Nates 2 & 4
Note 1: Audits were not performed in Region 7 or Region 8 due to the
relatively low dollar value obligated against Superfund.
Note 2: The budgetary figure for the laboratories was included under the
Headquarters'budget.
Note 3: The primary audit areas at these locations were the Cincinnati
MERL and FMO and the Research Triangle Park EMSL and FMO. The
Cincinnati FMO is responsible for interagency agreement and
contract payments. The Research Triangle Park FMO is also
responsible for contract payments.
-------
Exhibit B
Page 2 of
-32-
References; (Continued) >
Note 4: The Las Vegas FMO is responsible for cooperative agreement pay-
ments. We did not perform an on-site audit at this location
since there was only one cooperative agreement awarded during
fiscal 1981 (State of New Hampshire—$2,305,600) and no disburse-
ments were made. In addition, the Office of the Inspector General
is now auditing this cooperative agreement.
-------
-33-
Audit Report E5eH2-ll-0012-20708
Exhibit C
Hazardous Substance Response Trust Fund
Statement of Financial Activities and Results
of Audit by Object Classification
Total Obligations p__
Obligations Accepted Questioned" Set Aside' References
$ 2,424,020 $ 121,247 $
312,471 301,962 10,509
$2,302,773 Exhibit D
Exhibit E
Object Class
Description
Personnel Compensation
and Benefits
Transportation of
Persons and Things
Rent, Gonaiunication,
and Utilities
Printing and
Reproduction
Contractual
irvices
Equipment, Supplies,
and Materials
Interagency Agreements
Contracts
Research Grants
Cooperative Agreements
{with State Governments
Total
References . „
Note 1: Costs were accepted only to the extent that valid obligation records .
were maintained. At a later date, final audits of contracts, interagency
agreements and cooperative agreements may disclose questioned costs.
670,190
6,691
108,826
2,891,495
7,731,375
23,231,594
460,766
2,305,600
40,143,028
19,645 20,545
6,691
86,391 22,435
2,766,070 125,425 .
7,731,375
23,041,594 190,000
460,766
2,305,600
$36,841,341 $368,914
630,000 Exhibit F
» -
Exhibit G
Exhibit H
Exhibit I,
Note 1
Exhibit J,
Note 1
Note 1
Note 1
$2,932,773
-------
-34-
Audit Report E5eH2-ll-0012-20708
Exhibit D
Hazardous Substance Response Trust Fund
Schedule of Personnel Compensation and Benefits
Audit Areas
Region 1
Region 2
Region 3
Region 4
Region 5
Region 6
Region 8
Region 9
Region 10
Headquarters
Total
References;
•total
Obligations
(Note 1)
$ 162,790
226,200
117,331
161.037
327,106
137,333
99,127
79,864
110,774
J,002,458
$2,424,020
Obligations
Accepted
Questioned
Set Aside References
121,247
$121,247
$ -0-
$ 162,790
226,200
117,331
161,037
327,106
16,086
99,127
79,864
UO, 774
1,002,458
Note 1
Note 1
Notes 1 & 2
Notes 1 & 3
Notes 1 & 4
Note 5
Note 1
(tote 1
Notes 1 & 6
$2,302,773 A
Note 1: With the exception of Region 6, where we found proper documentation
was usually maintained, we have disclaimed an opinion on personnel
condensation. Internal controls were not adequate, and necessary
supplementary records were not always maintained to support salary
costs charged to Superfund. We noted that in some cases Superfund
was overcharged, but in other cases Superfund was undercharged.
However, because timesheets were not kept by employees, we were not
always able to quantify this over- and under-charge. We have therefore
set aside all salary costs except for those incurred in Region 6.
For details, see the narrative portion of this report entitled
"Personnel Compensation and Benefits."
Note 2: Additional salary costs of $10,552 should have been charged to Super-
fund. These costs were payroll charges for the last two pay periods
of fiscal 1981, which were not recorded against Superfund.
Note 3: Additional salary costs, supported by timecards and other documentation,
amounting to $87,818 personnel compensation were not recorded against
the fiscal 1981 Superfund appropriation. The amount consisted of
the following:
-------
Exhibit D
Page 2 of 3
.35.
References; (Continued) ;
(a) Labor exceptions of $33,019 were recorded oh timecards,
but not properly recorded into the payroll system.
(b) Public Health Service employees' salaries totalling
$27,432 were.charged to the incorrect appropriation.
(c) B\d-of-year payroll costs totalling $27,367 were not
properly recorded. These payroll costs were incurred
during the last eight days of fiscal 1981. Because
* the end of the pay period did not coincide with the last
day of the fiscal year, the last eight days of fiscal
1981 were commingled with the first two days of fiscal
1982. The total payroll costs for this period (pay
period 01 of fiscal 1982) were recorded in fiscal 1982,
instead of being split between fiscal years 1981 and
1982. The $27,367 represents fiscal 1981 payroll costs
which were not recorded against the Superfund appropriation.
4: In Region 6 we have accepted all salary costs which were supported
by tiroesheets. We have set aside $16,086 of salary costs in Region
6 which were not supported by timesheets.
Note 5: Although we did not perform audits at Regions 7 and 8, we have set
aside salary costs because of the widespread problems concerning
the lack of adequate support documents noted in the other audit
areas.
Note 6: Personnel compensation was understated in some instances for
Headquarters personnel. Details of the understatements are as
follows:
a. The payroll system rejected $2,300 of site-related
time because the proper account numbers were not input.
The Agency uses the Departmental Integrated Personnel and
Payroll System (DIPS) operated by the Department of the
Interior. The Agency provides Interior with valid account
numbers each week, and DIPS personnel are responsible for
entering the account numbers in DIPS. During the fourth
quarter of fiscal 1981, the Agency informed Interior
that site-related data were not being accepted by DIPS.
DIPS personnel reviewed this procedure and told the Agency
that the problem was corrected. However, the problem was
not corrected until after September 30, 1981, and as a
result, site-related compensation incurred during fiscal
1981, was understated.
-------
Exhibit D
Page 3 of 3
-36-
Referencest (Continued)
The Economic and Policy Analysis Branch of the Office of
Planning and Evaluation failed to properly enter data on
the reverse side of the timecards. As a result, payroll
costs were understated by $2,250. However, discussions
with the employee disclosed that he worked on other
activities. Approximately 80 percent rather than 100
percent of his compensation should have been recorded to
Superfund. Consequently, Superfund was understated by
approximately 51,575 for this office.
The Financial Management Division recorded to Superfund
personnel compensation totalling $4,908 which it later
decided was inappropriate. FMD submitted EPA Form
2550-6, "Redistribution of Payroll Charges," to reverse
the charges. We found that the reversing entry was recorded
twice. Consequently, personnel compensation for Superfund
was understated $4,027 and fringe benefits $330.
-------
-37-
Audit Report E5eH2-ll-0012-20708
Exhibit E
Hazardous Substance Response Trust Fund
Schedule of Transportation of Persons and Things
Audit Area
Region 1
Region 2
Region 3
Region 4
Region 5
Region 6
Region 8
Region 9
Region 10
Lab. —Cincinnati
Headquarters
Total
References;
Note 1: Obligations were made against the Superfund appropriation
for motor pool charges which were not supported by adequate
documentation.
Note 2: The questioned travel costs in this regional office resulted
from six trips which did not appear to be related to the CERCLA
program ($1,799) and from accounting errors made by the finance
office ($810).
Total
Obligations
$ 16,450
; 18, 969'
13,476
24,871
15,475
26,180
7,276
17,477
t
3,771
' 64,934
103,592
$312,471
Obligations
Accepted Questioned
$ 16,450 $
11,069 7,900
10,867 2,609
24,871
15,475
26,180
7,276
17,477
3,771
64,934
103,592
$301,962 $10,509
References
Itote 1
Note 2
-
-------
-38-
Audit Report E5eH2-ll-0012-20708
Exhibit F
•*
Hazardous Substance Response Trust Fund
Schedule of Rent, Communication, and utilities
Audit Area
Region 2
Region 5
Region 6
Region 7
Lab.—Cincinnati
Headquarters
Tbtal
References:
Total
Obligations
$ 20,916
3,694
19,000
4,750
21,209
600,621
$670,190
Obligations
Accepted
$ 9,916
3,694
4,750
664
621
$19,645
Questioned
•> ,
$
20,545
$20,545
Set Aside
$ 11,000
19,000
600,000
$630,000
References
Note 1
Note 2
Note 3
Note 4
Note 1: Telephone costs of $11,000 were set aside because the cost allocation
plan for telephone expenses was not distributed equitably. 1b ensure
that indirect costs allocated to a program are fair and reasonable,
. the Agency needs to accumulate the actual costs incurred, identify
and document the base which best measures the relative degree of
benefit each program receives, and compute each program's share
of actual costs using the identified and documented base.
Note 2: Telephone costs were set aside because allocation was based on estimated
telephone use. No supporting documentation was prepared to show that
the allocation was fair and reasonable. Indirect costs need to be
allocated by means of a documented base which best measures the
relative degree of benefit.
Note 3: We have questioned $20,545 in obligations consisting of $15,927 for
chargeback support services (rental of space) and $4,618 for utility
services at Edison, New Jersey.
Ihe procedures used by the Cincinnati FMO to allocate EPA
Headquarters support services to EPA activities in Cincinnati were
not equitable. As a result, the allocation of support services to
Superfund was overstated by $15,927. During the fiscal 1981
zero base budgeting (ZBB) review and ranking process, the decision
was made to charge EPA programs for $3 million of Agency support
budget costs. EPA Headquarters was assessed the largest portion of
the total, while EPA field activities received proportionate shares.
-------
Exhibit P -
Page 2 of 3
-39-
References: (Continued)
Cincinnati's assessment was $210,000. This assessment was internally
allocated to programs by the Cincinnati FMO on the basis of work-
years—the ratio of total workyears within the individual program to
total workyears of all programs. Annual and monthly internal assess-
ments were revised quarterly. "Die only charge to a Superfund fixed
account number for this assessment appeared in the fourth quarter of
fiscal 1981.
MERL had 31.6 percent of the total workyears for Cincinnati activities
during the fourth quarter. Cn this basis, MERL was assessed $66,360
(31.6 percent of the total $210,000 chargeback). MERL, in turn,
allocated $16,590 to Superfund for the fourth quarter ($66,360 / 12 »
$5,530 x 3 months), or 100 percent of its chargeback for the fourth
quarter. However, our review showed that MERL charged only one
percent of its total workyears to Superfund. By using the workyears
allocation base, the current chargeback obligation against Superfund
should have been $664 computed as follows:
Total Chargeback Assessment . $210,000
X MERL's Percentage of Total Wbrkyears .316
Chargeback Assessed to MERL $ 66,360
X Percentage of MERL Hbrkyears Charged
to Superfund .01
Annual Chargeback Allocable to Superfund $ 664
As a result, Superfund was overcharged $15,927 ($16,591 - $664).
have questioned the $15,927.
We
Costs were obligated against Superfund for purposes unrelated to
CERCLA activities. This involved an obligation for utility costs at
the Edison, New Jersey, laboratory. An amount of $4,618 was originally
obligated and disbursed under an apparently correct appropriation.
However, it subsequently was changed by a journal entry and charged
against the Superfund appropriation. Cincinnati FMO officials could
not provide justification for this obligation to Superfund;. The
Edison, New Jersey, officials had no knowledge of the journal entry
changing the original obligation. Accordingly, we have questioned
the $4,618 as a charge to Superfund.
-------
Exhibit F .
Page 3 of 3
-40-
References; (Continued)
Note 4: The $600,000 set aside represented the amount allocated to the
CERCLA program at Headquarters for rent. Agency officials told us
that the program's share was estimated using the total Agency budget
and the Superfund budget.
The Agency lacked support that the allocation to Superfund was fair
and reasonable. . Neither the allocation plan determining the program's
share nor the confutation determining the $600,000 amount was available
for our review. In addition, the amount allocated generally should
not be based on budget figures. Actual costs should be allocated
by means of a documented base which best measures the relative degree
of benefit.
-------
Audit Report E5eH2-ll-0012-20708
Exhibit G
Hazardous Substance Response Trust Fund
Schedule of Other Contractual Services
Audit Area
Total
Obligations
Region 1 $ 5,171
Region 2 13,891
Region 4 . 717
Region 5 24,349
Region 6 150
Region 7 200
Region 9 . 484
Region 10 3,000
Lab—Cincinnati 16,132
Lab—Research, Triangle
Park 7,460
Headquarters 37,272
»tal $108,826
tferences:
Accepted
$ 5,171
13,891
717
13,249
150
200
484
3,000
4,797
7,460
37,272
$86,391
Obligations
Questioned
$
11,100
11,335
822,435
References
Note 1
Note 2
Note 3
Note 1: We have questioned obligations of $11,100 for contractual services not
related to CERCLA activities, these obligations consisted of $10,200
for a portion of a special utility cost for the Central Regional Labora-
tory and $900 for refurbishing office furniture. The special utilities
were for the operation, of the heating, cooling and ventilation systems at
the Central Regional Laboratory during the second shift (5:00 p.m. to
midnight).
According to the unit chief responsible for fund control, the work was not
related to Superfund activities, and the allocation of any portion of the
special utility charges was not correct. Apparently, the notation on the
obligation document distributing a portion of the cost to a Superfund account
was added after it was reviewed by the budget chief.
The obligation of $900 related to the cost of refurbishing nine desks.
The nine desks were a part of 40 refurbished for CERCLA. staff at a
cost of $4,000 ($100 per desk). We found that five desks were located
at the Office of the Inspector General, Northern Division, and four desks
could not be found. Since it did not appear that the nine desks were
being used for CERCLA activities, the $900 was questioned as a charge
to Superfund.
-------
EXnlDlt G
Page 2 of 2
-42-
References; (Continued)
Note 2: We have questioned $11,335 which represents an obligation for a
contract to close out three pump stations and remove all exposed
force main and electrical conduit. Cincinnati program officials
agreed that this contract had nothing to do. with CERQA. The
charge was made to Superfund to offset other expenses incurred on
CERCLA activities but not recovered by the MERL. Accordingly, we
questioned the $11,335 as a charge against Superfund. As of
September 30, 1981, no funds had been disbursed for this item.
Note 3: These costs were for a general purpose contract to perform quality
control tasks which are primarily related to flow measurement. The
contract was let by EMSL.
Although we have not taken exception to the contract at this time,
•the contract's scope of work is so general that it could be used to
perform services for programs other than CERCLA.
The Office of the Inspector General will closely review this contract
and any other general purpose contracts charged to Superfund for
indications of use by other programs. Vie will question any costs
not directly related to CERCLA.
-------
-43-
Audit Report E5eH2-ll-0012-2078
Exhibit H
Hazardous Substance Response Trust Fund
Schedule of Equipment, Supplies, and Materials
Total Obligations
Audit Area Obligations Accepted Questioned References
Region 1 $ 45,220 $ 45,220 $
Region 2 155,971 155,971
Region 3 88,023 46,823 41,200 Mote 1
Region 4 126,956 126,956
Region 5 61,499 16,645 44,854 Note 2
Region 6 112,748 93,960 18,788 Note 3
Region 7 9,714 9,714
Region 8 21,954 21,954
Region 9 35,742 35,742
^egion 10 11,171 11,171
|uab—Cincinnati 242,028 242,028
"Headquarters 1,980,469 1,959,886 20,583 Note 4
Total $2,891,495 ' $2,766,070 $125,425
References;
Note 1: Equipment purchased with Superfund money was not being adequately
accounted for and controlled. In addition, the Superfund appropriation
was charged for general purpose equipment. The items in question
were a photocopier costing $40,000 and a video cassette recorder
valued at $1,200. Use of both pieces of equipment were not restricted
to the CERCLA program, but appeared to be for general use of the
Region.
Note 2: We have questioned $44,854 charged to Superfund. This figure is composed
of $12,642 for supplies and materials and $32,212 for equipment.
Supplies and materials ($12,642)
a. There was $10,217 charged by the Central Regional Laboratory
for tubing*to hook up equipment ($1,912); expendable testing
supplies ($4,221); and materials to modify analytical equipment
($4,084). The laboratory's major responsibility was to provide
analytical and technical support to various EPA regional offices.
However, records were not maintained to show the utilization of
-------
Exhibit H .
Page 2 of 5
-44-
References: (Continued}
supplies and materials by the different programs. The costs
for supplies and materials were charged to different program
accounts based on management's estimate of the workload and
budget resources available. Costs need to be allocated by means
of a documented base which best measures the relative degree of
benefit received.
b. A $2,400 charge to Superfund for xerox paper represented a
share of a large single purchase for the Region; the distribution
was based on a workload estimate. However, records to support
the distribution were not available. Consequently, we have
questioned the obligation as a charge to Superfund.
c. An erroneous obligation of $25 for supplies and materials was
made as a result of a duplicate payment.
Equipment ($32,212)
We have questioned $32,212 of equipment obligations because documentation
was not available to show that the benefits derived by CEKCLA were in
proportion to the costs obligated. An explanation for each item
questioned can be found in the paragraphs noted next to the item in
the schedule below.
Amount
Description Questioned Note
Word Processors $13,102 d.
ADP Terminals 5,874 e.
. Gas Chromatograph 9,210 . f.
Office Furniture 3,086 g.
Untimely Obligation 940 h.
Total $32,212
d. Word Processors
Superfund was charged $15,800 as its share of the total cost paid to
purchase six Lexitron word processors. The units, which were initially
leased, were purchased outright in September 1981. Although none of
these six units was specifically designated for Superfund, one unit
was used to replace an older Lexitron transferred from the Surveillance
and Analysis Division to the Office of Superfund. The replacement
Lexitron included additional communication capabilities and cost
$8,098. The unit transferred to the Office of Superfund was also
purchased outright in September 1981 for $2,698. This cost was
charged to a management account instead of Superfund.
-------
Exhibit H •
Page 3 of 5
-45-
Ref erences: (Continued)
We were informed that the $15,800 charged to Superfund was not
related to the cost for any specific Lexitron, but rather was
an estimate based on usage. However, documentation was not
available to support the estimate. Based on available documen-
tation, it is our opinion that the only amount allocable to
Superfund was the cost of $2,698 for the Lexitron unit at
the Office of Superfund. As a result, we have questioned net
obligations of $13,102 ($15,800 - $2,698).
e. ADP Terminals
Total costs of $5,874 for the purchase of two data processing
terminals were charged to Superfund. However, it did not appear
that the equipment was used for CERCLA activities. Both terminals
were located at Region 5's central administrative office and
were used for general purposes. Two different terminals were
actually located at the Office of Superfund .and were used
exclusively by CERCLA personnel. CERCLA1s units were purchased
in 1978 and were made available at no additional cost. As a
result, we concluded that CERCLA did not benefit from the
expenditure in proportion to the costs charged.
f.. Gas Ghromatograph
The Central Regional Laboratory charged Superfund $9,210 for
a gas chromatograph. The laboratory's major responsibility was
to provide analytical and technical support to the various EPA
regional offices. However, records were not maintained to show
the utilization of equipment by the different programs. Although
the specially equipped chroma tograph was charged 100 percent to
Superfund, we were informed that it would also be used for
other programs.
g. Office Furniture
Costs of $3,086 were for the purchase of ten desks and chairs.
The ten desks and chairs were initially leased for the Waste
Management Branch for a period of six months and subsequently
purchased in July 1981. CERCLA. personnel had no knowledge of
the purchase, and we could not locate the items.
-------
Exhibit H
Page 4 of 5
-46-
References: (Continued)
Note 3:
h. Untimely Obligation
The untimely obligation occulted when a fiscal 1981 account
number was used for a purchase order made in fiscal 1982. Hie
account number was assigned to the purchase requisition for packing
trunks in late SepUfflUa 1961. The requisition was not processed
and the corresponding purchase order was not authorized until
October 5, 1981. The account number was never changed, and the
order was entered into the accounting system as a fiscal 1981
obligation. Consequently, fiscal 1981 costs were overstated
by $940 because of the untimely obligation. It appeared that
this error occurred because of an administrative oversight.
The cost of the following items were questioned because they were for
the general support of all regional activities rather than primarily
for CERCLA activities:
Description
Desk Organizer
Swivel Chairs'
Conference Chairs
Calculators
Caramate 3300 Front and
'Pear Projection, Record,
and Playback
Portable AM/FM stereo/
Cassette Recorder
VT-100-AA, Computer Terminal
Decwriter III
5-Drawer Letter Cabinet
Tool Set & Miscellaneous
Tools
Selectric III Typewriter
Decwriter III
Xerox Copier
Total
Division .
Management
Management
Management
Management
Management
Management
Enforcement.
Enforcement
Management
Management
Management
Surveillance
& Analysis
Management
Quantity Costs
5
6
4
4
6
1
1
1
1
1
1
1
$ 500
1,587
728
1,301
636
1,300
2,850
223
1,388
880
2,850
3,416
$18,788
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Page 5 of 5
-47-
References; (Continued)
4: We found that three allowance holders obligated a total of $20,583
for equipnent that was not directly'related to CERCLA activities.
These items are detailed below:
Allowance Holder Title
Office of Monitoring
Systems and Quality
Assurance
Office of Environmental
Processes and Effects
Research
Office of Health and
Environmental Assess-
ment
Description
Selectric Typewriter and
Elements
Drawers and Folding Stands
m
Recorder-Integrator Checker
Loemeter
Microsoft 16K Ram Card
Linksampler
Kleen Line Suppressor/Filter
language Reference Manual
Operating System Reference
Manual
Apple Writer
Statpro B
Statpro C
Pump Head
Quantum Sensor
Solumeter Controller
Screw-in Type B.C. Cell
PHO Circulating Pump
Float Valve
Unit Heater
Acid and Pump .
Viton Diaphram
Pump
Freight
Chairs
Desk
Filing Cabinets
Partitions
Computer Equipment including
Software; Controller and
Telecommunications Station
Total
Amount
3,726
190
169
50
159
50
30
' 20
25
75
150
150
765
520
346
456
76
24
1,050
299
45
33
25
252
328
628
342
10,600 (partial
purchase)
$20,583
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Audit Report E5eH2-ll-0012-20708
Exhibit I
.*
Hazardous Substance Response Trust Fund
Schedule of Interagency Agreements
Federal Agency
Internal Revenue Service
National Oceanic and. Atmospheric
Administration
Corps of Engineers
Department of Commerce, Bureau
of National Standards
Department of Energy
Department of Transportation
U.S. Coast Guard (Training)
U.S. Coast Guard
total
'Total
Obligations
(Note 1)"
$ 200,000
215,000
248,500
108,000.
47,000
120,000
50,000
6,742,875
$7,731,375
Obligations
Accepted
(Note 2)
$ 200,000
215,000
248,500
108,000
47,000
120,000
50,000
6,742,875
$7,731,375
Reference
Schedule l-l
Note 1: EPA's interagency agreements are administered and controlled by the
Financial Management Office located in Cincinnati, Ohio. The major
portion of the expenditures to the Superfund appropriation were for
cleanup actions of various hazardous waste sites performed by the
U.S. Coast Guard (USCG).
Expenditures by site under the USCG agreement are provided in
Schedule 1-1.
Note 2: These amounts were accepted only to the extent that valid obligation
and disbursement records were maintained at the Cincinnati FMO.
Final audits, at a later date, of each agreement may disclose
questioned costs.
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Audit Report E5eH2-llr0012-20708
Schedule 1-1
Hazardous Substance Response Trust Fund
Schedule of Amounts Obligated and Disbursed by
Site under the Interagency Agreement
with the U.S. Qoait Qiard
location
Picillo Site
Gilson Road
Montollo Site
Burrillville
Ottati - Qoss
Keefe Environmental
Service
Lipari Landfill
Old York Oil Co.
,Goose Farm
*Kin-Buc
Black Creek
Pollution Abatement
Service
Qrigco Facility
Dracup Warehouse.
McAllister Site
Mobray Engineering
Seymour Recycling
Cordova Chemical
Laskin/Poplar
Summit National
Liquid Service
French Limited
Motco Disposal
Stringfellow
Not Assigned to Sites
Total Obligations
State
Site No.
RI
NH
NH
RI
NH
NH
NE
NY
NJ
NJ
NY
NJ
MD
PA
AL
AL
IN
MI
OH
OH
TX
TX
CA
01100045
8H00073
, 01100056
01100031
01100011
01110018
03100020
'03110002
03110005
03100034
" 09200037
09170086
05190071
03200070
08110057
08110065
02100027
09210009
09200105
09200105
: 08100036
11100020
11100020
Obligations
ReoQrded & Accepted
(Note 1)"
? 240,980
23,073
97,299
31,255
393,000
146,000
100,000
86,667
1,000,000
435,000
43,333
218,388
246,500
170,462
50,138
. 49,800
886,500
266,666
334,929
9,308
314,968
335
74,047
Reference
$5,218,648
1,524,227
$6,742,875
Note 2
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Schedule 1-1
Page 2 of 2
-50-
References:
Note 1: These amounts were accepted only to the extent that valid obligation
and disbursement records were maintained at the Cincinnati FMO.
Final audits, at a later date, of each of the contracts awarded
by the USCG under the interagency agreement may disclose questioned
costs.
Note 2: EPA entered into an interagency agreement'on April 21, 1981, for
$6,742,875 with the USCG. During fiscal 1981, EPA disbursed
$5,218,648 under the agreement. The balance of $1,524,227
($6,742,875 - $5,218,648) remains an unliquidated obligation.
Amounts were not obligated by site until invoices were received and
approved for payment.
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Audit Report E5eH2-ll-0012-20708
Exhibit J
Hazardous Substance Response Trust Fund
Schedule of Contracts
Cost Category
Obligations
Obligations Accepted . Questioned References
(Note 1) (Note 2)
$19,924,281 $19,774,281 $150,000
Notes 3 & 4
400,000
657,000
50,000
562,000
92,000
240,000
6,313
1,300,000
123,231,594
400,000
657,000
' 50,000
522,000
92,000
240,000
6,313
1,300,000
$23,041,594
40,000
.$190,000
Note 5
Contracts (Other than
Emergency Response
Contracts)
Emergency Response
Contracts:
Region 1
Region 2
Region 3
Region 4
Region 5
Region 6
Region 8
Region 9
Total
References;
Note 1: The contracts for the CERCLA program are administered and paid
by the FMOs located in Cincinnati, Ohio, and Research Triangle Park,
North Carolina.
The contracts reviewed fell into three general categories:
a. research and development (R&D) contracts which provide for R&D
work, including basic and applied research and development relat
to CERCLA activity;
b. program contracts which provide for support services ranging
from laboratory testing and analyses to computer hardware and
software services; and
c. emergency response contracts which provide for services for the
cleanup of hazardous waste spills or sites.
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Exhibit J
Page 2 of 2
-52-
References; (Continued) ±
Note 2: these amounts were accepted only to the extent that valid obligation
and disbursement records were maintained. Final contract audits,
performed at a later date, may disclose questioned costs.
Note 3: We have questioned costs of $150,000 where the funds were escrowed
under a general purpose R&D contract to avoid returning them to
Headquarters at the end of the fiscal year. The contract was
originally funded to provide quality assurance and technical support
for the State, Local Air Monitoring System. The Superfund money was
added to the contract under the limitation-of-funds clause to cover
the contractor's performance for the contract period ending December
30, 1981 (first quarter of fiscal 1982). Based on the statements
of EMSL personnel, it was apparent that the extramural costs were
not reasonably necessary for the implementation of CERCIA and, as
such, were not chargeable to Superfund.
Note 4: It is important to note that many of the program contracts were
funded using several other appropriations, in addition to the
Superfund appropriation. Because of multiappropriation funding,
there will be a need to identify CERCIA work as it is performed and
billed under these contracts. These contracts will be reviewed
again in the near future; costs charged to the Superfund appropriation
will be questioned unless they can be specifically identified to
CERCIA activities.
Note 5: A contract was issued in error for work to be performed at the Valley
of the Drums, hazardous waste site in Louisville, Kentucky. It was
discovered after issuance that the contract number was assigned
to another contract. In an attempt to correct this mistake, another
contract and contract number was issued. However, instead of making
an administrative change to correct the contract number, the documen-
tation was processed as a new obligation. Thus, obligations for
this site were overstated by $40,000.
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-53-
Audit Report E5eH2-ll-0012-20708
Schedule J-l
Qnergency Response Contracts
Region Site No.
1 01
02
2 04
06
3 03
4 03
28
|5 03
07
6 17
8 02
9 02
Total— Emergency
Hazardous Waste Site
Picillo, Coventry , R.I.
Sylvester Gil Road, Nashua, N.H.
Kin-Buc Landfill, Edison, N.J.
Pollution Abatement Service,
Qswego, N.Y.
Bruin Lagoon, Bruin, Pa.
Valley of the Drums,
Louisville, Ky.
Dreyfus Street, Columbia, S.C.
Laskin-Poplar Oil Co., Jefferson,
Detroit Barrels (midnight dumping)
MacCornb, Oakland and Wayne
Counties, Mi.
Crystal Chemical, Houston, Tx.
Arlington, Wy.
Santa Fe Springs, Ca.
Response Contracts
Total Site
Obligations Reference
$ 360,000
40,000
557,000
100,000
50,000
412,000 Note 1
150,000
Oh. 70,000
22,000
240 ; 000
6,313
1,300,000
$3,307,313
Reference;
Note 1: An administrative error caused one contract to be obligated twice. 1ftis
resulted in an overobligation in the amount of $40,000. This amount was
questioned (see Exhibit J).
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Attachment I"
§ UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
f
-------
-2-
Audit Recommendations:
Page 8 and 9, Recommendations 1 and 2.
1. The Administrator establish a task force headed by a
senior Agency official, such as the Associate Admin-
istrator for Policy.and Resource Management (PRM), to
oversee and coordinate the development of Agency-wide
guidance on accounting for Superfund costs.
2. The task force take all necessary actions, including
those recommended in subsequent findings of this
report, to ensure uniform Agency-wide accounting
policies- and procedures are implemented.
SPA Response:
These recommendations resulted from the Inspector General's
(IG) findings that there was no agencywide guidance that fully
detailed the procedures or documentation necessary to make pro-
per charges to. Superfund. Most of the recommended actions are
already being undertaken at the Agency. Therefore, I believe,
the creation of a special task force is unnecessary.
Audit Recommendtions;
•
Page 12 and 13, Recommendations -1 thru 5.
1. Take necessary actions to:
a- develop a time distribution form which employees
'must use to distribute actual -time worked among
, two or more accounts;
b. revise Chapter 7 of'.the Timekeeping Manual to
require that the above form, completed by employ-
ees and approved by their supervisor, document
time distributed on T&A Reports between an-'
accounts, including but not limited to Superfund
accounts; and
c. inform the applicable program offices and support
organizations that only salary costs supported by
timesheets can be charged to Superfund.and that
'salary costs not supported by timesheets will be
questioned in future audits.
2. Require that:
a. employees who did not maintain time distribution
records, but charged salary costs to Superfund,
prepare a written certification of the percentage
of time they performed CERCLA work;
-------
b. the Division Director of such employees approve
the above certifications; and
c. the personnel compensation obligated for Super-
fund be adjusted as necessary to reflect the
effect of the above certification.
• J
3. Draft and issue guidance requiring that"tiraesheets be
prepared and maintained by all personnel who work on
CERCLA activities.
4. Draft and issue guidance stating that offices with
CERCLA responsibilities can charge Superfund salary
costs to their normal operating appropriation only
when their Superfund payroll budget is exhausted.
They should emphasize also that any cost that can be
attributed to a specific site must be charged to
Superfund in order for EPA to recover all direct cost
from responsible par .ties.
5. Issue a directive to all allowance holders, reminding
them of their responsibilities to control funds, in-
cluding the reconciliation of financial management
reports to supplementary records.
EPA Response; •
The auditors found -that much of the time charged to Super-
fund in FY 1981 was not documented by timesheets or other
methods, that some time charged was in fact spent on non-Super-
fund tasks, and that some time that was spent on Superfund
tasks was charged to other appropriations.
Some offices in the Agency have already initiated Super-
fund timekeeping procedures, and we are building on this effort.
The Agency has recently developed a new time distribution policy
which will be formalized and submitted to you next week. Subse-
quent to your review, the Agency will issue the policy and re-
vise Chapter 7 of the Timekeepers Manual. A statement of this
policy will also be included in appropriate allowances sent to
all EPA offices. Where feasible, the proposed time distribution
policy will be consistent with Recommendation 4. The proposed
policy will not require documentation of charges to non-Super-
fund accounts. No other program in the agency requies that
level of substantiation. We deem it inefficient to spend
precious time building an audit trail that will never be used.
Recommendation 2 appears to be a satisfactory method of
substantiating FY 1981 charges that did occur, and will be im-
plemented where legally and technically feasible. It should be
noted, however, that it makes no allowance for charging FY 1981
for work performed on Superfund that was not previously charged.
One problem with Recommendation 4 is that if an office had site-
specific and non site-specific functions and not enough Superfund
-------
-4-
payroll to cover both, strict application of this recommendation
could result in exhaustion of Superfund payroll costs on non
site-specific efforts if they occurred before the site-specific
work. This would leave only normal operating funds to cover
the site-specific work.
Audit Recommendations:
Page 15, Recommendations 1 and 2:
1. The Assistant Administrator for Administration reduce
Superfund obligations by $20,545 and, transfer these
costs to the proper operating appropration.
2. The task force prepare an equitable cost allocation
plan for rent, communication and utilities; and, then
adjust the Superfund obligations as necessary to re-
flect the CERCLA program's share of fiscal year 1981,
support service costs. Unless such an allocation
plan is prepared, Superfund obligations should be
reduced by the $630,000 of unsupported charges.
EPA Response;
The auditors found two situations that caused these recom-
mendations. First, support costs were charged based on budgeted
amounts or estimates. Second, costs that were inappropriate to
Superfund were charged to Superfund accounts. Recommendation I
corrects these latter charges and will be implemented, where
legally and technically feasible. Recommendation 2 requires
that an allocation plan be prepared to substantiate actual FY
1981 and future costs. Initial efforts to prepare this plan
have begun in the Office of Administration. Where legally and
technically 'feasible, the plan will be used to make adjustments
to PY 1981 and actual charges for FY 1982.
Audit Recommendationst
Page 16, Recommendations 1 and 2:
• 1. . The Assistant Administrator for Administration reduce
Superfund obligations by $125,425 and, transfer these
costs to the proper operating appropriation.
2. The task force:
a. establish procedures to ensure .that Super ;und is
• charged in proportion to the benefits received
when a item purchased can benefit more than one
objective. Such procedures might include the
maintenance of equipment utilization records or
the development of fee schedules for laboratory
services; and
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-5-
develop and implement policy and guidelines to
ensure that future acquisitions have a direct
connection to or are essential for carrying out
the stated general purpose for which funds are
appropriated. Procedures could include a Head-
quarters prior approval requirement for certain
items (camera, video cassette records, photocopy
machines), and items with a unit price in excess
of a set financial limit.
EPA Response;
These recommendations resulted from findings that some
offices have charged Superfund for the full purchase cost of
certain equipment and supplies that were only partially, or
were not, used for Superfund (or where Superfund use was un-
determinable) . '
Discussions with the relevant offices will be held by the
Office of Administration to determine the technical and legal
feasibility of implementing Recommendation 1. Portions of
recommendation 2 have already been implemented. For example,
the Assistant Administrator for Administration is currently
signing off on all agency equipment purchases in excess of
$5,000. In addition, we are reviewing alternative methods of
documenting purchases made with Superfund money. One method
being reviewed was .recently.implemented by the Office of Admin-
istration for internal -use. It established approval levels
and requires the written justification of the use of Superfund
monies.
Audit Recommendations!
Page 17, Recommendations 1 and 2;
1. The Assistant Administrator for Administration deobli-
gate EMSL and MERL contract costs that were inappro-
priately charged to Superfund, and transfer the
.costs to the proper appropriation.
2. .The task force issue a directive to all CERCLA pro-
gram offices and support offices with CERCLA responsi-
bilities, limiting Superfund obligations to only
those items which were necessary for and incidental
to CERCLA activities.
SPA Response;
The auditors.contend that two contracts were inappropri-
ately charged to Superfund accounts. If the auditors' conten-
tion is true, which we will seek to determine, then 1 should
be implemented by the Office of Research arid Development. We
will address Recommendation 2 as part of our review of alterna-
tives to document Superfund purchases.
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-6-
Audit Recommendation;
Page 19, Recommendation:
We recommend that PCMD take appropriate actions to defini-
tize existing contracts and ensure future contracts are defini-
tized in a timely manner.
SPA Response:
During FY 1981 and even now, in each emergency response
in which EPA becomes involved, where contractor support is
needed immediately, such support is obtained under an emergency
contracting procedure called a "Notice to Proceed with Emergency
Response to Hazardous Substance Release". This procedure
allows a contractor to start'work and spend up to $50,000 per
site. The Notice to Proceed must be definitized, i.e., replaced
with a negotiated contract, within 30 days unless properly
extended. As of January, when all of the notices issued in FY
1981 were at least 124 days old, none had been definitized.
While all of the notices have been properly extended, it
is in the agency's best interest to definitize these contracts
as early as possible. In the short run, the Office of Admin-
istration has redirected its Superfund contracts personnel to
address this prpblem. Progress is being made. For the long
run, the Agency is now in the process of awarding a national
contract to cover emergency responses so. that the Notice to *
Proceed proced.ure may be eliminated.
Aud it Recommendation;
Page 20, Recommendations 1 and 2:
1. Develop and implement guidance to establish and main-
tain some means by which CERCLA property can be
uniquely identified through the Agency's property
managment system.'
2. Promulgate and implement policies and procedures
specifically governing the acquisition, use, and dis-
position of CERCLA property, including a requirement
that Superfund be credited with the residual value
of CERCLA property transferred to another program.
SPA Responset
These recommendations resulted from an audit of all agency
property since Superfund property could not be separately iden-
tified and subjected to audit. While the recommendations appear
reasonable, the Agency needs to examine the legal and technical
feasibility of implementing these changes.
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-7-
Page 22, Recommendations 1 thru 4:
We recommend that the Assistant Administrator for
Administration:
1. Issue guidance to inform OSC's of the need to process
contractor invoices in a timely manner so the Agency
can take advantage of discounts offered for prompt
payment*
2. Consider changing current procedures to allow pay-
ments based solely on the contractors certification,
if SPA is unable to consistently take advantage of
discounts offered for prompt payment.
3* Emphasize to the Financial Management Offices the
importance of expediting the processing of invoices
in instances where discounts are offered for prompt
payment.
4. Instruct the Financial Management Offices to use
1 general ledger account number 601.8, Discounts Lost,
to record discounts offered but not taken on vendor's
invoices.
SPA Response:
*
The auditors found that invoices were not-being paid
promptly enough to allow paying offices to take prompt payment
discounts offered by Superfund emergency response contractors.
They cited a requirement that the on-scene coordinator approve
and certify contractor invoices before payment is made as one
factor that prevents payment from occurring promptly; Recom-
mendation 2 suggests that this requirement be dropped if the-
process cannot be otherwise speeded up through recommendations
1 and 3. I do not accept recommendation 2 because it is not a
good business practice. The Agency has recently implemented
the project officer certification process on all contracts and
grants after finding that one grantee, because no one had to
certify the appropriateness of his invoices, had drawn the en-
tire balance from his letter of credit long before he completed
. work or expended funds on the grant. Seven to eight years ago,
EPA abandoned project officer invoice certification over this
same issue on the grounds that interim audits would be regularly
performed. These have not been done on a timely basis and it
is often years before final audits are completed. In lieu of
prompt interim audits, the most appropriate defense against
this type of abuse is project officer invoice certification.
04
-------
-8-
Audit Recommendation:
Page 23, Recoiranendation:
We recommend that the Assistant Administrator for Admin-
istration inform all EPA offices of the limitations OMB
Policy Letter 81-1 placed on fourth quarter procurements,
hurry-up, or unnecessary end-of-year procurements.
SPA Response:
This recommendation resulted from a finding that Region
IX and X were allowed'to spend headquarters funds late in the
fiscal year. The Agency has internal procedures that meet the
requirements set forth in OMB policy letter 81-1. The Superfund
program is funded through a no year appropriation, with all
funds available until expended. Additionally, Congressional
and OMB restrictions on fourth quarter expenditures did not
pertain to this program in 1981. As the Agency did not have
authorization to obligate Superfund dollars until the final
quarter of Fiscal Year 1981, I do not concur with the presumption
that these expenditures were conducted in a hurry-up fashion.
r>
tT.S.
••> I F-*«..u»etlOO
401 M Street, S.W.
Washington. PO _ §04W
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