HIA)
e / UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
f WASHINGTON, D.C. 20460
fV
OFFICE OF
THE INSPECTOR GENERAL
MEMORANDUM
SUBEJCT: Audit Report No. P5CH6-1 1-0049- 701 18 J
Report of Final Audit of Contract I
No. 68-01-6794 _ \
Total Chem Services, Inc. f
Fol croft, Pennsylvania •
FROM: Kenneth D. Hockman
Divisional Inspector'General for Audit
Internal Audit Division (A-109)
TO: Pamela John, Chief
Procurement Branch (Superfund)
Procurement and Contracts Management
Division (PM-214F)
b
SCOPE AND OBJECTIVES |
A certified public accounting (CPA) firm examined the costs claimed by
Total Chem Services, Inc. (TSC) for work performed under Environmental ;
Protection Agency (EPA) Contract Number 68-01-6794 for the period '.
August 1, 1983 through June 18, 1984. The alienability of costs claimed
under the contract was determined in accordance with the provisions of
the contract and applicable Federal regulations. '
!
The audit was performed in accordance with generally accepted auditing f
standards and the Standards for Audit of Governmental Organizations.
Programs. Activities, and Functions (1981 revision) promulgated by the
U.S. Comptroller General and the Contracts for Emergency Response Cleanup
Services Audit Guide (February 1985} issued by the Environmental Protection
Agency.Accordingly, the examination Include such tests of the accounting
records and such other auditing procedures as was considered necessary in
the circumstances. r
WASHINGTON, OX: 20460
-------
As part of the audit, transactions for contract activities were selectively
tested. The audit objectives were:
(!) To determine whether costs claimed under the EPA contract are
reasonable, allowable, and allocable to the sponsored project;
(2) To provide the EPA contracting officer with quantity, cost,
rate, and other information sufficient to negotiate a final
settlement.
SUMMARY OF FINDINGS
TCS claimed costs of $701,808 for services performed on EPA Contract
Number 68-01-6794, for the period August 1, 1983 through June 18, 1984.
The contract ceiling price, as modified, was $709,000. Substantial
questioned and set-aside costs (see Exhibit A) were determined and are
summarized below.
Claimed Accepted Set-Aside Questioned
Total Contract Costs $701,808 $18,256 $670,238 $13,314
===== = = = ==s==== ' sassssss =======
Contract costs were questioned for the following reasons:
0 Labor and equipment usage charges were billed to EPA at rates in
excess of those provided in the contract.
0 A subcontracted service was invoiced to EPA twice.
0 Several mathematical errors were made by TCS while preparing
invoices.
In addition to the questioned costs, the audit disclosed substantial set-
aside costs for the following reasons:
0 Labor, travel, equipment usage.and materials costs were not
adequately supported by the accounting records of TCS. He were
not able to perform the necessary audit procedures to determine
whether the costs incurred were allocable to the EPA contract.
0 All subcontract agreements were verbal; both 1n approval by EPA
to TCS, and in the actual agreement between TCS and the subcon-
tractor. Because the verbal agreements were never documented, we
were unable to perform auditing procedures necessary to determine
if costs were allowable or if subcontracts were in compliance with
the Federal Procurement Regulations.
-------
The above costs were set-aside because of the uncertainties involved.
In addition, TCS applied a 15% handling charge to most material and
subcontractor costs. The handling charges were not supported by the
accounting records of TCS. All handling charges were set-aside or
questioned if associated with unauthorized activity due to lack of
supporting documentation.
RECOMMENDATIONS
We recommend that the Chief, Procurement Branch (Superfund):
1} Not participate in the $13,314 of questioned costs; and
2) Evaluate the appropriateness of participating in the $670,238
of set-aside costs.
EXIT CONFERENCE
The management of TCS was not available to hold an exit conference to
discuss the findings because the company was no longer operating on a
daily basis. As a result, TCS comments on audit results were not obtained,
ACTION REQUIRED
In accordance with EPA Directive 2750, the action official 1s required to
issue a final determination on the costs questioned and any other
recommendations in this report within 150 days of the audit report date.
Where the action official considers a position on the audit findings that
differs from our recommendations, we would appreciate the opportunity to
discuss management's position before the determination 1s issued to the
auditee. A copy of the final determination should be provided to our
office when issued.
We have no objection to the further release of this report at your
discretion. Should your staff have any questions, please have them
contact Elissa Karpf on 382-4930.
Attachments
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REPORT ON AUDIT
OF
COSTS CLAIMED BY
TOTAL CHEM SERVICES, INC.
FOLCROFT, PENNSYLVANIA
IN PERFORMANCE OF
EPA CONTRACT NUMBER 68-01-6794
FOR THE PERIOD AUGUST 1, 1983 THROUGH JUNE 18, 1984
TICHENOR, RESLER, & EICHE
CERTIFIED PUBLIC ACCOUNT ANTS
THE SUMMIT, SUITE 200
4350 BROWNSBORO ROAD
LOUISVILLE, KENTUCKY 40207
(502) 893-0700
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I J
TOTAL CHEM SERVICES, INC.
FOLCROFT, PENNSYLVANIA
EPA CONTRACT NUMBER 68-01-6794
FOR THE PERIOD AUGUST 1, 1983 THROUGH JUNE 18, 1984
TABLE OF CONTENTS
PAGE
SCOPE AND OBJECTIVES
SUMMARY OF FINDINGS
RECOMMENDATIONS
BACKGROUND
EXIT CONFERENCE
AUDITORS' REPORT ON EPA CONTRACT NUMBER 68-01-6794
AUDITORS' REPORT ON INTERNAL ACCOUNTING CONTROL
AUDITORS' REPORT ON COMPLIANCE
1
2
2
2
2
3
4
5
EXHIBIT
EXHIBIT A-
SUMMARY OF COSTS CLAIMED, ACCEPTED,
SET-ASIDE AND QUESTIONED FOR THE
PERIOD AUGUST 1, 1983 THROUGH JUNE 18,
1984 6
NOTES TO EXHIBIT A 7
SCHEDULE I- SUPPORTING SCHEDULE OF QUESTIONED
AND SET-ASIDE COSTS BY INVOICE NUMBER
FOR THE PERIOD AUGUST 1, 1983 THROUGH
JUNE 18, 1984 12
SCHEDULE H- SUPPORTING SCHEDULE OF SUBCONTRACTOR
SET-ASIDE COSTS FOR THE PERIOD AUGUST
1, 1983 THROUGH JUNE 18, 1984 14
SCHEDULE HI- SUPPORTING SCHEDULE OF QUESTIONED
COSTS RESULTING FROM MATHEMATICAL
ERRORS FOR THE PERIOD AUGUST 1,1983
THROUGH JUNE 18, 1984 15
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TOTAL CHEM SERVICES, INC.
FOLCROFT, PENNSYLVANIA
EPA CONTRACT NUMBER 68-01-6794
FOR THE PERIOD AUGUST 1, 1983 THROUGH JUNE 18,1984
SCOPE AND OBJECTIVES
We have examined the costs claimed by Total Chem Services, Inc. (TCS) for
work performed on the Environmental Protection Agency (EPA) Contract
Number 68-01-6794 for the period August 1, 1983 through June 18,1984.
The audit was performed in accordance with generally accepted auditing
standards and the Standards for Audit of Governmental Organizations.
Programs, Activities, and Functions (1981 revision) promulgated by the U.S.
Comptroller General and the Contracts for Emergency Response Cleanup
Services Audit jjuide (February 1985) issued by the Environmental Protection
Agency. Accordingly, the examination included such tests of the accounting
records and such other auditing procedures as we considered necessary in the
circumstances. Audit fieldwork was performed from June 27, 1986 through
July 2,1986.
As part of the audit, transactions for contract activities were selectively
tested. The audit objectives were:
(1) To determine whether costs claimed under the EPA contract are
reasonable, allowable, and allocable to the sponsored project; and
(2) To provide the EPA contracting officer with quantity, cost, rate,
and other information sufficient to negotiate a final settlement.
SUMMARY OF FINDINGS
TCS claimed costs of $701,808 for services performed on EPA Contract
Number 68-01-6794 for the period August 1, 1983 through June 18, 1984. The
contract ceiling price, as modified, was $709,000. Substantial questioned and
set-aside costs (see Exhibit A) were determined and are summarized below.
Claimed Accepted Set-Aside Questioned
Total Contract Costs $701,808 $18,256 $670,238 $13,314
Contract costs were questioned for the following reasons:
1) Labor and equipment usage charges were billed to EPA at rates in
excess of those provided in the contract (see Exhibit A, Notes 2 and 4).
2) A subcontracted service was invoiced to EPA twice (see Exhibit A,
Note 6).
3) Several mathematical errors were made by TCS while preparing
invoices (see Exhibit A, Note 7).
-------
In addition to the questioned costs, our audit disclosed substantial set-aside
costs for the following reasons.
1) Labor, travel, equipment usage and materials costs were not
adequately supported by the accounting records of TCS. We were not
able to perform the necessary audit procedures to determine whether
the costs incurred were allocable to the EPA contract (see Exhibit A,
Notes 2, 3, 4 and 5).
2) All subcontract agreements were verbal; both in approval by EPA to
TCS, and in the actual agreement between TCS and the
subcontractor. Because the verbal agreements were never
documented, we were unable to perform auditing procedures necessary
to determine if costs were allowable or if subcontracts were in
compliance with the Federal Procurement Regulations (see Exhibit A,
Note 6).
The above costs were set-aside because of the uncertainties involved.
In addition, TCS applied a 15% handling charge to most material and
subcontractor costs. The handling charges were not supported by the
accounting records of TCS. All handling charges were set-aside or questioned
if associated with unauthorized activity due to lack of supporting
documentation (see Exhibit A, Note 8).
RECOMMENDATIONS
1. We recommend that the Chief, Procurement Branch (Superfund):
a) Not participate in the $13,314 of questioned costs; and
b) Evaluate the appropriateness of participating in the $670,238 of
set-aside costs.
BACKGROUND
On August 1, 1983, EPA awarded TCS Contract Number 68-01-6794. The
contract had nine modifications. The performance period was 323 days, and
the cost ceiling was $709,000.
TCS was required to furnish the necessary services connected with the
location and removal of hazardous waste from the specified location in Berks
County, Pennsylvania. Contract efforts were completed within the period of
performance. Subsequent to contract completion, but prior to audit fieldwork,
TCS essentially ceased operations.
EXIT CONFERENCE
The management of TCS was not available to hold an exit conference to
discuss the findings because the company was no longer operating on a daily
basis. As a result, TCS comments on audit results were not obtained.
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TICHENOR, RESLER. & EICHE
CERTIFIED PUBLIC ACCOUNTANTS
THE SUMMIT. SUITE 200
4350 BROWNSBORO ROAD
LOUISVILLE. KENTUCKY 40207
(502) 893-0700
Mr. Kenneth D. Hockman
U.S. Environmental Protection Agency
Divisional Inspector General for Audit
Internal Audit Division
Office of the Inspector General
Washington, D.C.
AUDITORS' REPORT ON EPA CONTRACT NUMBER 68-01-6794
We have examined the Summary of Costs Claimed, Accepted, Set-Aside and
Questioned by Total Chem Services, Inc. Folcroft, Pennsylvania, under EPA
Contract Number 68-01-6794 for the period August 1, 1983 through June 18,
1984. Except as set forth in the following paragraph, our examination was
made in accordance with generally accepted auditing standards, the Standards
for Audit of Governmental Organizations, Programs, Activities, and Functions
(1981 revision), promulgated by the U.S. Comptroller General and the
Contracts for Emergency Response Cleanup Services Audit Guide, (February
1985), issued by the U.S. Environmental Protection Agency and accordingly
included such tests of the accounting records and such other auditing
procedures as we considered necessary in the circumstances.
Total Chem Services, Inc., did not retain adequate evidential matter to
support contract costs in the amount of $670,238. The Company's available
records do not permit the application of adequate alternative procedures
regarding support of contract costs. Contract costs in the amount of $670,238
were set-aside as a result of inadequate support. In addition, contract costs of
$13,314 were questioned because of errors in invoices and because costs were
not charged in accordance with the contract provisions.
Since the Company did not provide us with adequate evidential matter to
support all costs, and we were unable to apply adequate alternative procedures
regarding contract cost support as noted in the preceding paragraph, the scope
of our work was not sufficient to enable us to express, and we do not express,
an opinion on the financial statement referred to above.
This report is intended for use in connection with the contract to which it
refers and should not be used for any other purpose.
Tichenor, Resler & Eiche
Louisville, Kentucky
July 1, 1986
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.TG
TICHENOR, RESLER, & EICHE
CERTIFIED PUBLIC ACCOUNTANTS THE SUMMIT. SUITE 200
4350 BROWNSBORO ROAD
LOUISVILLE. KENTUCKY 40207
(502) 893-0700
Mr. Kenneth D. Hockman
U.S. Environmental Protection Agency
Divisional Inspector General for Audit
Internal Audit Division
Office of the Inspector General
Washington, D.C.
AUDITORS' REPORT ON INTERNAL ACCOUNTING CONTROL
We have examined the Summary of Costs Claimed, Accepted, Set-Aside and
Questioned by Total Chem Services, Inc. for the period August 1, 1983 through
June 18, 1984, and have issued our report thereon dated July 2, 1986, in which
an opinion was disclaimed because of significant scope limitations. Our
examination was made in accordance with generally accepted auditing
standards, the Standards for Audit of Governmental Organizations! Programs,
Activities, and Functions (1981 revision), promulgated by the U.S. Comptroller
General and the Contracts for Emergency Response Cleanup Services Audit
Guide, (February 1985) issued by the UJS. Environmental Protection Agency.
Solely to assist us in planning and performing our examination, we made a
study and evaluation of the internal accounting controls of Total Chem
Services, Inc. That study and evaluation was limited to a preliminary review
of the system to obtain an understanding of the control environment and the
flow of transactions through the accounting system. Because management of
Total Chem Services, Inc. was not available to substantiate the accounting
systems in adequate detail to allow us to rely on the accounting controls, our
study and evaluation of the internal accounting controls did not extend beyond
this preliminary review phase. Accordingly, we do not express an opinion on
the system of internal accounting controls taken as a whole. Also, our
examination, made in accordance with the standards mentioned above, would
not necessarily disclose material weaknesses in the system of internal
accounting control. However, during our examination we did note several
conditions, as presented in the Notes to the Summary of Costs Claimed,
Accepted, Set-Aside and Questioned, that we believe to be material
weaknesses.
This report is intended for use in connection with the contract to which it
refers and should not be used for any other purpose.
Tichenor, Resler & Eiche
Louisville, Kentucky
July 2, 1986
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.TG
TICHENOR, RESLER, & EICHE
CERTIFIED PUBLIC ACCOUNTANTS THE SUMMIT. SUITE 200
4350 BROWNSBORO ROAD
LOUISVILLE, KENTUCKY 40207
(502) 893-0700
Mr. Kenneth D. Hockman
U.S. Environmental Protection Agency
Divisional Inspector General for Audit
Internal Audit Division
Office of the Inspector General
Washington, D.C.
AUDITORS' REPORT ON COMPLIANCE
We have examined the Summary of Costs Claimed, Accepted, Set-Aside and
Questioned by Total Chem Services, Ihc, for the period August 1, 1983 through June
18, 1984, and have issued our report thereon dated July 2, 1986, in which an opinion
was disclaimed because of significant scope limitations. Our examination of
compliance features, which was limited to the provisions of the contract and
applicable laws and regulations, was made in accordance with generally accepted
auditing standards, the Standards for Audit of Governmental Ogranizations,
Programs, Activities, and Functions "(1981 revision), promulgated by the U.S.
Comptroller General and the Contracts for Emergency Response Cleanup Services
Audit Guide, (February 1985), issued by the U.S. Environmental Protection Agency,
and accordingly, our examination included such tests of the accounting records and
such other auditing procedures as we considered necessary in the circumstances.
Total Chem Services, Inc. did not provide pertinent accounting records or adequate
alternative documentation to allow for testing of certain significant compliance
features. The inability to test such compliance features restricted the scope of our
work to the extent that we are unable to express, and we do not express, an opinion
in accordance with the guidelines referred to above.
This report is intended for use in connection with the contract to which it refers and
should not be used for any other purpose.
Tichenor, Resler & Eiche
Louisville, Kentucky
July 2, 1986
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EXHIBIT A
SUMMARY OF COSTS CLAIMED. ACCEPTED. SET-ASIDE AND QUESTIONED
FOR THE PERIOD AUGUST 1, 1983 THROUGH JUNE 18, 1984
EPA CONTRACT NO. 68-01-6794
TOTAL CHEM SERVICES. INC.
FOLCROFT, PENNSYLVANIA
DESCRIPTION
Labor
Travel
Equipment Usage
Materials Expended
Subcontractors
Other
CLAIMED
(Note 1) ACCEPTED SET-ASIDE QUESTIONED NOTE
$102,015
15,950
45,523
44,974
489,478
3,868
$701,808
$ -0-
-0-
-0-
16,750
1,506
—0—
$18,256
$100,787
15,950
40,122
28,224
485,155
-0-
$670,238
$1,228
-0-
5,401
-0-
2,817
3,868
$13,314
2
3
4
5 and
6 and
7
8
8
The accompanying notes to this exhibit are an integral part of this summary.
6
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NOTES TO EXHIBIT A
EPA CONTRACT NO. 68-01-6794
TOTAL CHEM SERVICES, INC.
FOLCROFT, PENNSYLVANIA
All of TCS travel costs were claimed on a per diem basis as follows:
Quantity Rate Amount
319 man/days $50 per man/day $15,950
The per diem rates of $50 were not paid to employees for reimbursement of
costs incurred. TCS provided their employees with lodging and a daily cash
allotment for subsistence. We were unable to determine the amount of cash
given to employees or that TCS expended amounts equal to $50 per day on
employee travel related activities. Even though documentation could be
presented to support that employees were in travel status on the respective
dates of claims, additional cost documentation must be presented to support
that TCS incurred costs of $50 per diem.
Failure for TCS to maintain documentation of travel costs incurred, result in
$15,950 of set-aside costs. For details, refer to Schedule I.
NOTE 4 - EQUIPMENT USAGE
a. TCS did not maintain any type of property management system to
substantiate the type of equipment used or the amount of use. The absence of
equipment use documentation prevented the application of auditing procedures
to verify the amount of use allocable to the EPA contract. Inadequate
documentation of equipment usage indicates noncompliance with the contract
Article IV, Paragraph C. However, had proper supporting documentation been
present, we would have accepted the costs as they were invoiced in
accordance with the contract terms.
Failure to maintain equipment use records results in all equipment use claims
($40,122) being set-aside, except the $.20 per mile charge which is questioned
below. For details, refer to Schedule I.
8
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NOTES TO EXHIBIT A
EPA CONTRACT NO. 68-01-6794
TOTAL CHEM SERVICES. INC.
FOLCROFT. PENNSYLVANIA
NOTE 1 - BASIS OF ACCOUNTING
The Summary of Costs Claimed, Accepted, Set-Aside and Questioned is a
compilation of the invoices prepared by Total Chem Services, Inc. for services
rendered to EPA under the contract.
NOTE 2 - LABOR COSTS
a. TCS maintained no time and labor distribution records (timesheets) for
employees to substantiate the hours allocable to the EPA contract. No payroll
system was available for examination with the exception of cancelled payroll
checks. EPA Form 1900/55 (Hazardous Substance Response Fund Contractor
Cost Report) could not be relied upon to substantiate labor costs because the
hours reported on the 1900/55's did not agree to the hours charged on the
invoices.
The extent to which labor records were absent precluded the application of
auditing procedures to verify that labor costs allocated to the EPA contract
were proper. Failure to maintain time and labor distribution records to
support costs indicates noncompliance with the contract Article IV, Paragraph
B. Our review did, however, determine that labor rates were invoiced at
contract terms. As a result, all labor costs claimed by TCS that were not
questioned costs are hereby set-aside in the amount of $100,787. For details
refer to Schedule I.
b. TCS claimed overtime on Sundays at 200% of regular time. Exhibit D of
the contract between EPA and TCS prescribes overtime rates for all
employees at 150% of regular time. Overclaims resulting from overtime being
billed in excess of 150% of regular time is detailed below:
Rate in Excess of Amount of
Invoice Position Hours 150% of Regular Time Overclaim
9559 Project Manager 8.5 $20 $ 170
9559 Laborer 117.5 $9 1,058
Total Questioned Costs
NOTE 3 - TRAVEL COSTS
TCS presented no supporting documentation to substantiate any travel costs
claimed. We were unable to determine any of the following:
1) Existence of costs.
2) Necessity of costs.
3) Evidence that per diem rates were paid to employees for the amount
invoiced to EPA.
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NOTES TO EXHIBIT A
EPA CONTRACT NO. 68-01-6794
TOTAL CHEM SERVICES, INC.
FOLCROFT, PENNSYLVANIA
b. TCS claimed $.20 per mile for vehicle usage. The EPA contract with TCS
defines a fixed rate of $50 and $75 per day for automobiles and pick-up trucks
respectively. TCS claimed $.20 per mile in addition to the daily charge. TCS
was unable to substantiate that costs in excess of the daily rates were
incurred. Vehicle mileage charges are detailed below:
Invoice Miles Rate Overclaim
9559 11,242 $.20
9561 4,894 .20
9564 3,535 .20
9576 3,030 .20
9577 2,785 .20
9581 670 .20
9599 250 .20
9623 600 .20
Total 27,006
Vehicle use charges at rates in excess of those provided in the contract result
in questioned costs of $5,401.
NOTE 5 - MATERIALS EXPENDED
a. TCS did not consistently maintain invoices to support material purchases
related to the EPA contract. The invoices that TCS did retain were examined
and the related costs were determined to be reasonable and necessary for
contract completion. As a result, all costs supported by an invoice were
accepted. These are detailed as follows:
Invoice To
EPA Item Description Amount
9561 PVC Pipe Materials $ 1,489
9564 Gravel 5,618
9564 PVC Pipe Materials 14
9577 Drinking Water Storage Tank 9,629
Total Accepted
b. The above represents the only invoices for materials presented by TCS for
examination. TCS claimed an additional $28,224 for reimbursement of
materials purchased. Because there was no supporting documentation of these
costs, auditing procedures could not be applied to verify the amount or validity
of costs. However, had proper supporting documentation been present, we
would have accepted the costs as they were invoiced in accordance with the
contract terms. Failure to retain invoices for material purchases indicates
noncompliance with the contract Article IV, Paragraph H and resulted in
set-aside costs of $28,224, as detailed in Schedule I.
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NOTES TO EXHIBIT A
EPA CONTRACT NO. 68-01-6794
TOTAL CHEM SERVICES, INC.
FOLCROFT. PENNSYLVANIA
NOTE 6 - SUBCONTRACT COSTS
a. Utility charges for electric service and telephone installation and monthly
service were accepted because the costs were specified in the contract, the
costs were reasonable, and the limited applicability of procurement
regulations to utilities. Charges for long distance service, however, are
set-aside because there was no documentation that costs were allocable to the
EPA contract. The resultant accepted and set-aside costs are as follows:
Accepted Set-Aside
Vendor Costs Costs
Conestoga Telephone $ 601 $4,889
Metropolitan Edison 905 267
Total Accepted and Set- Aside
Utilities Costs $ 1.506 $5,156
b. TCS did not maintain records to support that the Federal Procurement
Regulations were followed when obtaining subcontractor services as required
by Article IV, Paragraph G of the contract. We have scheduled set-aside
subcontract costs in the amount of $479,999, as detailed in Schedule n .
The costs identified above would have not been necessarily accepted if there
had been records to support compliance with the Federal Procurement
Regulations. Other uncertainties were involved in some of the subcontractor
costs such as lack of a supporting invoice or cancelled check. In addition, the
subcontractors were not required to maintain supporting accounting records of
invoices submitted to TCS, nor were we authorized to review such records, if
available, of subcontractors.
c. Our review of subcontractor costs disclosed that trailer rental provided by
a subcontractor had been billed to EPA twice. A receipt for $2,450 plus a 15%
handling charge of $367 (see Note 8) was billed on Invoice 9581 and again on
Invoice 9599. Double billing resulted in total questioned costs related to
subcontracts of $2,817.
Total subcontract costs are summarized below:
Accepted Set- Aside Questioned
Utilities Costs $1,506 $ 5,156
Other Subcontract Costs ._-^"0" 479.999
Total Subcontract Costs $1.506 $485.155 $ 2,817
10
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NOTES TO EXHIBIT A
EPA CONTRACT NO. 68-01-6794
TOTAL CHEM SERVICES. INC.
FOLCROFT. PENNSYLVANIA
NOTE 7 - MATHEMATICAL ERRORS
Several mathematical errors were disclosed in our review of invoices. The
overclaims and underclaims resulting from these errors were categorized as
Other Costs because errors were not always exclusively associated with a
particular cost category. The mathematical errors in invoice preparation
resulted in questioned costs of $3,868, as detailed in Schedule HI.
NOTE 8 - HANDLING CHARGES
The following handling charges were questioned or set-aside in association
with their respective cost categories in Notes 5 and 6. TCS applied handling
charges to most Subcontractor and Material costs. The contractor did not
present adequate accounting records to support the handling charges. All
handling charges associated with accepted and set-aside Materials and
Subcontractor costs were set-aside due to a lack of supporting
documentation. Set-aside handling charges are as follows:
Handling Charge Associated With
Invoice Material Subcontractor Total
9559 $ 1,996 $23,123 $ 25,119
9561 237 17,344 17,581
9564 963 6,956 7,919
9576 569 6,935 7,504
9577 2,044 4,967 7,011
9581 34 967 1,001
9599 57 2,215 2,272
9623 -0- 797 797
Total $ 5,900 $63,304 $ 69,204
AH handling charges associated with Material and Subcontractor questioned
costs were also questioned. This resulted in questioned subcontractor handling
charges of $367 on Invoice 9599 (See Note 6).
11
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r
SCHEDULE I
SUPPORTING SCHEDULE OF QUESTIONED AND SET ASIDE COSTS
BY INVOICE NUMBER
FOR THE PERIOD AUGUST 1, 1983 THROUGH JUNE 18. 1984
EPA CONTRACT NUMBER 68-01-6794
TOTAL CHEM SERVICES, INC.
FOLCROFT. PENNSYLVANIA
Description
LABOR CHARGES
Questioned Set-Aside
Invoice
Invoice
Invoice
Invoice
Invoice
Invoice
Invoice
Invoice
Total
#9559
19561
#9564
#9576
#9577
#9581
#9599
#9623
> 41,039
15,907
14,708
12,576
10,621
2,000
1,200
2.736
100.787
TRAVEL CHARGES
Invoice
Invoice
Invoice
Invoice
Invoice
Invoice
Invoice
Invoice
Total
#9559
#9561
#9564
#9576
#9577
#9581
#9599
#9623
EQUIPMENT USAGE
Invoice #9559
Invoice #9561
Invoice #9564
Invoice #9576
Invoice #9577
Invoice #9581
Invoice #9599
Invoice #9623
Total
-0-
5,401
7,400
1,800
2,500
1,950
1,650
150
50
450
15,950
22,947
7,035
3,190
3,255
2,670
375
150
500
40,122
12
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SCHEDULE I
(Continued)
SUPPORTING SCHEDULE OF QUESTIONED AND SET ASIDE COSTS
BY INVOICE NUMBER
FOR THE PERIOD AUGUST 1. 1983 THROUGH JUNE 18, 1984
EPA CONTRACT NUMBER 68-01-6794
TOTAL CHEM SERVICES. INC.
FOLCROFT. PENNSYLVANIA
Description
MATERIALS EXPENDED
Questioned Set-Aside
Invoice
Invoice
Invoice
Invoice
Invoice
Invoice
Invoice
Invoice
Total
#9559
#9561
#9564
#9576
#9577
#9581
#9599
#9623
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
^^-^^^—
-0-
15,276
329
1,752
4,369
5,802
261
435
-0-
28.224
SUBCONTRACTORS
Invoice
Invoice
Invoice
Invoice
Invoice
Invoice
Invoice
Invoice
Total
#9559
#9561
#9564
#9576
#9577
#9581
#9599
#9623
176,901
132,451
53,326
53,042
46,814
7,413
9,096
6.112
485.155
OTHER
Invoice
Invoice
Invoice
Invoice
Invoice
Invoice
Invoice
Invoice
Total
#9559
#9561
#9564
#9576
#9577
#9581
#9599
#9623
Total Questioned and Set-Aside
Costs
-0-
3,234
-0-
48
-0-
-0-
86
500
3.868
$13.314
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
$670.238
13
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SCHEDULE
SUPPORTING SCHEDULE OF SUBCONTRACTOR
SET-ASIDE COSTS
FOR THE PERIOD AUGUST 1, 1983
THROUGH JUNE 18. 1984
EPA CONTRACT NUMBER 68-01-6794
TOTAL CHEM SERVICES INC.
FOLCROFT, PENNSYLVANIA
Total Contract
Subcontractor Costs
Charley Frank $137,546
SJ Transportation 2,286
Allied Electric 18,113
Mobile Field Office 1,658
Woodward Clyde 158,234
Mid Atlantic Inland 66
A and A Rentals 763
Authorized Business Machines 488
Rental World 319
Aeronautics 135
Waste Conversion 8,200
Foxboro Instruments 2,731
Mike Attrichter 614
Aid Instruments 247
Dealers Service 512
Dolore Associates 17,860
Western Sandfill 20,547
Hanes and Kibblehouse 69,426
Pottstown Power 128
Light man Drum 955
Powers and Simon Inc. 15,077
Urwiler and Walder 3,865
Geosight 2,558
Explo-Craft, Inc. 7,531
Viking Welding 81
Harry Nusbaum 5,250
Garber Drilling 2,945
Barney's Electric 1,645
Delaware Container 219
Set-Aside Subcontractor Costs $479,999
14
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SCHEDULE HI
SUPPORTING SCHEDULE OF QUESTIONED COSTS
RESULTING FROM MATHEMATICAL ERRORS
EPA CONTRACT NUMBER 68-01-6794
TOTAL CHEM SERVICES INC.
FOLCROFT, PENNSYLVANIA
Invoice
Number Description Amount of Error
9561 Labor and per diem of $184.50 and $50.00, respectively, $ 234.50
were invoiced twice. The overstated daily amount for
September 13,1983 was carried forward to the 9561 invoice.
9561 The daily total for September 29, 1983 is $3,000.00 greater 3,000.00
than sum of the various components of cost. The total was
6,531.58, however, the sum of the individual costs was $3,531.58.
9576 Subcontractor costs were incorrectly added on the 92.00
November 7,1983 daily detail and carried forward to the
invoice. This caused a overstatement of $92.00.
9576 An addition error in the personnel costs made up of labor (44.00)
and per diem resulted in the understatement of costs of $44.00.
9599 Subcontractor use of a truck at $75.00 plus 15% handling 86.25
charge was not itemized but was included in the total daily
detail on February 15, 1984.
9599 A $.20 subcontractor cost footing error occurred on the (.20)
February 15,1984 daily detail.
9623 A $1.00 footing error was found on the June 6,1984 daily (1.00)
detail.
9623 Overstatement of the June 7, 1984 daily detail of $500.25 500.25
due to the inclusion of the same subcontractor cost twice.
Costs were $435.00 plus 15% handling charge.
TOTAL MATHEMATICAL ERRORS $ 3,867.80
15
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