UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                           WASHINGTON, D.C. 204«0
                                                                  0,,,cto,
                                                              THE INSPECTOR GENERAL
MEMORANDUM

SUBJECT:  Report of Financial and Compliance Audit
          of Region 4's Adjusted Personnel Compensation
          and Benefits Under CERCLA for the Fiscal Year
          Ended September 30, 1983
          Audit Report No. P5EH7-11-0034-80612
EH7-11-0034-80612

7] o™n&  
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The CPA audited the adjusted PC4B costs for fiscal 1983 in accordance
with generally accepted auditing standards and the standards for financial
and compliance audits contained in the Standards for Audit of Governmental
Organizations, Programs, Activities, and Functions, issued by the U.S.
General Accounting Office.The CPAdid not examine any other elements or
accounts in the Statements of Obligations and Statements of Disbursements
which were previously reported on.

RESULTS OF AUDIT

The CPA accepted Regions 4's adjusted PC4B costs of $1,657,878 for the
fiscal year ended September 30, 1983.  Additional details are contained
1n the attached CPA's report.

ACTION REQUIRED

None.  In accordance with EPA Directive 2750, you are the designated Action
Official for this report.  Since the report contains no recommendations,
a formal written response is not required.  We have closed out this audit
in the Audit Tracking and Control System.

Should your staff have any questions, please have them contact Roland W. Cyr
on 382-4930.

Attachment

cc:  Tichenor and Eiche, CPAs

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                               DISTRIBUTION
A.  Office of the Inspector General  (A-109)

    Divisional  Inspector General
      for Audit - Southern Division  (1)
    Director, Audit Operations Staff (3)
    Chief, Program Analysis Unit (1)

B.  Regional Office

    Regional Administrator, Region 4
    Audit Follow-up Coordinator

C.  Headquarters Office
    Comptroller (PM-225)                                        1
    Director, Financial Management Division (PM-226)             2
    Chief, Superfund Accounting Branch {PM-226)                 1
    Agency Follow-up Official (PM-225)                          1
      Attn:  Resource Systems Management Division
    Assistant Administrator for Solid Waste and
      Emergency Response (WH-562A)                              1
    Director, Office of Emergency and Remedial
      Response (WH-548)                                         1
    Associate Administrator for Regional
      Operations (A-101)                                        1

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              UNITED STATES
     ENVIRONMENTAL PROTECTION AGENCY
                REGION 4
            ATLANTA, GEORGIA

REPORT OF FINANCIAL AND COMPLIANCE AUDIT
   PERSONNEL COMPENSATION AND BENEFITS
                UNDER THE
  COMPREHENSIVE ENVIRONMENTAL RESPONSE,
 COMPENSATION, AND LIABILITY ACT OF 1980

        FOR THE FISCAL YEAR ENDED
           SEPTEMBER 30, 1983

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                          UNITED STATES
                 ENVIRONMENTAL PROTECTION AGENCY
                            REGION A
                        ATLANTA, GEORGIA

            REPORT OF FINANCIAL AND COMPLIANCE AUDIT
               PERSONNEL COMPENSATION AND BENEFITS
                            UNDER THE
              COMPREHENSIVE ENVIRONMENTAL RESPONSE,
             COMPENSATION, AND LIABILITY ACT OF 1980

                    FOR THE FISCAL YEAR ENDED
                       SEPTEMBER 30, 1983
                        TABLE OF CONTENTS

                                                            PAGE

SCOPE AND OBJECTIVES                                          1

SUMMARY OF AUDIT RESULTS                                      2

BACKGROUND                                                    3

AUDITORS' REPORT ON PERSONNEL COMPENSATION
 AND BENEFITS5

AUDITORS' REPORT ON INTERNAL ACCOUNTING
 CONTROL AND COMPLIANCE7

FINDING

     RESULTS OF STATISTICAL ANALYSia .,F PERSONNEL
      COMPENSATION AND BENEFITS TRANSACTIONS10

EXHIBITS

     EXHIBIT 1 - PERSONNEL COMPENSATION AND BENEFITS,'
                  FISCAL YEAR ENDED SEPTEMBER 30, T9%3       12

     EXHIBIT 2 - NOTES TO PERSONNEL COMPENSATION AND
                  BENEFITS, FISCAL YEAR ENDED SEPTEMBER
                  30, 198313

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                          UNITED STATES
                 ENVIRONMENTAL PROTECTION AGENCY
                            REGION 4
                        ATLANTA, GEORGIA

            REPORT OF FINANCIAL AND COMPLIANCE AUDIT
               PERSONNEL COMPENSATION AND BENEFITS
                            UNDER THE
              COMPREHENSIVE ENVIRONMENTAL RESPONSE,
             COMPENSATION, AND LIABILITY ACT OF 1980

                    FOR THE FISCAL YEAR ENDED
                       SEPTEMBER 30, 1983

                      SCOPE AND OBJECTIVES

We have  performed  a financial and  compliance  audit of Personnel
Compensation  and  Benefits  (PC&B)  costs for  the  portion of  the
Hazardous  Substance  Response  Trust Fund  (Superfund)  reported by
the U.S. Environmental Protection  Agency (EPA),  Region 4 (Allow-
ance  Holder  04),  for the  fiscal  year ended  September  30,  1983.
Superfund  was  established under the  Comprehensive  Environmental
Response,  Compensation,   and   Liability Act   of  1980  (CERCLA).
CERCLA  [section  lll(K)]  states that the  Inspector  General  shall
audit as  appropriate all  payments,  obligations,  reimbursements,
or other  uses  of  Superfund  to assure  that  Superfund  is  being
properly administered and that claims are being appropriately and
expeditiously considered.

The audit  was  performed in  accordance with  generally accepted
auditing standards and the standards for financial and compliance
audits contained in the Standards for Audit of Governmental Orga-
nizations,  Programs,  ActTyities,  and  Functions,issuedb~ythe
U.S.GeneralAccountingOffice.Accordingly,   the  examination
included  such tests  of  the  accounting records  and  such  other
auditing  procedures  as  we considered  necessary  in  the circum-
stances.   Audit fieldwork  was  performed  from  August  10,  1987
through August 21, 1987.

We made  a study and  evaluation of  internal  accounting controls
related to PC&B costs as well as an audit of PC&B costs obligated
and disbursed under the  Superfund appropriation for  the fiscal
year  ended September  30,  1983.   Our scope  was  limited  to  the
audit of  the adjusted PC&B  costs   and  related internal controls
for the fiscal year ended September 30,  1983.

As part of the  audit,  PC&B costs  disbursed for Superfund activi-
ties  were  selectively   tested.   The  audit  objectives were   to
determine if:

      (1)  The Personnel  Compensation and Benefits costs are pre-
          sented fairly in accordance with applicable  laws, regu-
          lations, and guidelines;

      (2)  EPA  management  complied  with  laws   and   regulations
          which,  if  not  followed,  might have  a  material effect
          upon the Personnel  Compensation and  Benefits  costs;  and

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                SCOPE AND OBJECTIVES (CONTINUED)
      (3)  EPA established an adequate system of internal account-
          ing control to ensure the reliability of accounting and
          management records for PC&B costs.

We  previously  performed a financial and  compliance  audit  of the
portion  of  Superfund  reported  by the  U.S.  Environmental  Pro-
tection  Agency  (EPA),  Region  4  (Allowance  Holder 04), for the
fiscal  years ended September  30,  1984  and 1983, and  issued our
Auditors' Report  on  Financial  Statements  dated  May 23,  1985.  We
qualified our opinion on the Statements of Obligations and State-
ments of Disbursements  presented in that  report due to errors in
recording personnel  compensation costs,  inadequate justification
and documentation for  Superfund charging,  and errors in calcula-
ting  support services  cost  allocations.   Due  to  the  questioned
and set-aside  PC&B costs resulting from  the  audit,  EPA Region 4
conducted a  review of PC&B costs for fiscal 1983 and made adjust-
ments to the previously reported amounts.

                    SUMMARY OF AUDIT RESULTS

FINANCIAL RESULTS OF AUDIT

The financial  results  of our audit are summarized  below and de-
tailed in the Exhibits.

     Description                 Total             Accepted

Personnel Compensation         $1,500,504          $1,500,504

Personnel Benefits               157.374             157,374

  Total Personnel Compen-
   sation and Benefits         $1,657,878          $1,657,878


RESULTS  OF  STATISTICAL  ANALYSIS  OF  PERSONNEL  COMPENSATION AND
BENEFITS TRANSACTORS

We  performed a  statistical analysis  of  the  adjusted  Superfund
Personnel Compensation  costs  for the  fiscal year ended  September
30, 1983.   Based  upon  the  results of our  testing  ~f  a random
sample  of  disbursement  transactions,  we   are 95Z  confident  that
the Superfund  Personnel Compensation costs were no greater  than
$1,542,452  and  no  less  than  $1,361,899, with  a  precision of
$90,276.  The  recorded disbursements  for Personnel Compensation
costs for  fiscal  1983  were  $1,500,504,  which  falls  within  the
upper and  lower limits.  Consequently, we accepted the recorded
Personnel  Compensation  costs  for  fiscal  1983.    Additionally,
based upon our  review  of Superfund Personnel Benefits for fiscal
1983,  we accepted the recorded  amount of  $157,374.
                                -2-

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                           BACKGROUND
The "Superfund" program was  established  by  the Comprehensive En-
vironmental  Response, Compensation  and  Liability Act  of  1980
(CERCLA),  Public  Law 96-510, enacted on  December  11,  1980.   The
Superfund  program was created  to  protect public health  and the
environment from  the  release, or  threat  of  release,  of hazardous
substances from abandoned hazardous waste sites (sites) and other
sources where response was not required by other Federal laws.  A
Trust  Fund was  established  by CERCLA  to  provide  funding  for
responses  ranging   from  control  of   emergency   situations  to
provision  of  permanent  remedies   at  uncontrolled sites.  CERCLA
authorized  a  $1.6  billion  program  financed  by  a  five-year
environmental tax on  industry and  some  general revenues.   CERCLA
requires that response,  or  payment for response,  be  sought  from
those  responsible for  the  problem,  including property  owners,
generators and transporters.

The basic  regulatory blueprint  for the  Superfund  Program is the
National Oil rr !.  Hazardous  Substances  Contingency  PI?- (NCP), 40
CFR Part 300.   The NCP was first published in 1968 S.L  . i«:t of the
Federal Water Pollution  Control Plan,  and has been substantially
revised to meet CERCLA requirements.   The NCP lays out two broad
categories  of  response:   removals and  remedial  response.   Re-
movals are relatively short-term responses, and modify an earlier
program under  the Clean Water  Act.   Remedial  response  is long-
term planning and action  to  provide  permanent remedies for seri-
ous abandoned or uncontrolled sites.

CERCLA  recognizes that  the   Federal  Government can  only assume
responsibility for remedial response at a limited number of sites
representing the  greatest  public  threat.   It therefore requires
the maintaining of  a National  Priorities List  (NPL),  which must
be updated at  least annually.  The NPL  is  composed primarily of
sites which have  been ranked on the basis  of a standard scoring
system which evaluates  their potential  threat  to  public health.
In addition, each State was  allowed  to  name its highest priority
site without regard to the ranking system.

CERCLA section 104(c)(3) provides  that  no remedial actions  shall
be taken unless the State in which the release  occurs  enters  into
a contract or  cooperative  agreement with EPA to  provide certain
assurances, including cost-sharing.   At most sites,  the  State
must pay 10 percent of the costs of remedial  action.   Preremedial
activities  (preliminary  assessments, site  inspections)  remedial
planning (remedial  investigations,  feasibility studies,  remedial
designs) and removals may be funded  100 percent by EPA.  For fa-
cilities operated by a State  or political subdivision  at  the  time
of disposal of hazardous  substances,  the State must pay  at  least
50 percent of all response costs,  including removals and  remedial
planning previously conducted.

CERCLA was revised  and expanded by  the  Superfund Amendments and
Reauthorization Act of 1986  (SARA), Public  Law  99-499, enacted  o

                                -3-

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                     BACKGROUND (CONTINUED)
October  17,  1986.   SARA  reinstituted  the environmental  tax and
expanded the taxing mechanisms  available  for a five-year period.
It authorized an  $8.5  billion program for  the 1987-1991 period.
The Trust Fund was renamed the Hazardous Substance Superfund.
                               -A-

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      TlCHENOR & ElCHE
     CERTIF/ED I'UBLIC ACCOUNTANTS
                                                  THE SUMMIT. SUITE 200
                                                  4350 BROWNS8ORO 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 Inspector General
Washington, D.C.  20460
AUDITORS' REPORT ON PERSONNEL COMPENSATION AND BENEFITS

We  have  examined the Personnel  Compensation  and Benefits  (PC&B)
costs of the U.S. Environmental  Protection Agency  (EPA), Region 4
(Allowance Holder 04) portion of the Hazardous Substance Response
Trust  Fund  (Superfund)   for  the  fiscal year  ended September 30,
1983,  as  presented  in Exhibit 1.   Our examination was performed
in  accordance with  generally accepted auditing standards and the
standards  for  financial  and compliance audits  contained  in the
Standards for Audit  of  Governmental Organizations, Programs, Ac-
tivities, and  Functions,  issued b~y the  0". S.  General Accounting
Office.  Additionally,  the  U.S.  Environmental Protection  Agency
Hazardous Substance Response Trust  Fund Audit Guide (revised Feb-
ruary  23, 1987)  was  used as a guide in our examination.  Accord-
ingly, our examination  included  such tests of the accounting re-
cords  and such  other auditing procedures as we considered  neces-
sary in the circumstances.

We  previously  examined  the Statements  of  Obligations  and the
Statements of Disbursements  of  the  '~.S.  EPA,  Region 4 portion
Superfund for the fiscal  years ended September 3n   ^84 and 19o^,
and issued our Auditors'  Report  on  Financial  Statements dated May
23, 1985.  We qualified our ooinion on the Statements of Obliga-
tions  and  Statements of Disbursements presented  in  that  report
due to errors  in personnel  compensation costs, inadequate  justi-
fication and documentation for Superfund charging, and errors  in
calculating support services cost allocations.   Subsequent  to the
issuance of our report,  Region 4 conducted a  review of PC&B costs
for fiscal  1983 and made adjustments  to the previously  reported
amounts.  At EPA's  request,  we have examined Region  4's  adjusted
PC&B costs  for fiscal  1983.  We did  not  examine any other ele-
ments or accounts in the Statements of Obligations and Statements
of  Disbursements which  were previously reported on.  This  report
does modify our  report  on those statements dated  May 23,  1985  as
indicated in the fourth  paragraph.

The Statements of Obligations and the  Statements  of Disbursements
were prepared for  EPA  use by EPA's  Financial  Management  Division
based  upon  Allowance Holder financial  information contained  in
the Financial Management System (Superfund Status Reports, dated
September 30, 1984 and  1983. The Personnel  Compensation and Ben-
efits  costs  referred  to in  the first   paragraph were prepared
                                -5-

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AUDITORS'   REPORT   ON  PERSONNEL   COMPENSATION  AND   BENEFITS
CONTINUE!)) — ~~~ -

by EPA based upon adjusted financial information contained in the
Financial Management System  (PAYMERGE,  as  of August  13,  1987).
The  statements  and  the  PC&B costs  referred to  above are  not
intended  to   present   either  the   financial  position  or  the
financial  results  of   operations  in  conformity with  generally
accepted  accounting  principles in  that  allowable costs and  EPA
accounting  policies  and practices  are  legislatively established
and  promulgated  through  various  Federal   and  EPA  policy  and
procedural  standards.

In  our  opinion,  the Personnel Compensation and  Benefits  costs
referred  to in the  first  paragraph and presented in  Exhibit 1,
present fairly the  PC&B costs of the U.S.  EPA,  Region 4 portion
of Superfund in accordance with applicable  Federal laws, regula-
tions, policies, and program guidelines for the fiscal year ended
September 30,  1983.

This report is  intended for use in connection with the statements
and PC&B costs to which it refers and should not be used for any
other purpose.
TICHENOR & EICHE
Louisville, Kentucky
August 21, 1987
                               -6-

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      TlCHENOR & ElCHE
    CEKHFl ED PUBLIC ACCOUNTANTS
                                                  THE SUMMIT. SUITE 200
                                                  4J50 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 Inspector General
Washington, D.C.  20460

AUDITORS' REPORT ON INTERNAL ACCOUNTING CONTROL AND COMPLIANCE

We  have  examined the Personnel  Compensation  and Benefits (PC&B)
costs of the U.S. Environmental Protection Agency  (EPA), Region 4
(Allowance  Holder 04),  portion of  the Hazardous  Substance Re-
sponse Trust Fund (Superfund) for  the fiscal year ended September
30,  1983,  and issued our Auditors'  Report on Personnel Compen-
sation and  Benefits thereon dated August 21, 1987.   As  part of
our examination, we made  a study and evaluation of EPA, Region 4,
portion  of  Superfund system  of internal accounting  control for
PC&B costs to  the extent  we  considered necessary to evaluate the
system as  required  by generally accepted auditing standards and
the  standards  for financial  and  compliance  audits  contained in
the  the  Standards for Audit of Governmental  Organizations, Pro-
grams, Activities,  and   Functions.issuedBytheU.S.General
Accounting  Office.    For  tKipurpose  of this  report,  we  have
classified the significant  internal  accounting controls into the
following transaction category:

          Personnel compensation disbursements.

Our study included only the transaction category listed above.

The purpose of our  study  and evaluation was to determine the na-
ture, timing, and extent  of the auditing  procedures necessary for
the expressing an opinion on the Personnel Compensation and  Bene-
fits costs.  Our study and evaluation was more limited than  would
be necessary to  express  an  opinion on the system of internal ac-
counting control  taken  as a whole or  on  the category of control
identified above.

We  previously  examined  the Statements  of Obligations and  State-
ments of the  Disbursements  of  the U.S. EPA,  Region * portion of
Superfund for the fiscal  years  ended September 30,  1984 and  1983,
and  issued  our   Auditors'  Report on  Financial  Statements and
Auditors' Report  on Internal Accounting  Control and  Compliance,
both  dated  May  23,  1985.   Subsequent  to  the  issuance  of our
reports,  Region  4  conducted  a  review of PC&B  costs for  fiscal
1983 and made adjustments to the previously reported  amounts.  At
EPA's request,  we have  examined  Region  4's  adjusted PC&B  costs
and related  internal controls  for fiscal 1983.  This  report does
                                -7-

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AUDITORS'  REPORT ON INTERNAL ACCOUNTING  CONTROL AND  COMPLIANCE
(CONTINUED)
modify  our  reports  on  the statements  and  internal  accounting
control  and compliance dated May  23,  1985, as  indicated  in the
sixth paragraph.

EPA management  is  responsible  for  establishing and maintaining a
system  of internal accounting  control.   In  fulfilling  this re-
sponsibility, estimates and judgements by management are required
to assess  the expected benefits and related costs of control pro-
cedures.   The  objectives of  internal  accounting control  are  to
provide  reasonable,  but  not absolute, assurance  that  assets are
safeguarded  against  loss  from  unauthorized use  or disposition,
and  that  transactions  are executed  in  accordance with manage-
ment's  authorization and  recorded  properly to permit preparation
of financial reports in  accordance with applicable  Federal laws
and regulations.   The  concept  of reasonable assurance recognizes
that the cost  of a system  of  internal  accounting control should
not  exceed  the  benefits  derived  and also recognizes  that the
evaluation of  ~bese factors  necessarily requires  e?-''rates and
judgments  by management.

There are  inherent limitations  that  should be recognized in con-
sidering the potential effectiveness  of any  system  of internal
accounting control.  Because of inherent limitations  in any sys-
tem of  internal control,  errors or  irregularities  may neverthe-
less  occur  and  not be  detected.    In  the performance  of  most
control  procedures,  errors can result  from misunderstanding in-
structions, mistakes of judgment, carelessness, or other personal
factors.   Control procedures whose effectiveness depend on segre-
gation  of duties can  be  circumvented by  collusion.   Similarly,
control  procedures  can be  circumvented  intentionally  by manage-
ment,  either with  respect  to  the  execution  and recording  of
transactions or  with respect to the  estimates and judgments re-
quired  in  the  preparation of  financial   statements.   Further,
projection of  any evaluation  of internal  accounting  control to
future  periods  is subject  to  the  risks that  the procedures may
become  inadequate  because of changes  in conditions and that the
degree of  compliance with procedures may deteriorate.

Our study  and evaluation,  made for the  limited purpose  described
in the  first paragraph, would  not  necessarily disclose all  mate-
rial weaknesses in the system.  Accordingly, we do not express an
opinion  on the  system  of  internal  accounting control of EPA, Re-
gion 4,  portion of Superfund  taken as a whole or on the category
of control  identified  in the first paragraph.  However,  our  study
and evaluation  disclosed no condition that we  believed to be  a
material weakness  in relation  to  the  Personnel Compensation and
Benefits costs of EPA, Region 4, portion of Superfund.

The U.S.  Environmental Protection  Agency Hazardous Substance Re-
sponse  Trust  Fund Audit  Guide, (revised  February  23,   1987) re-
quires areview and evaluationof the  adequacy  ofthe internal


                                -8-

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           REPQRT ON INTERNAL  ACCOUNTING CONTROL AND  COMPLIANCE
 (CONTINUED)
accounting controls of EPA, Region 4, portion of the Superfund as
a  basis  for reliance  thereon and  for  the determination  of the
resultant extent of the tests to which auditing procedures are to
be restricted.  The audit guide also requires a review of CERCLA,
other regulations, policies,  and  guidelines  to  determine if Fed-
eral  funds  are being  expended  in accordance with  provisions  of
CERCLA, other regulations, policies, and guidelines.

The result of  our  tests  indicate  that  for the items tested, EPA,
Region 4,  complied with  the provisions  of  CERCLA,  other regu-
lations, policies, and guidelines except  for the  conditions de-
scribed in the Finding and  Exhibits,   Further,  for  the items not
tested, based upon our examination and the procedures referred-to
above, nothing came  to our  attention  which  indicated  that EPA,
Region 4, had  not  complied with  the provisions  of  CERCLA, other
regulations, policies, and guidelines  referred  to  above,  beyond
the conditions described in the Finding and Exhibits.

This report is intended solely  for  the  use of the EPA management
and should not be used for any other purpose.
TICHENOR & EICHE
Louisville, Kentucky
August 21, 1987
                               -9-

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                             FINDING
RESULTS  OF STATISTICAL  ANALYSIS OF  PERSONNEL COMPENSATION  AND
BENEFITS TRANSACTIONS

We  performed  a  statistical  analysis  of  the  adjusted  Superfund
Personnel Compensation costs  for the  fiscal  year  ended September
30,  1983.   Based upon  the results  of our  testing  of a  random
sample  of  disbursement transactions,  we  are  952  confident  that
the  Superfund  Personnel  Compensation costs were  no  greater  than
$1,542,452  and  no  less  than  $1,361,899,  with  a precision  of
$90,276.   The  recorded disbursements  for  Personnel  Compensation
costs  for  fiscal 1983  were   $1,500,504, which falls within  the
upper  and  lower  limits.   Consequently, we accepted  the recorded
Personnel  Compensation  costs  for  fiscal  1983.    Additionally,
based  upon  our review of Personnel Benefits  for  fiscal 1983,  we
accepted the recorded amount of $157,374.

We  noted  improvement  in  the recording  of   Superfund  personnel
costs  as  well  as   implementation   of  charging  policies   for
personnel compensation.   We  tested six key  internal  control  at-
tributes for compliance  with EPA policies and procedures.   From
these  six attributes, our statistical results indicated that  the
exception rates in the sample for three attributes were in excess
of our expected error rates of 5.0Z, as follows:

                                             Percent      Upper
                        Sample  Exceptions      Of      Precision
         Attribute       Size   In Sample   Exceptions    Limit

     Employees signature  136      24<.a)       17.11        23. fl"

     Time & attendance
       report agrees
       with payroll
       records (FMS)      209      13(b)       6.22         9.0Z

     Time & attendance
       report agrees
       with timesheet     136      23(c)       16.92        22.22
     Notes;

     (a)  These errors were primarily due to Region 4's inability
          to locate the timesheets for certain employees.  Howev-
          er, we  examined time and attendance  reports signed by
          timekeepers.

     (b)  Most of these errors were  input errors  caused by  the
          double  input  of data  by  contract  personnel  at  EPA
          Headquarters.  Some  of the  original  exceptions  were
                              -10-

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                       FINDING (CONTINUED)
         OF STATISTICAL  ANALYSIS OF  PERSONNEL  COMPENSATION  AND
BENEFITS TRANSACTIONS  (CONTINUED)'

          caused by mistakes  made  by  timekeepers in transferring
          hours  from  timesheets.    For  audit  purposes,  if  a
          timesheet was  available,  it was  considered  the  ource
          document  in  determining  the  proper  charging   ..a  the
          Financial Management System (FMS).

     (c)  These  errors were  caused by  differences  in Superfund
          account numbers;  the charging of hours  between fiscal
          years  in  Pay  Period 1;   and  mistakes  in transferring
          hours  from  timesheets  to time and attendance reports.
          For audit purposes,  if the  timesheet was available, it
          was considered the  source document in determining prop-
          er charging  in the  FMS.

We discussed  the errors noted above with  Region 4 personnel and
they indicated  that  due to the audit period (fiscal 1983), some
timesheets had  not been retained or could  not be located.  Addi-
tionally, Region 4 personnel  stated that many of the errors were
made  by  contractor   personnel at  EPA Headquarters  during  the
input of  corrections  of payroll data.   We were able  to   satisfy
our  audit requirements  if the available  timesheet or  time and
attendance report agreed with the  information in the FMS.  Since
the  combined  effect  of any unresolved  errors  did not materially
affect our projected  audit  dollar  results,  we did not attempt to
follow  up on these  apparent  errors.   Also,  the  procedures for
recording  Superfund  hours  in the  FMS  has  changed  significantly
since fiscal  1983.    The  additional three  attributes  tested in-
dicated  an acceptable  degree of  compliance.   Consequently,  we
make no recommendations in  this report.
                               -11-

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                          UNITED STATES                EXHIBIT 1
                 ENVIRONMENTAL PROTECTION AGENCY
                            REGION 4
                        ATLANTA, GEORGIA

       HAZARDOUS SUBSTANCE RESPONSE TRUST FUND  (SUPERFUND)
          PERSONNEL COMPENSATION AND BENEFITS (Note 1)
              FISCAL YEAR ENDED SEPTEMBER 30, 1983
     Description             Total           Accepted        Note

Personnel Compensation      $1,500,504       $1,500,504        2
Personnel Benefits             157,374          157,374        3

Total Personnel Com-
  pensation and Benefits    $1,657,878       $1,657,878
The Notes to Personnel  Compensation and Benefits are  an  integral
part of this statement.
                               -12-

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                          UNITED STATES
                 ENVIRONMENTAL PROTECTION AGENCY
                            REGION k
                        ATLANTA, GEORGIA
EXHIBIT 2
       HAZARDOUS SUBSTANCE RESPONSE TRUST FUND (SUPERFUND)
          NOTES TO PERSONNEL COMPENSATION AND BENEFITS
              FISCAL YEAR ENDED SEPTEMBER 30, 1983
Note 1:   Personnel  Compensation and  Benefits financial inform-
          ation was prepared by EPA from information contained in
          the Financial Management System (PAYMERGE, as of August
          13, 1987).


Note 2:   Personnel  Compensation  costs, from  the financial in-
          formation  provided by  EPA,  contained  9  transactions
          with negative values amounting to $5,706.  These trans-
          actions were excluded from our random sampling universe
          and detailed  information  was provided to  EPA Region k
          so that adjustments could be made to correct these ap-
          paror c  errors.   Due  to  the  immateriality  of the  a-
          mounts, these  transactions  were not  quest.^ned or set
          aside.
Note 3:   Personnel Benefits  costs were  examined only to deter-
          mine the  reasonableness  of Region  4's  Superfund bene-
          fits costs  to  Superfund  compensation costs.   This per-
          centage, amounting  to  10.5%,  reflected the approximate
          percentage  of  EPA's  total  benefits  to  EPA's  total
          compensation for  Superfund personnel  costs  for fiscal
          1983 (10.4%).

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