UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                    WASHINGTON, DC. 204CO
                                                      OFFICE OF
                                                  THE INSPECTOR GENERAL
MEMORANDUM

SUBJECT:  Audit of Superfund  Interagency Agreements with the
          Federal Emergency Management Agency for Fiscal 1987
          Audit Report M5BFL9-11-0029-9100259

FROM:     Kenneth D. Hockman 7yi>v^olw cP H0^*^^
          Divisional Inspector General for Audit
          Internal Audit Division

TO:       Harvey G. Pippen
          Director, Grants Administration Division


     On November 21, 1988, I  transmitted the attached audit
report from the Office of the Inspector General, FEMA for
information purposes.  At that time, I indicated that FEMA's
Office of the Comptroller (Comptroller) had not responded to the
audit report.  FEMA's Office  of the  Inspector General has now
analyzed the Comptroller's response  and concluded that the
Comptroller has taken or plans to take corrective action.

     To accurately report Superfund  costs to EPA, the Comptroller
is developing a system to reconcile  Superfund expenses included
on Department of Treasury reports of disbursements to FEMA's
official accounting records.  Future Office of Inspector General,
FEMA audit reports will address system effectiveness.

     Because FEMA has taken action to correct reporting errors
and locate supporting documentation  for Superfund costs, we are
not making any recommendations in this report.  We are closing
this report upon issuance.

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     I have attached FEMA's audit report (Attachment 1), the
Comptroller's response (Attachment 2), and the FEMA Office of the
Inspector General's analysis of the response (Attachment 3).
Should your staff have any questions concerning this report,
please have them contact John Walsh on 475-6753.

Attachments

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                                             APPENDIX



                      DISTRIBUTION  OF  REPORT


Director, Office of Emergency and Remedial Response (OS-200)

Director, Office of Program Management (OS-240)

Director, Financial Management Division (PM-226)

Comptroller (PM-225)

Chief, Grants Information and Analysis Branch  (PM-216F)

Agency Followup Official (PH-208)

Audit Followup Coordinator (PM-208)
  Attn:  Program Operations Support Staff

Agency Followup Official (PM-225)
  Attn:  Director, Resource Management Division

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                                             ATTACHMENT 1
         Federal Emergency Management Agency
                     Washington. D.C. 20472
                           >'QV -4
MEMORANDUM FOR:
FROM:
SUBJECT:
Grant C.  Peterson
Associate Director
State and Local Programs  and
 Support Directorate
Gary J, Barard
Assistant Inspector General  for  Audit
Office of the Inspector General

Review of FEMA's Administration  of J:he
Comprehensive Environmental  Response,
Compensation and Liability Act For  Fiscal
Year 1987; Audit Report No.  H-02-89
The Office of Inspector General conducted an  audit of  the Federal
Emergency  Management  Agency's   (FEMA)  administration  of  the
temporary   and  permanent  relocation  program   under  the
Comprehensive Environmental  Response, Compensation and Liability
Act of  1980.   This  audit,  mandated by the Superfund Amendments
and Reauthorization  Act  of  1986, was  made  to determine if FEMA
had effectively  fulfilled its  program  responsibilities  and had
expended funds for eligible purposes.

We  found  that FEMA  had  effectively  administered  the temporary
relocation  component of  the  Program,  and  had  generally   spent
funds  for  eligible  purposes.   The report  contains  no findings
which require action by your office.

However, we did  identify  several  recording  and  documentation
problems which  the  Office  of the Comptroller must  correct.  We
have  addressed  recommendations  to  that  office  for  appropriate
action.
Should you have any questions on this  report please contact me or
Jane Altenhofen on 646-3911.

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         Federal Emergency Management Agency
                    Washington, D.C. 20472
                           NOV - 4 1988
MEMORANDUM FOR:
FROM:
SUBJECT:
George H.  Orrell
Comptroller

                -"-i-i*!^.,
Gary JT Barard         '~~-
Assistant  Inspector General  for Audit

Review of  FEMA's Administration of the
Comprehensive Environmental  Response,
Compensation and Liability Act For
Fiscal Year 1987;  Audit Report No.  H-02-89
The  Office  of  Inspector  General  conducted  an  audit  of  the
Federal  Emergency  Management Agency's  (FEMA)  administration  of
the   temporary  and  permanent  relocation  program   under  the
Comprehensive Environmental  Response, Compensation  and Liability
Act of  1980.   This  audit,  mandated by the  Superfund  Amendments
and Reauthorization  Act of  1986, was  made to determine  if FEMA
had effectively  fulfilled  its  program  responsibilities  and  had
expended funds for eligible purposes.

We  found that FEMA  had  effectively  administered  the  temporary
relocation  component of  the Program,  and  had  generally  spent
funds for eligible purposes.  However,  we identified a  clear need
for FEMA to improve its  procedures for reporting  program  costs
and for retaining documentation  to support such costs.

In accordance with  FEMA Instruction 1270.2,  paragraph  7, we  are
requesting that your office submit  comments  on the  report within
60 days  from  the  date  of this memorandum.   Your  comments should
indicate concurrence or non-concurrence with the  audit findings,
reasons  for  non-concurrence  where  appropriate,   and  actions
initiated  or  planned by  your office  to comply  with   the  audit
recommendations.

Should you have any questions on this  report  please  contact  me or
Jane Altenhofen on 646-3911,
Attachment

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OFFICE OF
INSPECTOR
GENERAL
REVIEW OF FEMA'S ADMINISTRATION OF THE
COMPREHENSIVE ENVIRONMENTAL RESPONSE,
COMPENSATION AND LIABILITY ACT FOR
FISCAL YEAR 1987
AUDIT REPORT NO. H-02-89
FEDERAL EMERGENCY
MANAGEMENT AGENCY
             NOVEMBER 1988
               DATE

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                      INTRODUCTION AND  SCOPE
The  Office of the  Inspector General  conducted  an audit  of  the
Federal  Emergency Management Agency's (FEMA)  administration  of
the   temporary   and  permanent   relocation  program   under  the
Comprehensive Environmental  Response,  Compensation and Liability
Act   (CERCLA)  of  1980.     This   Act,  commonly  referred  to  as
Superfund, requires  an  annual audit of expenditures  incurred  by
each  Federal Agency  involved in  the  administration  of  program
activities.    Our  audit  was made to  determine  if  FEMA  had
effectively   fulfilled   its   program   responsibilities  and  had
expended funds for eligible purposes.

The  audit  covered program and expenditure activities  for Fiscal
Year  (FY)  1937.   During this period,  FEMA received $8.4  million
in allocation transfers  from the Environmental Protection Agency
(EPA)  ,  the Agency  with primary  responsibility  for  Superfund
administration.    For  the same period,  FEMA reported expenditures
of $1,647,275.   FEMA received $5 million of the unspent balance
of $6.8 million late in the fiscal year for training purposes.

FEMA  spent program  funds for relocation activities at 20 sites,
selected by EPA,  and in support of five accounts for planning and
training  activities  (see  Exhibit A).    We  audited  temporary
relocation program expenses of $316,922 incurred for 12 of the 20
sites(see  Note,Exhibit  A),  and administrative  expenses  of
$506,668  for all  five   of  the  planning  and  training accounts.
FEMA  had  not incurred  any  expenses  for  permanent  relocation
activities at the sites we reviewed.

The majority of the expenses  ($.7 million)  at the remaining eight
sites, were  incurred by  a contractor administering  the  program
for  FEMA.  At FEMA's request, the  Defense Contract Audit Agency
indicated they would audit these costs in part.

During our review,  we examined  the results  of  internal  control
assessments performed by the State and Local  Programs and Support
Directorate,  the  FEMA organizational element  responsible for the
Superfund  Program.    These  assessments,   made  pursuant  to  the
Office of  Management and  Budget Circular A-123,  concluded that
the  susceptibility of the  Superfund Program  to fraud,  waste,  and
abuse was low.

Our  audit  was performed during the period of  March 1988 through
July  1988,  and   included  audit   work  at  FEMA  Headquarters  and
Regional Offices  in  Boston,  MA.; Denton, TX. ;  Kansas  City, MO.;
Denver,  CO. ; and San  Francisco,  CA.   The  audit  was  made  in
accordance  with  the   "Standards  for  Audit  of  Governmental
Organizations, Programs, Activities and Functions" promulgated by
the  U.S.  Comptroller  General.     Accordingly,  the  examination
included  such tests  cf the  accounting  records and  such  other
auditing  procedures   as  we   considered  necessary   in  the
circumstances,

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                           BACKGROUND
The U.S. Congress passed CERCLA  (P.L. 96-5X0)  in  1980  to  address
the  problems  associated  with- hazardous  substances.    This  Act
established  a  Hazardous  Substance  Response  Trust   Fund   and
authorized the Federal  Government  to respond directly  to  actual
or  threatened  releases of hazardous  substances,  pollutants,  or
contaminants   that  may  endanger  public  health  or welfare.
Specifically,  it provides  for  the  establishment of a  program to
control  and  clean-up hazardous  substances released  or left  to
dissipate  into  the  environment.     In  conjunction   with  such
actions,  the  Federal  Government   also  provides  temporary  or
permanent  relocation to  individuals  affected  by the  hazardous
substances.

Executive Order No.  12316,  "Responses to  Environmental Damage",
assigns  responsibility  to  various   Federal   agencies   for
administration of  the Act.   EPA has primary  responsibility  for
carrying  out  the   program  and  FEMA  has   responsibility   for
administering  the  temporary  and  permanent  relocation program.
FEMA  was  assigned  these  activities  because  of  the Agency's
previous experience  in regulating  relocation  efforts  under  the
Disaster Assistance Program.

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                        RESULTS OF AUDIT
We  found  that  FEMA  had effectively  administered the  temporary
relocation component of the  Superfund  Program,  and had  generally
spent  funds  for  eligible  purposes.   However,  we  identified  a
clear  need for  FEMA  to  improve  its procedures  for  reporting
program costs  and for  retaining documentation  to  support  such
costs.

1.   Program Administration

     Our review of program  administration during FY  1987  showed
     that  FEMA  provided temporary  relocation benefits  totaling
     $316,922  to  90  families,  at  12 sites.    These  benefits
     included moving expenses,  lodging,   and  food subsidies.  We
     determined that all 90 families were  eligible for assistance
     and   that  the  assistance  they   received  was   provided
     expeditiously.

2.   Accumulation  and Reporting of Program Costs

     By agreement, FEMA  is  required to submit  financial  reports
     to EPA monthly  on program expenses.   The  reporting  of  such
     expenses   must  clearly  delineate  costs  by   site   and
     administrative   account.   We   found that  because  of  the
     procedures  and  practices   in  compiling  costs,   FEMA
     understated expenses  in its reports  to  EPA by  $46,430  and
     reported site and account totals incorrectly.

     The reporting inaccuracies occurred  because FEMA's  office of
     the Comptroller,  the  preparer  of financial reports  to  EPA,
     used  unreconciled  reports of  disbursements prepared by  or
     for  the  Treasury  Department  as  the  source for  compiling
     Superfund costs  rather than the Agency's  official accounting
     system.     The   reports  of  disbursements  were   inaccurate
     because of inadvertent data entry  errors and because  they
     did not reflect  payroll adjustments.

     These inaccuracies consisted of the:

     o    Underreporting of  $62,460 in  allocable payroll  costs
          (see Exhibit  B) .   These  costs  were incurred  for  FEMA
          employees  who performed site-specific  Superfund duties
         . intermittently through the year.   Such costs  were not
          reflected  on the Treasury  reports;

     o    Underreporting of  $18,990  in   eligible  expenses  (see
          Exhibit  C)  .   These expenses were not recorded  on  the
          Treasury reports;

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          Reporting  of  $35,020  in  ineligible  costs.    These
          charges were  for either expenditures  unrelated  to the
          Superfund  Program (see Exhibit  D)   or for  the  unused
          portion of travel advances (see Exhibit E); and

          Incorrect reporting of  $3,016  in  otherwise eligible
          expenses which  had been charged  to the  wrong site  or
          account (see Exhibit F).
3.   Missing Documentation

     The  agreement between  EPA  and FEMA  also required  FEMA  to
     maintain  documentation to  support  all   Superfund  charges.
     However,  the  office  of the  Comptroller  could not  provide
     supporting  documentation   for   approximately  $26,242   in
     expenditures  (see  Exhibit  G).     Missing  were  invoices,
     receipts,  or payment  documents.  Thus,   these charges  are
     considered questionable.

                         RECOMMENDATIONS

In view of the  above  conditions,  we recommend  that the Office of
the Comptroller:

          1)    Reconcile Superfund  expenses included on Treasury
               reports   of  disbursements  to  FEMA's  official
               accounting records to ensure accurate reporting of
               Superfund costs to EPA; and

          2)    Correct  the reporting   inaccuracies  found  through
               audit  by   adding   (in   subsequent  reports)   the
               $81,450 in eligible costs; deleting  (in subsequent
               reports)   the  $35,020   in ineligible  costs;  and
               reporting accurately (in subsequent  reports)  the
               $3,016 in costs  charged to the wrong  accounts  or
               sites.

          3)    Locate   records   to  support   the  $26,242   in
               questioned costs or reduce Superfund expenditures
               by that amount.

                         EXIT CONFERENCE

We discussed these  findings and recommendations  with  the Office
of the  Comptroller  on  October  20,  1988.   The  representatives
generally  concurred  with  the  findings  and  agreed  that  the
reporting errors   needed   to  be  corrected   and  the  missing
documentation located.

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                          SCHEDULE OF  FISCAL YEAR  1987
EXHIBIT A


SITE/ACCOUNT *
3300/3400
9000
9004
9005
9006
9008
9020
9022
9026
9027
9028
9029
9032
9033
9034
9035
9036
9037
9038
9039
9040
9041
9042
9043
9C44

SUPERFUND EXPENDITURES BY SITE/ACCOUNT
REPORTED TO EPA 8Y FEMA
LOCATION
TIMES BEACH, MISSOURI
PLANNING AGREEMENT - HEADQUARTERS
GLOBE, ARIZONA
M INKER STOUT/NIEGHBORS, MISSOURI
QUIAL RUM, MISSOURI
PIAZZA ROAD, MISSOURI
SCRANTON, PENNSYLVANIA
HUDSON, NEU HAMPSHIRE
LONOENOERRY, NEW HAMPSHIRE
MILL CREEK, MONTANA
DETROIT, MICHIGAN
SANFQRD, NORTH CAROLINA
CHEHALIS, WASHINGTON
PLANNING AGREEMENT - NETC
PLANNING AGREEMENT - NTH
SENUTA FAMILY, TEXAS
HOLLEY FAMILY, TEXAS
DEHPSEV FAMILY, TEXAS
CASTLEUOOO, MISSOURI
LIBERTY, TEXAS
MONROVIA, CALIFORNIA
CCNRCE, TEXAS
PLANNING AGREEMENT - REGION 1
SPRINGFIELD, VERMONT
TIKE 1 1 1 I;*NING FL*OS
TCTAL


FY 1987 EXPENDITURES
$679,292.88
$343,293.56 -
$67,100.99
$42,867.80 *
$56,953.85 *
$1,442.89 *
15,773.00
$12,765.23
$32,673.39
$64,074.39 *
$4,301.89
$14,297.33
$7,480.24
$57,684.95 *
$103,327.65 •
$17,174,81 *
$709.00 *
S1.564.32 «
$27,638.25 *
$7,094.29 *
$34,949.18 *
$304.50 *
$1,459.73 *
i62,148.50 *
I7C2.C3 '
il ,647.274.$7
* SiTES ALD!'£3

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     SCHEDULE OF PAYROLL COSTS
                                                     EXHIBIT 8

SITE/ACCOUNT *

3300/3400
9000
9005
9006
9008
9027
9029
9032
9033
9034
9035
9036
9037
9038
9039
9040
9043
MOT REPORTED TO EPA
LOCATION

TIMES 8EACH, MISSOURI
PLANNING AGREEMENT - HEADQUARTERS
MlNKER STOUT/NEIGHBORS, MISSOURI
QUAIL RUN, MISSOURI
PIAZZA ROAD, MISSOURI
MILL CREEK, MONTANA
SANFORD, NORTH CAROLINA
CHEHALIS, WASHINGTON
PLANNING AGREEMENT - NETC
PLANNING AGREEMENT - NTH
SENUTA FAMILY, TEXAS
HOLLEY FAMILY, TEXAS
DEMPSEY FAMILY, TEXAS
CASTLEUOOD, MISSOURI
LIBERTY, TEXAS
MONROVIA, CALIFORNIA
SPRINGFIELD, VERMONT

PAYROLL
UNOERREPORTEO
$Z,<.23.69
$15,209.82
$91.99
($1,033.64)
$63.72
$18,801.61
$1,341.41
$97.51
$1,688.19
$11,807.07
S35.28
$182.41
$219.27
$5,016.92
$862.41
$4,228.79
$1,383.78
TOTAL
$62,460.23

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                        SCHEDULE  OF  ELIGIBLE  EXPENSES
EXHIBIT C

SITE/ACCOUNT
9027
9027
9040
9034
9034
9034
9034
9034
9034
9034
9034
9034
9034
9034

9034

9041
9000
9000
9000
TOTAL
NOT REPORTED TC
SCHEDULE <1>
VD0263
VOQ257
VF0349
RCC535
RC0549
RC0550
RC0556
RN0474
TC0126
TC0127
TC0129
RF0544
IC0178
RA0641 &
[A0132
RK0266 &
I KOI 24
RT04SO
RN038S
RN039H
TC0116

1 EPA
AMOUNT
S9.466.00
$4,787.00
$13.01
$86. 50
$1,179.24
$442.25
$558.40
$229.50
$436.00
$364.00
$311.00
$290.00
$153.00
$55.00

$90.00

$52.69
$133.62
$52.60
$290.00
$18,989.81
<1>  SCHEDULE NUMBERS CSTA1NEO f?CM SJPERFUNO ACCOUNTING RECORDS

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                                    SCHEDULE OF
                                                                           EXHIBIT D


SITE/ACCOUNT
9040
9000
9006
9034
9034
9000
TOTALS
NON-SUPERFUND EXPENSES
REPORTED TO EPA
NOW- SUPER FUND
SCHEDULE  AMOUNT AMOUNT
RF0522 $9,562.53 $9,478.53
IN0192 $25,000.00 $25,000.00
374562 ($52.04) ($52.04)
1T0147 $40.00 $40.00
RD0506 $200.00 $200.00
TN0074 $229.50 $229.50
$34,979.99 $34,895.99
<1>  SCHEDULE NUMBERS OBTAINED FROM STATEMENT OF TRANSACTION REPORT

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                                SCHEDULE OF UNUSED
EXHIBIT E

SITE/ACCOUNT
9000

9034

9039

9034

TOTALS
TRAVEL ADVANCES
SCHEDULE <1> ADVANCE
IM0179 & $100.00
RN0367
1A0137 & $40.00
RA0663
IT0139 & $100.00
RT0443
IC0178 & $130.00
RC0548
$390.00

EXPENSE OUTSTANDING
$97.00 $3.00
'
$9.84 $50.16

$31.85 $68.15

$127.30 $2.70

$265.99 $124.01
<1>  SCHEDULE NUMBERS OBTAINED FROM STATEMENT OF TRANSACTIONS REPORT
                AND SUPERFUND ACCOUNTING RECORDS.

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                                SCHEDULE OF EXPENSES REPORTED
                                                                               £XH!8ir F
INCORRECTLY BY SITE/ACCOUNT

SITE/ACCOUNT
9000
9000
9000
9000
9000
9006
9043
9043
9043
9043
9043
9043
9038
9043
9035


•OTALS

SCHEDULE <1>
RN0464
RN0470
TNOOS3
TN0087
100479
841141
B0131S
80139S
B0154S
801 58S
B0169S
869336
H7B174
80169S
RT0407




AMOUNT
$253.60
$197.30
$248.00
$82.00
$50.00
$157.25
$150.00
$394.60
$676.66
$30.44
$28.88
($69.76)
$297.38
$78.00
$386.33


$3,015.73
CORRECT
ACCOUNT
9034
9034
9034
9034
9034
9005
9034
9034
9034
9034
9034
9042
9033
9034
9035
9036
9037

CORRECT
AMOUNT
$258.60
$197.30
$248.00
$82.00
$50.00
$157.25
$150.00
$394.60
$676.66
$80.44
$28.83
($69.76)
$297.38
$78.00
$129.05
$129.05
$128.28
$3,015.73
<1> SCHEDULE NUMBERS OBTAINED FROM STATEMENT OF TRANSACTIONS REPORT

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                   SCHEDULE QF EXPENSES
                                                       EXHIBIT G
WITH HISSING DOCUMENTATION
SITE/ACCOUNT
3300/3400
3300/3400
3300/3400
3300/3400
3300/3400
9000
9000
9000
9020
9033
9034
9034
9034
9034
9044
TOTAL
SCHEDULE <1>
T 00393
871027
871025
871143
870989
TA0398
V02677
V028T6
VP0409
H02499
T7T010
H7B168
H7L170
RS0214
E71449

AMOUNT
4218.00
$9,195.04
$7,657.31
($52.40)
($2,424.87)
$443.00
$260.00
$3,173.00
$5,773.00
$15.75
$418.00
$331.80
$7.57
$240.00
$986.30
$26,241.50
<1>  SCHEDULE NUMBERS OBTAINED FROM SUPERFUNO ACCOUNTING RECORDS

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                                                ATTACHMENT 2
        Federal Emergency Management Agency
                     Washington, D.C. 20472
                                               JAN 12 1989
MEMORANDUM FOR:
 FROM:
SUBJECT:
 Garv J. Barard
 Assistant Inspector General for Audit

(•George H. Orrel!)
 Controller

              If   '
 Review of FEMff's Administration of  the Comprehensive
 Enviromental Response, Compensation and Liability
 Act (CERCLA) for Fiscal Year 1987
 Audit Report No, H-Q2-89
We have completed our review of  the  subject audit report and your
supplemental memorandum dated November 4, 1988, regarding administrative
costs charged against various Superfund relocation programs under CEHfLA
during FY 1987.   In response to  the  audit findings, and in accordanc^
with FEMA Instruction 1270.2, paragraph 7, we have prepared the attached
comments and planned corrective  action.

I would like to  compliment your  staff for their professionalism when
conducting the recent subject audit.  When requesting information and
assistance from  the Accounting Division, your staff was consistently
friendly, polite and considerate of  ongoing operational deadlines.
Consequently, both offices worked well together to achieve the purpose
of the audit without incurring some  of the friction and
misunderstandings that are sometimes associated with an audit.  The
result was a high degree of cooperation and a well prepared audit report.

Due to the continuing expansion  of FEMA's Superfund activities and the
Superfund's highly visibile position in Congress, we understand the
importance of the annual audit.  Your report has helped us identify
several new issues that are in need  of correction.  Additionally, your
findings reinforce some actions  that we have already taken to correct
operational weaknesses.  Full compliance with the recommendations
outlined in your audit will be accomplished by February 28, 1989.

If you have any  questions or require additional information, please
contact Jim Lucas, Accounting Officer, at 646-4398.

Attachment

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                  Office of the Comptroller Review
                          January 11. 1989
Me have completed our review of the subject audit report and vour
supplemental memorandum dated November 4, 1988, regarding administrative
costs charged against various Superfund relocation programs under CERCLA
during FY 1987,  We will respond to the report on an item by item basis.

Item number one does not require action.

Item number two of the audit states that expenses reported to EPA were
understated bv $46,430, and that site and fund totals were reported
incorrectly.  The audit states that the monthly financial reports
submitted to EPA were not accurate since they were prepared from
unreconciled "Summary of Transactions" (SF 224) reports, rather than the
"Data Processing Special Request" (OPSR 337) report, which is extracted
from FEMA's "Financial Reporting and Accounting System" PARS.  The audit
further states that the SF 224 reports were inaccurate due to data entry
errors and lack of payroll adjustments.  Subsequently, the audit has
identified more specific problems below:
                                                                     3
The amount of 162,460 was identified in Exhibit B of the audit report^as
an allocable pavroll cost not reported on FEMA's SF 224 reports.

     We agree with the audit that Superfund payroll costs were not being
     reported to EPA correctly.  Actual Superfund payroll costs were not
     reported to EPA until the end of the fiscal year, on the September
     "Project Status" report.  Payroll costs wgje reported monthly
     (during the same fiscal year) in the SF 224 report to the
     Department of Treasury (Treasury), and the "Report on Budget
     Execution" (SF 133), which is also provided to EPA.  The payroll
     costs reported on the SF 224 and SF 133 reports are provided by
     Treasury on their monthly Treasury Payroll Information System
     (TPIS) report.  The TPIS figures are based on actual payroll
     (salaries and benefits) costs processed for the Agency by Treasury,
     and are broken out by fund and pay period.  However, the TPIS
     figures do not include any prorated (time) payroll adjustments made
     in the "Intergrated Staffyear Information System" (ISIS), (by
     Superfund and/or non-Superfund employees) for time incurred against
     various Superfund sites/programs.  Thus, Treasury's payroll costs
     were not alwavs correct.  Before actual payroll costs could be
     reported accurately on the "Project Status" report, the Accounting
     staff is required to reconcile Treasury's and PARS' Superfund
     payroll costs by pay period.  When ISIS entries are made,
     accounting adjustments are required in FARS, and are made in
     conjuction with the reconciliation process to correctly balance
     payroll costs between FARS and Treasury.  (During prior fiscal
     years, the payroll reconciliation process could not be completed
     (due to various reasons) until the end of the fiscal year,  to
     coincide with the year-end reporting and closeout process).

     The Accounting staff has already begun research on  the payroll


                                -2-

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     amounts identified in the audit (Exhibit 8 of the audit report),  to
     Mke certain that thev have been reconciled and have been posted
     Wit necessary)  to EPA's "Project Status" report.   Action has  also
     bavn taken to determine how Superfund pavroll costs can be
     reconciled and reported to EPA on a monthly basis.  We anticipate
     completion of these items bv February 28, 1989, at which time we
     will contact the auditor verbally and/or in writing on the status
     of our planned corrective actions.

The amount of S18.99Q in eligible expenses listed in Exhibit C of  the
audit report was not recorded on FEMA's  5F 224 reports.

     We agree that the identified eligible expenses were not recorded
     properlv on our monthly SF 224 reports.   The Accounting staff has
     researched all of the (19) schedules listed in Exhibit C, and have
     determined that 15 schedules wgjg reported on FEMA's SF 224 reports
     to Treasury.  However, it appears that the accomplished (paid)
     entries for these schedules were inadvertently coded in PARS
     against the wrong fund code (i.e.,  S & E = 9, Disaster « 6)
     number.  The remaining four schedules (VD0263, VOQ257, RN0474 &
     RF0544) were preoared and coded in PARS, but were never
     accomplished by Treasury - which means that these schedules weree
     never recorded on the SF 224 report.  The Accounting staff will
     make all of the necessary coding changes and correcting entries for
     these discrepancies by February 28, 1989.  (The schedule amounts
     listed in Exhibit C for schedules RC0535, RC0550, RC0556 and IC0178
     did not correspond to the actual schedule totals when researched.
     The auditor has been notified of the variances for these schedules).

The amount of $35,020 has been identified in Exhibit 0 & E of the audit
report as ineligible costs charged to the Superfund Program.  The audit
has identified $34,8% as being non-Superfund costs reported to EPA, and
$124 as outstanding Superfund travel advances due FEMA.

     We agree that all of the schedules  listed in Exhibit D, in the
     amount of $34,8%, were erroneously charged to the Superfund

     Program instead of the Salaries and Expense (S 4 E) account.  The
     Accounting staff will make all of the necessary correcting entries
     by February 28, 1989.

     We do not agree with the auditor's  findings concerning outstanding
     travel advances in the amount of $124.01.  Upon researching the
     schedule numbers listed in Exhibit E within the "Travel Information
     Reporting System" (TRIPS), the Accounting staff has determined that
     all outstanding advances have been repaid.  The Accounting staff
     has provided the auditor copies of printouts which supports their
     conclusion.

The amount of $3,016 has been identified in Exhibit F of the audit
report as being erroneously charged to the wrong Superfund  site or  fund.

     We agree with that the schedules listed in Exhibit F were


                                -3-

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     inadver-.entlv charged to the wrong Supeifund site/program number or
     to the 3 4 E account (Fund 9), and will make all of the necessarv
     Cprrec:.ng entiles by Februarv 28, 1989.  However, the Accounting
     staff -=s determined that schedule numbers B0169S, H7B174 and
     dtWCT :o net reauire adjustments, and have provided the auditor
     with c:iies of schedules and printouts to support their
     cone iu:. on.  (The amounts referenced for schedules B01395, 8015-iS
     and RTI-37 in tne exhibit, do not correspond to the actual scheoule
     amount- *nen compared during research.  The auditor has been
     notifies of the variances for these schedules).

Item number *nree of the audit states that the Office of the Comptroller
could not or:.ide supporting documentation (i.e., invoices, receipts and
pavment dooxents) for $26,242 in expenditures as listed in Exhibit G of
the audit rercrt.  Therefore, these charges have been considered
questionable.

     The Accounting staff has located schedules V02678, V02816, H7B168
     and RSCli-t, and have submitted them to the auditor for his review.
     The Acccjnting staff is having some difficulty locating the
     remaini-g schedules as follows:

          1 .  T00393
          2.  871027
          3 .  871025
          4.  871143
          5 .  870989
          6.  TAQ398
          7 .  VP0409
          8 .  HQ2499
          9.  T7T010
         10.  H7L17Q
         11.  £71449

     We wil- continue to search for all missing documentation.  As
     documer-.s are located, they will be promptly delivered to the
     auditor.  The Accounting staff will attempt to have all missing
     documer-.ation located and delivered to the auditor by February 28,
     1989.   Schedules TA0398 and VP0409, were requested from Regions
     III anc IV by formal memorandum.  Copies of the memorandum have
     been provided to the auditor for his review).

Item one of  our supplemental memorandum states that Letter of Credit
(LOC) month 1 . expense reports for O.R. Colan Associates (under Times
Beach, MCn -.5,6 not been entered into PARS since April 1985.
Subsequent! . expenditures in the amount of $1.9 million were not
reported to EPA from Mav 1985 thru September 1987.
     We aarr-e that O.R. Colan Associates' monthlv "Summary of
     Transa—ions" (SF 272) report was not being entered  into  PARS  in a
     time!, -anner.  In the past, the SF 272 reports were not  being
     enter&z into PARS routinelv due to the following reasons:
                                -4-

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       o  Reports were  sometimes attached to invoices and were not
          separated before being submitted to Documents Control and
          Accounts Pavable for payment processing.

     "*b  Untimei- and  disorganized delivery patterns of the report to
          and within the Accounting Division.

       o  Heaw data entrv backlogs in the LOG office.

     We have corrected  this matter bv making sure that the responsible
     Program Officer delivers the SF 272 report directly to the
     Superfund Accountant each month.  The Accountant will then ensure
     that the SF 272 report is delivered to the LOG office in a timelv
     manner, and is promptly entered into PARS.

     The LOG office has already entered O.R. Colan's SF 272 reports into
     PARS for Mav 1985  thru September 1987 in the amount of $1.9
     million.  Additionally, reports for October 1987 thru April 1988,
     have been entered.  The LOG office is currently organizing reports
     for Mav 1988 thru  November 1988, for entry into FARS during January
     1989.

Item two of vour supplemental memorandum identified (in the attachment)
several eligible transactions reported to EPA, but not recorded in FARS.

     We do not agree with the audit.  All of the documents identified in
     the attachment we,re recorded in FARS, with the possible of
     exception of schedule 870361, which cannot be confirmed at this
     time.  The Accounting staff cannot locate an entry for this
     schedule in FARS,  but will research the reason for omission.  Once
     research has been  completed, the auditor will be notified of the
     results and will be provided printouts if needed.  The Accounting
     staff has provided copies of printouts (of confirmed schedules) to
     the auditor for his review.

Item three of your supplmental memorandum states that "time sheets for
Accounting personnel were missing for the entire year".

     Ne agree that the  time sheets requested by the auditor during the
     audit process could not be immediately located.  The Accounting
     staff has located  the requested time sheets for Headquarters and
     have provided copies to the auditor for his review.  Time sheets
     for Region VII were located at Headquarters also, but did not
     contain the FY 1987 time sheets requested bv the auditor.  We will
     contact the Region VII Superfund contact and ask that he trv to
     locate the 1987 time sheets, and transmit them to Headquarters for
     the auditor to review.  The Accounting staff will attempt to have
     the missing timesheets for Region VII delivered  to the auditor by
     February 28, 1989.

If vou have anv questions or require additional information, please
contact Vince Velez at  646-3707 or Svlvia Faulkner at 646-4266.
                                -5-

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                                                                              ATTACHMENT  3
                   •KCfflWENDATIONS ^OR THE SUPERFUND AUDIT QF FISCAL  YEAR  1787
                                FEUA 016 AUDIT REPORT NO.  H-02-89
RECOMENOATION t flNB RECQHMENDATIQN
                                                 STATUS
ACHON TAKEM *C RESOLVE
1.  Ke recowenc that the  0"ice cf ts«
Caiatroller recsncile Super'uri axpsnm
included on Treasury reoorts  '.* iissu
to FE.19's Official  accepting  'e::rs? ta
ensure accurate resorting  :*  S'-:s** j-ii  icsts
to EF$.
                                                RESOLVED    T1ie  Office of the CoiDtrsilar has agreed
                                                            »ith  the Binding srd is develsoing a
                                                            systei  tc correct th:s.  Action has not
                                                                          d at tni» tise.
:,  Ma recowed  that  tka  3?fica v t"3
Csioti'sller cor-ect  tie rssc't:--:
inaccuracies fou^d  th^^ug?1  twa -^\'. :v


:  idi the ailocable  :-a,":!l  ::;*.5 3*
   $62.460 te tr,e costs «-e:c".s: v; ;:A.
c  Atfa the ehgiale  ssce-sss  :'
                                                RESDLVEB    4djusti',q  entries  ^ave been lade and
                                                   i        detgrtined to  non  be correct,
                                                RESOLVED    Adjusting  vines have been tade anc
                                                   4        deternrsi  -.3 ron it csrrKt.
a  ^duc; :UiisJ  ::5ts  :J  «T?.?:3  ':-
                                                            Ad;usti-ig  '.-.triss  'lavs :eer iase ind
                                                            ceternrsd  t: now  :e co-'sct.
             .c;-r=:t.v  :y  sits  t; Er
                                                            ^dj,3t:":c  e-tnes  lave been ^afle and
T,  iff -2:?i«e.-d thit  the  Cff.ca •:? f-.a
:i*::r5ller locate records to suc:or-. the
i2i.2*2 ir, questiontd  costs or  re.uca
s-iSr'fLid expenditures bv  that  aiount.
                                                   4
                                                 CLOSED
                                                                             Ocsstrj'.'.er hj5 located


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