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ISZy
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
SOUTHERN DIVISION, SUITE 276
1375 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30309
(404) 347-3623 AUDIT
(404) 347-2398 INVESTIGATIONS
February 22, 1989
REGIONAL OFFICE:
1445 ROSS AVENUE, SUITE 1200
DALLAS, TEXAS 75202-2733
(214) 655-6621 AUDIT
(214) 655-6610 INVESTIGATIONS
MEMORANDUM
SUBJECT:
FRCM:
TO:
Audit Report No. P5cGN8-06-0122-9300022
Report on Interim Audit of Arkansas Department of
Pollution Control and Ecology's
Grant No. V006462-01
Michael D. Siitmons
Acting Divisional Inspector General for Audit
Southern Division
John Fleeter
Assistant Regional Administrator for Management (6M)
Region 6
Attached is a copy of the subject report. This report discloses that ADPCE
needs to further develop and implement policies and procedures which will
ensure the accuracy of quarterly reports and eliminate inconsistencies which
impact the integrity of financial and project records.
Personnel costs, along with applicable fringe benefits and indirect costs in
the amount of $6,601, were questioned because of different timesheets and
quarterly progress reports.
As the action official, you are required under EPA Directive 2750 to issue a
final detemination on the costs questioned within 150 days of the audit
report date.
Should your staff have any questions or need additional information, please
contact Robert Page or Dwight Murray at 347-3623. Please refer to the audit
report number in all correspondence regarding this report.
cc: Oiief, Resources Management Branch, Region 6
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REPORT OP INTERIM AUDIT OF
ARKANSAS DEPARTMENT OF POLLUTION CONTROL AND ECOLOGY'S
ADMINISTRATION OF SUPERFUND COOPERATIVE AGREEMENT NUMBER V-006462-01
WITH EPA UNDER THE COMPREHENSIVE ENVIRONMENTAL RESPONSE,
COMPENSATION, AND LIABILITY ACT OF 1980
FOR THE PERIOD APRIL 1, 1985 THROUGH MARCH 31, 1988
Simmons, Rtetwy
& Company, P.C.
CwtMtod AiMe Acoowtfana
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ARKANSAS DEPARTMENT OF POLLUTION CONTROL AM) ECOLOGY
INTERIM AIDIT OF ADMINISTRATION OF SUPERFUJD COOPERATIVE
AGREEMENT NUMBER V-006462-01
TABLE OF CONTENTS
—•- Page
Scope and Objectives 1
" ~ Sumroary of Audit Results 2
Background 4
Auditors' Report on Multi-Site Cooperative Agreement
: V-006462-01 Awarded to the Arkansas Department of
Pollution Control and Ecology 7
. Auditors' Report on Internal Control 9
Auditors' Report on Compliance 11
Findings and Recommendations 12
Exhibit A - Statement of Costs Claimed, Accepted and
. Questioned, Super fund Multi-Site Cooperative Agreement
V-006462-01 13
EPA's Comments - Attachment A 16
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Simmons, Richey
& Company, P.C.
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ARKANSAS DEPARTMENT CF POLLUTION CONTROL AND ECOLOGY
INTERIM AUDIT OF ADMINISTRATION OF SUPERFUND COOPERATIVE
AGREEMENT NLMBER V-006462-01
Scope and Objectives
We performed an interim audit of the Arkansas Department of Pollution
Control and Ecology's (ADPCE) administration of its multi-site cooperative
agreement with the United States Environmental Protection Agency (EPA)
under the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980 (CERCLA). The primary objectives of our examination
were to determine whether:
(1) Costs claimed under the cooperative agreement for the period April 1,
1985 through March 31, 1988 are reasonable, allowable and allocable to
the sponsored projects, and
(2) Controls exercised by the state through its financial management,
accounting, procurement, contract administration and property
management systems are adequate to provide assurance that costs
claimed are reasonable, allowable and allocable to the sponsored
projects.
Our audit for the period April 1, 1985 through March 31, 1988 was
performed in accordance with generally accepted auditing standards and the
"Standards for Audit of Governmental Organizations, Programs, Activities,
and Functions" promulgated by the Comptroller General of the United
States. The Environmental Protection Agency's OIG Manual entitled
"EAG-3—-CERCLA Cooperative Agreements" was also used as a guide.
Accordingly, our examination included such tests of the accounting records
and such other auditing procedures as we considered necessary in the
circumstances.
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Simmons, Rlclwy
& Company, P.C.
CwlMtod PuMe Accountants
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Summary of Audit Results
The results of our audit indicate that, except for the matters discussed
in the following paragraphs, costs claimed were reasonable, allowable and
allocable and controls exercised by the state through its financial
management, accounting, procurement, contract and property management
systems were generally adequate to ensure that costs claimed are
reasonable, allowable and allocable to the sponsored projects.
Personnel Costs
The state's accounting system accumulates direct labor hours, related
costs and other costs by specific function and site. Direct salaries are
traceable to timesheets signed by the employee and attested to by
supervisors. However, during our examination of the quarterly progress
report packages submitted by the state to EPA and correspondence from EPA
program personnel related thereto, we noted inconsistencies between hours
reported by site and the narrative descriptions of work performed by site.
The primary inconsistency relates to hours being reported for specific
sites for which narrative justification was not included. We believe this
inconsistency lessens the credibility of the time records as evidence to
support related costs claimed. Accordingly, we have questioned costs
totaling $6,601 including direct salaries plus applicable fringe benefit
and indirect costs claimed.
Questioned costs are costs claimed which we have concluded should not be
reimbursed by EPA as part of project-eligible expenditures because they
are not allowable under the provisions of applicable laws, regulations,
policies, cost principles or terms of the cooperative agreement.
Indirect Cost and Fringe Benefit Rates
Indirect costs claimed from July 1, 1986 through March 31, 1988 are based
on provisional rates. ADPCE is currently negotiating with the Cost Policy
and Rate Negotiation Section of the Planning and Cost Advisory Branch at
EPA to establish a final indirect cost rate for 1987 and will do so for
1988 following close-out of fiscal year 1988. Fringe benefit costs
claimed from October 1, 1987 through March 31, 1988 are based on the
actual fringe benefit rate for the year ended September 30, 1987; final
fringe rates will not be determined and costs claimed adjusted until after
September 1988. Allowable costs under the cooperative agreement may
increase or decrease based on the final negotiated indirect cost rates for
1987 and 1988 and determination of the actual fringe benefit rate for
1988.
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Simmons, Rfcfwy
& Company, P.C.
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Qther Matters
(a) ADPCE did not consistently submit, on a quarterly basis, the required
quarterly Minority and Women's Business Enterprise utilization
reports, as required by the cooperative agreement.
(b) Earlier in the project period, Federal Cash Transactions Reports were
submitted late.
(c) The project narrative statement included in the grant application was
incorporated into the cooperative agreement by reference as a special
condition. ADPCE did not conply with specific provisions requiring
EPA project officers' approval of the quality assurance/quality
control plan prior to beginning certain site work. Certain costs
incurred prior to submission of the plan were questioned in 1986 by
EPA program personnel. Although these costs were later excluded by
ADPCE from costs claimed, EPA's observation disclosed the Auditee's
failure to comply with the special conditions of the cooperative
agreement.
Simmons, Richey
& Company, P.C.
CwtMtod PuMte Aeeountw
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ggcfrground
The SUperfund program was established by the Comprehensive Environmental
Response, Condensation, and Liability Act of 1980 (CERCIA), Public Law
96-510, enacted on Deceirber 11, 1980. The Superfund program was created
to protect public health and the environment from release, or threat of
release, of hazardous substances from abandoned hazardous waste sites and
other sources where response was not required by other Federal law. A
Trust Fund was established by CERCIA to provide funding for responses
ranging from control of emergency situations to provision of permanent
remedies at uncontrolled sites. CERCIA authorized a $1.6 billion program
financed by a five-year environmental tax on industry and some general
revenues. CERCIA requires that response, or payment for response, be
sought from those responsible for the problem, including property owners,
generators, and transporters.
CERCIA was revised and expanded by the Superfund Amendments and
Reauthorization Act of 1986 (SARA), Public Law 99-499, enacted October 17,
1986. SARA reinstituted the environmental tax and expanded the taxing
mechanism 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. The basic regulatory blueprint for the
Superfund Program is the National Oil and Hazardous Substances Contingency
Plan (NCP), 40 CFR Part 300. The NCP was first published in 1968 as part
of the Federal Water Pollution Control Plan, and has been substantially
revised to meet CERCIA requirements. The NCP lays out two broad
categories of response: removal and remedial response. Removals are
relatively short-term responses, and modify an earlier program under the
Clean Hater Act. Remedial response is long-term planning and action to
provide permanent remedies for serious abandoned or uncontrolled hazardous
waste sites.
CERCIA recognizes that the Federal government can only ensure
responsibility for remedial response at a limited number of sites
representing the greatest public threat. It therefore requires a National
Priority 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 designate its highest
priority site, without regard to the ranking system.
CERCIA 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 at 100 percent by
EPA. For facilities operated by a state or political subdivision at the
time of disposal of hazardous substances, the state oust pay at least 50
percent of all response costs, including removals and remedial planning
previously conducted.
Simmons, Rteh«y
& Company, P.C.
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CEPCLA Section 104(d)(i) provides that if a state or political subdivision
thereof is determined to have the capability to respond to the issues
addressed in the Act, they may be authorized to respond by use of a
contract or cooperative agreement. As a result, most states have
participated in some part of the Superfund program. CERCIA Section
104 (d) (2) provides a remedy to the Federal government for failure of a
state or political subdivision to perform satisfactorily.
Cooperative Agreement V-006462-01 entered into with the ADPCE, as modified
through Amendment Number Three, involves state participation in: (a) one
state-lead remedial investigation/feasibility study (RI/FS) site, (b)
non-specific preliminary assessment/site investigation (PA/SI) sites, and
(c) nine specific management assistance (MA) sites, of which ADPCE was
actively involved in seven through March 31, 1988. Amendment Four to the
agreement was executed after March 31, 1988.
Old Midland Products (State-Lead RI/FS Site)
The Old Midland Products Company operated a sawmill and wood preserving
plant from 1969 to 1979 in Yell County, Arkansas about 1/2 mile east of
Ola. In July 1984, the site was added to the super fund list of hazardous
waste sites based on prior inspections and test results.
The Agreement provided for up to $820,000, including $736,970 for
contractual services, to complete the RI/FS and obtain the report. As of
March 31, 1988, the report had been completed and the state and EPA were
in the process of determining which remedial action would be undertaken.
Astance (M/A) Sites
The original scope of work included ADPCE 's request for management
assistance for Old Midland and the five EPA-lead sites indicated below.
CeciJ
This site covers 4.5 acres near Newport, Arkansas. It was privately-owned
and unpermitted. Leachate from the sandy soils contain heavy metals and
organic compounds. The primary concern was the potential for runoff to
contaminate the shallow aquifer under the site and nearby Village Creek.
Qirley Oil Pj.t
This privately owned and operated 3.3 acre site, located one mile north of
Edmondson, Arkansas, was used between 1970 and 1976 for disposal of
sludges from the refining of waste oil. The sludges contained chromium,
lead, and low levels of PCB's.
Simmons, Rtetey
& Company, P.C.
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This site, located twelve miles southeast of Fort Smith, is an abandoned
industrial and solid waste landfill and surface inpoundment used from 1970
to 1979 to dispose of sludges and industrial wastes. Contaminants
included heavy metals and organics.
Mid South Wood Products
This 57 acre site in Mena, Arkansas was purchased by the company in 1978.
Wxd processing operations conducted from 1967 to 1977 by the former owner
resulted in surface waters being contaminated with PCP, creasote, arsenic
and chromium. Subsurface contamination was considered highly probable.
Vertac. Inc.
As a result of inadequate waste disposal methods and production controls,
solid, surface waste and general ground water on this 92 acre site in
Jacksonville, Arkansas were contaminated by insecticides, herbicides,
chlorinated phenals and dioxin. The Federal District Court ordered a
remedy consisting of surrounding the waste burial areas with slurry walls
and French Drains, improving caps for existing burial areas, draining and
closing a contaminated pond and covering contaminated ditches.
Amendment Number 3 to the agreement provided funding for two additional
sites not included in the organizational statement of work. These
included: (1) Arkwood, Inc. and (2) Frit Industries.
Non-Specific PA/SI Sites
The original project narrative summary included five PA/SI sites. Ten
additional sites were subsequently added. PA/SI site costs are claimed as
one activity on the Financial Status Reports, although ADPCE accumulates
costs separately for each site. Based on discussions with the EPA project
officer, all but one (Pinecrest Lumber) of these 15 sites had been
finalized.
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Slmmons, Rtehey
& Company, P.C.
CwtHtod PutoUe Accountant*
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Simmons, Rlchey
& Company, P.C.
Public Accountants
1447 Peachtree Street, NE
Suite 700
Atlanta, Georgia 30309
(404) 876-6227
Memben: Georgia Society of CPA'i
American Injntute of CPA'i
Ms. Kathryn M. Kuhl-Inclan
Division of Inspector General for Audits
EPA, Southern Division
1375 Peachtree Street, N.E.
Suite 276
Atlanta, Georgia 30309
Dear Ms. Kuhl-Inclan:
We have examined the costs incurred and claimed by the Arkansas Department
of Pollution Control and Ecology (ADPCE) under Cooperative Agreement
Number V-006462-01 for the period April 1, 1985 through March 31, 1988.
Our examination was made in accordance with generally accepted auditing
standards and the "Standards for Audits of Governmental Organizations,
Programs, Activities and Functions." The audit included tests of the
accounting records and such other auditing procedures as we considered
necessary in the circumstances. The Environmental Protection Agency's OIG
Manual "EAG-3—CERCLA Cooperative Agreements" was also used as a guide in
our examination.
As part of our examination, we determined the allowability of costs
claimed under the cooperative agreement in accordance with the provisions
of the agreement and applicable Federal regulations. Exhibit A sets forth
the costs we questioned in this regard and includes an explanation of the
reasons such costs were questioned. The indirect cost rates for 1987 and
1988 had not been approved in final as of March 31, 1988, and the actual
1988 fringe benefit rate cannot be determined until after year end. Costs
claimed may increase or decrease once final indirect cost and fringe
benefit rates are determined.
The Statement of Costs Claimed, Accepted and Questioned (Exhibit A) was
prepared on the basis of regulations and criteria established by the U.S.
Environmental Protection Agency relating to Superfund Cooperative
Agreements pursuant to Public Lav 96-510. Accordingly, Exhibit A is not
intended to present financial position and results of operations in
conformity with generally accepted accounting principles.
In our opinion, subject to the effects, if any, on Exhibit A of EPA's
ultimate resolution of questioned expenditures, final approval of indirect
cost rates and determination of the 1988 fringe benefit rate referred to
in the second preceding paragraph, Exhibit A presents fairly the costs
claimed by the ADPCE under the cooperative agreement with EPA on the basis
described above.
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This report is intended for use in connection with the cooperative
agreement to which it refers and should not be used for any other purpose.
May 24, 1988
Simmons, Richey
& Company, P.O.
CwWtod PuMte AoeowntMt*
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Simmons, Rlchey
& Company, P.C.
Cartlftod Public Accountants
1447 Peachtree Street, HE
Suite 700
Atlanta, Georgia 30309
1 (404) 876-6227
_i-i. :: Memben: GsorgM Sociwy of CPA't
; American taintute of CPA's
Ms. Kathryn M. Kuhl-Inclan
Division of Inspector General for Audits
EPA, Southern Division
1375 Peachtree Street, N.E.
Suite 276
Atlanta, Georgia 30309
AUDITORS' REPORT ON INTERNAL ACCOUNTING CONTROLS
Dear Ms. Kuhl-Inclan:
We have examined the costs incurred and claimed by the Arkansas Department
of Pollution Control and Ecology (ADPCE) under Superfund Cooperative
Agreement Number V-006462-01 with the Environmental Protection Agency from
April 1, 1985 through March 31, 1988, as presented in Exhibit A, and have
issued our report thereon dated May 24, 1988 (see page 7).
As part of our examination, we reviewed the system of internal accounting
controls to the extent we considered necessary to evaluate the system as
required by generally accepted auditing standards for financial and
compliance audits contained in the U.S. General Accounting Office's
"Standards for Audit of Governmental Organizations, Programs, Activities
and Functions" (1981 revision). For purposes of this report, we have
classified the significant internal accounting controls into the following
categories:
Disbursements
Payroll
Procurements
Contractor Performance and Billings
Management of Federal Cash
Property Management
Our study included all of the control systems listed above. The study was
limited to a preliminary review of the system to obtain an understanding
of the established controls and the flow of transactions through the
accounting system. Studies and evaluations performed by the State's
Legislative Auditors in connection with their audits of ADPCE for state
Fiscal Years 1986 and 1987 were reviewed as a part of our study. Our
study established a basis for reliance on the grantee's accounting system
in determining the nature, timing and extent of other auditing procedures
necessary for expressing an opinion on costs claimed.
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The objective of internal accounting controls is to provide reasonable,
but not absolute, assurance that the (1) assets are safeguarded against
loss from unauthorized use or disposition and (2) financial records are
reliable for preparing financial statements and maintaining accountability
for assets. The concept of reasonable assurance recognizes that the cost
of a system of internal accounting controls should not exceed the benefits
derived and also recognizes that the evaluation of these factors
necessarily requires estimates and judgments by management.
Because of inherent limitations in any system of internal accounting
control, errors or irregularities may nevertheless occur and not be
detected. Also, projection of any evaluation of the system to future
periods is subject to the risk that procedures may become inadequate
because of changes in conditions or that the degree of compliance with the
procedures may deteriorate.
Our study and evaluation made for the limited purpose described in the
second paragraph would not necessarily disclose all material weaknesses in
the system. Accordingly, we do not express an opinion on the system of
internal accounting control of the ADPCE taken as a whole or on any of the
categories of controls identified in the second paragraph. However, our
study and evaluation disclosed the conditions described in the "Findings
and Recommendations" section under "Personnel Costs" and "Other Matters"
which we believe are material.
This report is intended solely for use in connection with the cooperative
agreement to which it refers and should not be used for any other purpose.
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May 24, 1988
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Slmmons, Rtehey
& Company, P.C.
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Simmons, Rlchey
& Company, P.C.
Certified Public Accountants
1447 Peachtree Street, NE
Suite 700
Atlanta, Georgia 30309
•4; (404) 876-6227
H— |- Membcn: Georgia Society of CFA'i
i' American Inatnua of CPA'l
--M-4 .
Ms. Kathryn M. Kuhl-Inclan
Division of Inspector General for Audits
EPA, Southern Division
1375 Peachtree Street, N.E.
Suite 276
Atlanta, Georgia 30309
ACDITORS1 REPORT CM COMPLIANCE
Dear Ms. Kuhl-Inclan:
We have examined the costs incurred and claimed by the Arkansas Department
of Pollution Control and Ecology (ADPCE) under Superfund cooperative
agreement Number V-006462-01 with the Environmental Protection Agency from
April 1, 1985 through March 31, 1988, as presented in Exhibit A, and have
issued our report thereon dated May 24, 1988 (see page 7).
In connection with the examination referred to above, we selected and
tested transactions and records to determine ADPCE's compliance with
applicable Federal laws and regulations and with the provisions of the
Agreement, noncompliance with which could have a material effect on costs
claimed (Exhibit A).
The results of our tests indicate that, for the transactions and records
tested, ADPCE complied with the laws and regulations and agreement
conditions referred to above, except as described in the "Findings and
Recommendations" section under "Personnel Costs" and "Other Matters." Our
testing was more limited than would be necessary to express an opinion on
whether the ADPCE administered the projects in compliance in all material
respects with applicable laws and regulations. Regarding transactions and
records that were not tested by us, nothing came to our attention to
indicate that the ADPCE had violated laws and regulations or cooperative
agreement conditions beyond those conditions referred to above.
This report is intended for use in connection with the agreement to which
it refers and should not be used for any other purpose.
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May 24, 1986 '
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FINDINGS AND RECOMMENDATIONS
Personnel Costs
As was disclosed during an interim program review conducted by EPA's
program personnel, inconsistencies existed between hours reported by the
ADPCE for effort expended by its personnel and the narrative discussion of
work performed included in the quarterly progress reports. In February
1988 the auditee eliminated from program costs claimed those costs
relating to the discrepancies identified by EPA during the interim review
except for costs relating to the Gurley Oil and Mid-South MA sites. We
examined the quarterly progress reports from June 1986 through March 1988
noting additional discrepancies between hours reported and the work
performance narratives. Accordingly, costs related to these
inconsistencies have been questioned for the purpose of this report as
follows:
Appli- Appli-
cable cable
Quarter Direct Fringe Indirect
_ Ended Hans. Labor Benefits Cost Total
Site/Funct ion
Gurley Oil MA 12/85 50
Gurley Oil MA 9/87 4
Mid-South MA 12/85 40
Mid-South MA 3/86 82
Mid-South MA 9/87 13
American Lantern PA/SI 6/87 67
American Lantern PA/SI 9/87 3
Industrial Waste MA 6/87 8
Fordyce Wood PA/SI 3/88 4
For purposes of the above computations, we utilized the hours reflected in
the quarterly timesheet summaries, which in some instances differ from
hours reflected in the quarterly progress reports (see below).
? 703
59
557
1,129
192
825
45
118
48
$
421
35
334
676
113
505
27
72
29
$1,269
104
1,006
2,038
338
1,471
80
210
85
01
Other inconsistencies noted during our review
reports, which did not result in questioned costs,
of quarterly progress
include the following:
1. In every instance where hours were reported, the total hours reflected
in the quarterly progress reports were less than those reflected in
the computerized timesheet summarizes.
2. Activities for specific sites were reported for some months where the
time summaries included in the quarterly reports reflected no hours
expended for the specific sites.
Simmons, Richey
& Company, P.C.
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PuWte Accountants
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Recoimendat ion
We recommend that the Regional Administrator instruct the ADPCE to develop
and implement policies and procedures which will ensure the accuracy of
quarterly reports and eliminate inconsistencies which may impact the
integrity of financial and project records.
Indirect Cost and Fringe Benefit Rates
It is ADPCE's policy to make appropriate adjustments to cumulative cost
claimed where, upon obtaining EPA approval of indirect cost rates and
determination of the actual fringe benefit rates, differences occur
between rates for interim purposes and final rates. The EPA Cost Policy
and Rate Negotiation Section has given approval to final indirect cost
rates of 59.96% and 64.75% for the state fiscal years ended June 1986 and
June 1985, respectively. In November 1987, ADPCE submitted revised FY
1988 provisional and FY 1987 actual rates of 59.08% and 61.22%,
respectively, to EPA for approval. As of May 24, 1988, audit fieldwork
completion date, approval of the 1987 rate had not been received.
Approval of the final 1988 rate cannot be obtained until the year has
ended and actual rates are submitted.
ADPCE's fringe benefit rate determinations are based on Federal fiscal
year data. Actual rates through September 1987 have been applied to
direct salaries claimed through September 1987. For purposes of 1988, the
1987 actual rates are being used until year end, at which time the actual
rate can be computed and appropriate adjustment made.
Inasmuch as this is an interim, rather than final, audit, no indirect or
fringe benefit costs claimed have been set-aside. Once final indirect
cost rates are approved and the actual fringe rate for 1988 is determined,
cost claimed to date may increase or decrease.
Recommendation
We recommend that the Regional Administrator instruct ADPCE to ensure that
such adjustments as may be required, once final rates are determined, are
made. Additionally, upon final close-out and audit, indirect and fringe
benefit costs will need to be examined to ensure that approval of final
indirect cost rates is obtained and determination of fringe rates has
occurred for all periods encompassed by the Agreement and that such rates
are used in computing final cumulative claimed costs.
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& Company, P.C.
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Other Matters
(a) During our examination, we noted that certain required reports were
not submitted when due. During state fiscal years 1986 and 1987, the
required quarterly Minority and Women's Business Enterprise
utilization reports were not submitted for some quarters, as required
by the terms of the cooperative agreement. Additionally, Federal Cash
Transaction Reports relating to quarters earlier in the project period
were submitted late.
(b) The project narrative statement was incorporated by reference as a
special condition of the grant. ADPCE did not comply with the Section
2.4 provisions thereof, which stipulate: "No fieldwork shall occur
until a QA/QC plan has been approved by the EPA project officer."
During their review of the quarterly progress reports, EPA personnel
had questioned $27,181 in related costs claimed through September 1986
(prior to the date the Quality Assurance/Quality Control Plan was
submitted by ADPCE to EPA for approval). The $27,181 was included in
ADPCE's February 1988 reduction of cost claimed.
_ Recommendat ion
u — ....
We recommend that the Regional Administrator instruct ADPCE to develop and
implement policies and procedures to ensure that appropriate personnel are
fully cognizant of special conditions of the agreement and that they are
complied with.
EPA's Comments on Findinas
EPA's comments have been appended to this report as Attachment A. The EPA
- state coordinator indicated clarification from the state has been sought
regarding inconsistencies in past quarterly reports. The coordinator also
indicated that guidelines call for submission of MBE/WBE reports only when
the procurement cycle begins.
— Addition?! Auditors* ComiRn1
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EXHIBIT
Simmons, Richey
& Company, P.C.
C«ftm«d Public Accountants
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Exhibit A
ARKANSAS DEPARTMENT CF POLLUTION CONTROL AND ECOLOGY
SUPERFUND COOPERATIVE AGREEMENT NUMBER V-006462-01
SUMMARY OF COSTS CLAIMED, ACCEPTED AND QUESTIONED
FOR THE PERIOD APRIL 1, 1985 THROUGH MARCH 31, 1988
EPA-Eligjble Costs
Cost Category
Personnel
Fringe benefits
Travel
Equipment
Materials and supplies
Contractual services
Other direct costs
Indirect costs
Claimed
(Note 1)
$139,811
26,848
1,354
168
10,304
642,836
639
83.222
$905,182
Accepted
(Note 2)
$136,135
26,135
1,354
168
10,304
642,836
639
81.010
Questioned
$3,676
713
Notes
3
3
2.212
,601
Note 1. The cost claimed consists of cumulative expenditures reported on
the Financial Status Report (SF269) through March 31, 1988.
Note 2. These amounts should not be construed as being the final
determination of accepted eligible costs. The amounts may vary
depending upon the final resolution by EPA of the $6,601 of
questioned costs, approval of final indirect cost rates for 1987
and 1988, and determination of the actual fringe benefit rate for
1988.
Note 3. The direct labor, fringe benefit and indirect costs questioned
result from inconsistencies noted in quarterly progress reports
submitted to EPA. Refer to the Findings and Reconmendations,
Personnel Costs, section of this report for further discussion.
-15-
Slmmons, Rlchey
& Company, P.C.
CwtHtod PuMte Accountants
-------
JAN * * I3°3 ATTACHMENT A
- <<9*'.> f— EPA/REGION IV
» ^^ ,
UNITED STATES ENVIRONMENTAL PROTEC
REGION VI
1445 ROSS AVENUE, SUITE 1200
DALLAS, TEXAS 75202
MEMORANDUM
December 15, 1988
DEC I" W8
SUBJECT: ADPC&E Audit Report f>006462-01 (Multi-Site Cooperative Agreement)
Comments^ N
FROM: / Roh*pJ*4fTrtjl Arkansas State Coordinator
v AWW RemediaT Sect ion
TO: Ben Chavez, 6M-PG
I have reviewed the draft audit report on Arkansas's Multi-Site Cooperative
Agreement (MSCA) IV-006462-01. Page 2 of the report notes inconsistencies
in past quarterlys. I have also noted theses descrepancies and have contacted
the State for clarification.
On page 3, the audit points out that ADPC&E did not consistently submit
their MBE/WBE quarterly reports. However, guidelines call for submission
of MBE/WBE Reports only when the procurement cycle begins.
-16-
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