-------
APPENDIX
DISTRIBUTION OF REPORT
Director, Office of Emergency and Remedial Response (OS-200)
Director, Office of Program Management (OS-240)
Chief, Financial and Administrative Management Section (OS-240)
Director, Financial Management Division (PM-226)
Chief, Grants Information and Analysis Branch (PM-216F)
Agency Followup Official (PM-208)
Agency Followup Coordinator (PM-208)
Attn: Program Operations Support Staff
Agency Followup Official (PM-225)
Attn: Director, Resource Management Division
-------
U.S. ARMY AUDIT AGENCY
: 1-303
2.9 SEPTEMBER 1989
-..- .:.> 1-vr.V->>'>„-'
?*?'£?-*#g?*?»j
*&^
-------
DEPARTMENT OF THE ARMY
OFFICE OF THE AUDITOR GENERAL
3101 PARK CENTER DRIVE
ALEXANDRIA, VIRGINIA 22302-1596
29 September 1989
Commander
U.S. Army Corps of Engineers
This is our report on the audit of Superfund Financial
Transactions for fiscal year 1988. We made the audit,
required by the Superfund Amendments and Reauthorization
Act of 1986, from January through July 1989 at Headquar-
ters, U.S. Army Corps of Engineers; one Corps division
office; and four Corps district offices.
Generally, fiscal year 1988 Superfund obligations and
disbursements made by the Corps were properly supported and
accurately recorded and reported. Obligations were gener-
ally supported by valid contracts, contract modifications,
or interdistrict agreements. Obligation amounts were cor-
rect and were for valid Superfund projects. Disbursements
were supported by valid contracts, contractor invoices,
receiving reports, or in-house cost reports. Except for
one instance, disbursements were accurate. Detailed audit
results are in the Observations and Conclusions section of
this report.
We are furnishing copies of this report to the activi-
ties listed in Annex B.
..D L. STUC
The Auditor Gener
-------
AUDIT OF FY 88 SUPKRFUND FINANCIAL TRANSACTIONS
CONTENTS
Page
Letter of Transmittal
RESULTS OF AUDIT
Preface 1
Objective and Scope 1
Background 2
Observations and Conclusions 2
Responsibilities and Resources 4
ANNEX A - TOTAL FT 88 SUPKRFUND
TRANSACTIONS REVIEWED 7
ANNEX B - ACTIVITIES FURNISHED COPIES OF
THE AUDIT REPORT 8
-------
U.S. ARMY AUDIT AGENCY
ALEXANDRIA, VIRGINIA 22302-1596
AUDIT OF FY 88 SUPERFUND FINANCIAL TRANSACTIONS
MM 89-3O3 29 SEPTEMBER 1989
RESULTS OF AUDIT
PREFACE
The Comprehensive Environmental Response, Compen-
sation, and Liability Act of 1980 (Public Law 96-510)
mandated the establishment of the Hazardous Substance
Response Trust Fund, which is commonly known as Superfund.
The Superfund Amendments and Reauthorization Act of 1986
requires an annual audit of Superfund financial
transactions. To meet this requirement, the DOD Inspector
General tasked the U.S. Army Audit Agency to perform an
audit of FY 88 Superfund financial transactions made by
the Corps. These audit results will be furnished to the
DOD Inspector General for transmittal to Congress. The
audit results will also be furnished to the Inspector
General, U.S. Environmental Protection Agency.
OBJECTIVE AND SCOPE
The Superfund, managed by the Environmental Protection
Agency, is a trust fund used to respond to emergency
hazardous conditions and to fund the cleanup of hazardous
waste substances. The Environmental Protection Agency
issues program authority to the Corps of Engineers to carry
out Superfund work. For FY 88, Superfund obligations
within the Corps totaled about $78.4 million and
disbursements totaled about $31.2 million. The objective
of the audit was to determine whether FY 88 Superfund
obligation and disbursement transactions were properly
supported and accurately recorded and reported.
The audit, performed from January through July 1989,
was made in accordance with generally accepted government
auditing standards and, accordingly, included such tests of
internal controls as we considered necessary under the
circumstances. Audit work was performed at Headquarters,
Corps of Engineers; and at the five Corps' activities
listed in Annex A. The audit covered obligation and
disbursement transactions recorded and reported during
FY 88 (see Annex A).
-------
BACKGROUND
The Superfund is used to clean up hazardous waste
substances when the responsible party either cannot be
identified or will not perform the cleanup work and when a
State will not assume responsibility. An agreement between
the Environmental Protection Agency and the Corps of
Engineers provides program authority and creates an
unobligated balance of funds that is available for use by
the Corps. The Corps incurs obligations against available
funds when contracts are awarded and when Corps' personnel
are used to administer contracts. Therefore, total
Superfund obligations for the Corps in a fiscal year will
not be the same as total program authority made available
during that year. Both cash and noncash disbursements are
recorded by the Corps for Superfund work. Payments to
commercial contractors for design and cleanup work are
examples of cash disbursements. Cost distributions for the
Corps' in-house labor, overhead, and asset-use expenses are
examples of noncash disbursements.
Information on Superfund obligations is included on
two monthly reports generated by the Corps' automated
accounting system. The Superfund Automated Management
System Report shows total obligations by month and cumula-
tive obligations to date for each Superfund project. This
report is used to provide the status of funds to the
Environmental Protection Agency. The Status of Appro-
priations and Work Allowances Report shows total fiscal
year obligations and disbursements. This report is used to
provide the status of funds to Corps Headquarters. Both
reports are used for program management by Corps
activities.
OBSERVATIONS AND CONCLUSIONS
Generally, Superfund obligation and disbursement
transactions for FY 88 were properly supported and
accurately recorded and reported. Supporting documentation
showed that obligations were incurred and disbursements
were made for valid Superfund projects. The Corps' records
showed that about $78.4 million of obligations and about
$31.2 million of disbursements were recorded and reported
for Superfund work during FY 88.
Using statistical sampling techniques, we reviewed the
accuracy of about 2,700 obligation transactions totaling
about $56.6 million that were recorded during FY 88 at the
5 Corps' activities listed in Annex A. All but one of the
obligations were valid and were supported by contracts,
contract modifications, or interdistrict agreements.
-------
Amounts obligated were correctly recorded and reported and
were made for valid Superfund projects.
An obligation transaction recorded at one site was not
supported. The obligation for $187,292 was recorded on
30 August 1988 by the New England Division. The division
is responsible for maintaining accounting records for the
New York District. The funds were obligated on a Superfund
project for the development of a filtering system at the
Lipari landfill in Pittman, New Jersey. But responsible
personnel at the two Corps' activities were not able to
provide any support for the transaction. At the conclusion
of our audit, command efforts to determine the validity of
the transaction were continuing. Command stated that the
funds would be deobligated if supporting documentation
could not be found.
Obligation transactions for in-house costs were
generally supported, and unexpended balances were
automatically deobligated at the end of each month. At the
New England Division, several miscellaneous obligation
documents used to support monthly obligations for in-house
government cost estimates were not kept on file after the
end of the fiscal year. However, based on other
documentation, we concluded that the recorded obligations
were valid and reasonable. Command stated that
miscellaneous obligation documents to support the entries
would be retained.
Using statistical sampling techniques, we reviewed the
accuracy of about 18,500 disbursement transactions totaling
about $25.5 million that were recorded and reported during
FY 88 at the 5 Corps' activities. Generally, disbursements
were properly documented and were accurately recorded and
reported. Disbursements were supported by valid contracts,
contractor invoices, receiving reports, and other appropri-
ate documents. Superfund project numbers cited on
disbursement transactions were correct and the work being
done was within the scope of the interagency agreements.
One disbursement transaction, valued at $404,358, was
not accurate and was charged to Superfund by the Omaha
District on 25 August 1988. The charge was based on an in-
house billing from the New England Division. The bill was
for work done by the New England Division to complete a
feasibility study and administer a contract for the upper
harbor project at New Bedford, Massachusetts. Due to an
administrative error, the bill was totaled incorrectly by
personnel at the New England Division. The error was not
found during reviews by Omaha District personnel. The
correct amount of the bill should have been $204,358,
-------
$200,000 less than the amount charged to Superfund. During
the audit, the Omaha District took action to correct the
error.
RESPONSIBILITIES AND RESOURCES
The Corps of Engineers is responsible for managing the
design and construction of Federal cleanup sites paid for
by the Environmental Protection Agency with money from the
Superfund Trust Fund. Design work is managed by Corps'
Missouri River Division elements, and construction is
managed by Corps districts having jurisdiction over the
geographic locations of cleanup sites. From FY 82 through
FY 88, the Corps accepted interagency agreements valued at
about $459.3 million from the Environmental Protection
Agency for Superfund work.
-------
ANNEX A
SUPKRFUND TRANSACTIONS
Corps' Activity
New England Division
Baltimore District
Huntington District
New York District
Omaha District
Total
Value of
Obligations Disbursements
(in millions)
$ 0.7
7.7
2.1
8.4
$25.5
-------
ANNEX B
ACTIVITIES FURNISHgn COPIES OF
Copies of this report are being furnished to the following
activities:
Department of Defense Inspector General
Inspector General, U.S. Environmental Protection Agency
Assistant Secretary of the Army (Civil Works)
Assistant Secretary of the Army (Financial Management)
Director of the Army Staff
The Inspector General
Chief of Legislative Liaison
Chief of Public Affairs
Deputy Chief of Staff for Personnel
Deputy Chief of Staff for Logistics
Chief of Engineers
Commanders
U.S. Army Criminal Investigation Command
U.S. Army Engineer Division, New England
U.S. Army Engineer Division,
U.S. Army Engineer Division,
U.S. Army Engineer Division,
U.S. Army Engineer District,
U.S. Army Engineer District,
U.S. Army Engineer District,
U.S. Army Engineer District,
First Region, U.S. Army Criminal Investigation Command
Sixth Region, U.S. Army Criminal Investigation Command
Commandant, U.S. Army Logistics Management College
North Atlantic
Missouri River
Ohio River
Baltimore
Huntington
New York
Omaha
8
-------