OFFICE OF
INSPECTOR
GENERAL
REVIEW OF FEMA'S ADMINISTRATION OF THE
COMPREHENSIVE ENVIRONMENTAL RESPONSE,
COMPENSATION AND LIABILITY ACT FOR FISCAL
YEAR 1988
AUDIT REPORT NO. H-04-90
AUDIT REPORT
FEDERAL EMERGENCY
MANAGEMENT AGENCY
JANUARY 1990
DATE

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TABLE OF CONTENTS
Page
I.	INTRODUCTION AND SCOPE	1
II.	BACKGROUND	3
III.	RESULTS OF AUDIT
A.	Program Administration	4
B.	Accumulation and Reporting of	4
Program Costs
C.	Questioned Costs	5
RECOMMENDATIONS	6
IV.	SUMMARY AND ANALYSIS OF MANAGEMENT COMMENTS TO 8
THE DRAFT AUDIT REPORT AND CORRECTIVE ACTIONS
STILL REQUIRED
EXHIBITS
A.	Schedule of Superfund Expenditures By
Site/Account Reported to EPA By FEMA
For Fiscal Year 1988
B.	Schedule of Expenses Reported Inaccurately
By Site/Account to EPA By FEMA For Fiscal
Year 1988
ATTACHMENTS
A.	Response from Office of the Comptroller
B.	Response from State and Local Programs
Support Directorate

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I. INTRODUCTION AND SCOPE
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 (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) 1988. During this period, FEMA reported expenditures
totaling $5.4 million to the Environmental Protection Agency
(EPA), the Agency with primary responsibility for Superfund
administration. For the same period, $ 9.3 million was
authorized for program activities.
FEMA spent program funds for temporary and permanent relocation
activities at 12 sites selected by EPA. To support program
administration, eight interagency agreements were negotiated
between EPA and FEMA: seven for planning and training
activities, and one for performing the annual audit (See Exhibit
A) .
We audited $551,595 of the reported $655,998 in temporary and
permanent relocation expenses incurred for 10 of 12 sites; and
performed a limited review of $878,696 in payroll expenses
reported. We also audited $629,045 of the reported $3.8 million
in administrative expenses for three of seven planning and
training accounts.
Included within the $3.8 million were $3.1 million in Title III
Training Funds. We did not audit these funds because this was a
one-time appropriation not subject to cost recovery actions. We
also did not review the $15,386 in costs incurred by our office
for performing last years' annual audit.
We examined and concurred with the results of the 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 in November
1987 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.
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Our audit was performed during the period of February through
August 1989 at four FEMA locations; Headquarters, and Regional
Offices in Denton, TX, Kansas City, MO, and Denver, CO. Field
work was also performed in Jackson, MS at the Mississippi
Emergency Management Agency and in St. Louis, MO and Charleston,
WV at the offices of the permanent relocation contractor, O.R.
Colan Associates.
The audit was made in accordance with the "Government Auditing
Standards", promulgated by the U.S. Comptroller General.
Accordingly, the examination included such tests of the
accounting records and such other auditing procedures as we
considered necessary under the circumstances.
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II. BACKGROUND
The U.S. Congress passed CERCLA (P.L. 96-510) 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 nay endanger public health or welfare.
Specifically, it provides for the establishment of a program to
control and cleanup 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 Ho. 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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III. RESULTS OF AUDIT
In summary, we found that FEMA had effectively administered the
temporary and permanent relocation components of the Superfund
Program and generally spent funds for eligible purposes.
However, we found a continuing need for FEMA to improve its
procedures for reconciling and reporting program cost.
Specifically, financial reports were based on unreconciled data
resulting in at least $83,200 in improper charges to Superfund
sites and accounts. We also found overpayments under the
permanent relocation program resulting in questionable costs of
$6,300.
A.	Program Administration
Our review of program administration for FY 1988 indicated
that FEMA provided temporary relocation benefits totaling
$179,623 to 305 families, at eight sites. These benefits
included moving expenses, lodging, and food subsidies. We
determined that all the families were eligible for
assistance and that the assistance they received was
provided expeditiously.
We also reviewed permanent relocation expenses totaling
$371,972 of the reported $476,375. The reported costs were
incurred for the purchase of 36 parcels of contaminated
property in Times Beach, MO and for administrative expenses
of FEMA Superfund personnel who performed permanent
relocation work at the Mill Creek, MT site. We found that,
except for the $6,300 in questioned costs addressed undei
section C. of this report, the expenses incurred foi
property acquisition were eligible under the permanent
relocation program.
B.	Accumulation and Reporting of Program Costs
FEMA is required to submit financial reports to EPA monthly
on Superfund Program expenses. The reporting of sue)
expenses must clearly delineate costs by site ant
administrative account.
In accounting for Superfund expenditures, FEMA uses tw
systems. One system, commonly referred to as the SF-22
tracking system, reflects Superfund disbursements requeste
by FEMA from the Department of the Treasury. The othe
system reflects the Superfund disbursements recorded in th
Agency's Financial Accounting and Reporting System (FARS)
Procedurally, an automated match is performed monthly an
two reports are generated to identify the difference
between the two systems.
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The Office of the Comptroller should use these reports to
reconcile the differences between the two systems for
accurate reporting to EPA. However, this procedure was not
followed.
To illustrate, the SF-224 tracking system report showed
total Superfund expenditures of $5.4 million for Fiscal Year
1988. However, the FARS Data Processing Special Report No.
337 showed total Superfund expenditures of $3 million for
the same period, a difference of $2.4 million. Instead of
reconciling the two expenditure figures, accounting
personnel reported to EPA the unreconciled $5.4 million
reflected in the SF 224 tracking system. Absent
reconciliations, we found based on limited tests, inaccurate
charges totaling $60,956 reported by site and administrative
account (See Exhibit B).
Additionally, we found that an expenditure totaling $22,250
was incorrectly charged to the Superfund Program. This
expenditure was charged to Superfund Account No. 9000 but,
in fact, was allocable to FEMA's disaster account.
Therefore, these charges are questioned.
Similar reconciliation problems existed during our last
audit of FEMA's administration of the Superfund program. In
our last report, Audit Report No. H-02-89, we identified
reporting inaccuracies resulting from data entry errors and
the failure of the Comptroller's staff to perform periodic
reconciliations. Based on this years audit, we found that
the reporting inaccuracies were corrected. However,
appropriate remedial action was riot taken to address the
reconciliation problem which was the underlying cause for
the reporting inaccuracies.
C. Questioned Costs
0.R.	Cclan Associates, the government contractor responsible
for administering the permanent relocation program at the
Times Beach, MO site, made overpayments totaling $6,300 to
the Missouri Title Company for the purchase of parcels of
property. Therefore, these charges are questioned.
1.	Parcel No. 130 contained five lots at $700 each. A
purchase payment of $3,500 was sent to the Missouri
Title Company on August 25, 1987 for the five lots.
However, only one of the lots cleared title, resulting
in an overpayment of $2,800. The Missouri Title
Company did not refund this amount to O.R. Colan
Associates.
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The Missouri Title Company in January 1988, billed and
received from O.R. Colan Associates a second payment of
$2,800 for the remaining four lots of Parcel No. 130.
However, at this time only one of the four remaining
lots cleared title, resulting in an overpayment of
$2,100. The Missouri Title Company again did not
refund this amount to O.R. Colan Associates.
„ In April 1988, the Missouri Title Company submitted its
final bill to O.R. Colan Associates for the remaining
three lots of Parcel No. 130, and received a payment of
$2,100. This time, title to all three lots cleared.
In summary, O.R. Colan Associates paid and charged to
the Superfund Account, $8,400 or $4,900 more than the
agreed purchase price for Parcel No. 130. Accordingly,
the amount overpaid is questioned.
2. Parcel No. 318 contained four lots at $700 each. A
purchase payment of $2,800 was sent to the Missouri
Title Company on August 25, 1987 for four lots.
However, only two of the lots cleared title, resulting
in an overpayment of $1,400. The Missouri Title
Company did not refund this amount to O.R. Colan
Associates.
In April 1988, the Missouri Title Company submitted its
final bill for the remaining two lots of Parcel No.
318 and received payment of $1,400. This time, title
to the remaining two lots cleared.
In summary, O.R. Colan Associates paid and charged to
the Superfund Account, $4,200 or $1,400 more than the
agreed purchase price for Parcel No. 318. Accordingly,
the amount overpaid is questioned.
RECOMMENDATIONS
In view of the above conditions, we recommend that the:
1. Office of the Comptroller reconcile the recorded $2.4
million difference between the costs reported to EPA ($5.4
million), and the amount recorded in the Agency's Financial
Accounting and Reporting System ($3.0 million), for FY 1988
Superfund expenditures. This reconciliation should reflect
all necessary adjustments including the $60,956 in
inaccurate charges by site and account, and the $22,250
incorrectly charged to the Superfund Program;
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2.	Office of the Comptroller perform monthly reconciliations ol
Superfund costs included on the Treasury Reports ol
Disbursements (SF 224) and the FEMA Data Processing Special
Reports No.337; and
3.	State and Local Programs Support Directorate instructs O.R.
Colan Associates to recoup the $6,300 in total overpayments
to the Missouri Title Company and to credit the Times Beach
Missouri site accordingly.
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IV. A SUMMARY AND ANALYSIS OF MAKAgEMEHT COMMENTS TO THE DRAFT
AUDIT REPORT AMD CORRECTIVE ACTIONS STILL REQUIRED
The results of our audit were discussed in October 1989 with key
officials of the State and Local Programs and Support (SLPS)
Directorate and the Office of the Comptroller. We also provided
the Associate Director of SLPS and the Comptroller with a draft
audit report and requested written comments on the findings and
recommendations contained therein. The entire text of their
comments is attached to this report. In general, both officials
agreed with the findings and recommendations and identified
actions taken or proposed to correct reported problems.
The following summarizes the comments received, our analyses of
actions taken or proposed, and action still required to satisfy
the audit recommendation.
Office of the Comptroller's Response to wprcHmn*»ndation Winner i
and 2 and Our Evaluation
The Comptroller concurred with our recommendation and indicated
that corrective action would be taken. The response indicated,
however, that reconciliations of Superfund expenditures for FYs
1988 and 1989 would not be performed until site close out. For FY
1990, the Comptroller stated that monthly reconciliations would
be performed as necessary to ensure accuracy in the monthly
reporting of Superfund costs to EPA.
The Comptroller also indicated that adjustments have been made to
correct the $60,956 in inaccurate charges by site and account,
and the §22,250 incorrectly charged to the Superfund Program.
Based on the Comptroller's response, the OIG considers both
recommendations resolved and Recommendation Number 2 closed.
However, Recommendation Number 1 cannot be closed until the
required reconciliation of program costs for FYs 1988 and 1989 is
completed.
State and Local Prcyf*™^ ^nd Support Directorate's Response to
PArr>mm**ndation wirmhpr (3) and Our Evaluation
The Associate Director concurred with our recommendation and
indicated that the contractor has been informed of the multiple
charges and has contacted the Missouri Title Company concerning
the $6,300 overpayment.
Based on this response, the OIG considers the recommendation
resolved. However, it cannot be closed until the overpayment has
been collected and credited to the appropriate site.
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SCHEDULE OF SUPERFUND EXPENDITURES
BT SITE/ACCOUNT REPORTED TO EPA BY FEMA
FOR FISCAL TEAR 1988
EXHIBIT t
TEMPORARY ANO PERMANENT RELOCATION
SITE NO.
SITE LOCATION
EXPENDITURES

3300/3400
TIMES BEACH, MISSOURI - PERMANENT
$474,566.82
<1)
9006
QUAIL RUN, MISSOURI
SI,899.80
(1)
9008
PIAZZA ROAD, MISSOURI
11,484.00
(1)
9027
MILL CREEK, MONTANA - TEMPORARY
S15.824.19
(1)
9030
MILL CREEK, MONTANA * PERMANENT
S1,808.45
(1)
9031
ARNOLD, MISSOURI
S2.183.74
(1)
9033
CASTLEUOOO, MISSOURI
$8,171.77
(1)
9039
LIBERTY, TEXAS
121,854.45
(1)
9041
CCNROE, TEXAS
S31.354.14
(1)
9043
SPRINGFIELD, VERMONT
<$155.85)

9045
NEWSOM BROTHERS - COLUMBIA, MISSISSIPPI
S96.850.92
(1)
9046
SIGNO TRADING,NEU YORK - PERMANENT
$73,398.59

S729.241.C2
PLANNING ANO TRAINING ACCOUNTS
ACCCXJKT NO.	ACCOUNT DESCRIPTION	EXPENDITURES
9000
PLANNING AGREEMENT
- HEADQUARTERS
$41,567.95
(1)
9033
PLANNING AGREEMENT
- NETC
$247,798.35
<1J
5034
PLANNING AGREEMENT
- NTH
*339,678.39
(1)
9042
PLANNING AGREEMENT
- REGION 1
$350.00

9044
TITLE III TRAINING
FUNDS
$3,136,689.58

9045
PLANNING AGREEKcNT
- REGION I
$76.65

9051
PLANNING AGREEMENT
• REGION U
$1,013.25

$3,767,174.17
OTHER ADMINISTRATIVE EXPENSES
9046	EPA/FEMA IG	S15.3U.6S
PAYROLL EXPENSES	$878.696.10 (2)
$894,082.78
TOTAL	S5.390.497.97
C83SMS«IStt8S«9S35!
(1) SITE ANO PLANNING ACCOUNTS REVIEWED DURING AUDIT.
(2)
PAYROLL REPORTED IN TOTAL FOR ALL SUPERFUNO SITES/ACCOUNTS AT END OF FY 19BB.
RECONCtLLED AND REPORTED BY SITE/ACCOUNT TO EPA IN AUGUST 1989.

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CHARGED IM ERROR
APPROPRIATE CHARGE
SITE/ACCOUNT MO.
9045
9045
9041
3300/3400
SCHEDULE
80H014
8HN013
T88056
H02774
AMOUNT
$50,000.00
$10,000.00
$794.00
$162.54
SITE/ACCOUNT NO.
9044
9044
9034
9034
AMOUNT
$50,000.00
$10,000.00
$794.00
$162.54
TOTALS
$60,956.54

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federal Emergency Management Agency
Washington, D.C. 20472
DEC I 4 I9S2
MEMORANDUM FOR:
Gary J. Barard
Assistant Inspector General for Audit
Office of Inspe
SUBJECT:
FROM:
P
•/George H. Or re
> Comptroller
Draft Report - F	lA's Administration
of the Comprehensive Environmental Response,
Compensation and Liability Act For Fiscal Year
1988.
We have completed our evaluation of the above mentioned report that
was transmitted to me by memorandum, dated October 30, 1989.
Attached are our comments to the "draft" report.
Vie appreciate the opportunity to respond to the "draft" report.
V.'e urge your office to consider our comments in the "final" report.
If you have any questions or require additional information, please
contact Jim Lucas on 646-4398.
Attachments

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Comments To Draft Report -
Review of FEMA's Administrative Environmental
Response, Compensation and Liability Act
For Fiscal Year 1988
Listed below are the Office of the Comptroller's comments to the
draft review report that was dated October 1989.
o Nowhere in the report does it mention Office of Inspector
General review reports from prior years and the progress made
by the Accounting Division in administering the Superfund
account. In the exit conference, your staff praised the
Accounting Division staff for the progress made in financial
management of the Superfund. Your report is completely silent
on this issue. An audit report can document positive actions,
not just the deficiencies. No mention is made that the
findings from the review of the 1987 report had all been
resolved. The Office of the Comptroller should be given
credit for resolving findings.
o Ke take exception to the comment on page 3, first paragraph,
which states in part, "...we found a continuing need for FEMA
to improve its procedures for reconciling and reporting
program cost." This statement is misleading and a reader of
the report could come to a wrong conclusion. In the audit
report for FY 19B7, you recommended that the Accounting
Division reconcile FEMA's accounting records for Superfund
expenses to Treasury's report of disbursements. During FY
1989 the Accounting Division performed this reconciliation not
only for FY 87 and FY 88, but also for FY 89 on a monthly
basis. The way the first paragraph is written would mislead
a reader of the report to conclude that the FY 193 7
recorr.r.endation was still outstanding. We feel that this
represents significant progress and should be r.ade a part of
tr.is audi; report.
oo The reconciliation that is suggested by the report
involves reconciling two internal subsidiary systems.
The report suggests that this reconciliation be performed
on a monthly basis. This reconciliation is presently
performed by the Accounting Division at the close out of
the site. Adjustments are made to the appropriate system
at that time. The report should state that the
reconciliation should be performed on a monthly basis
instead of at the time of the site close out. This
statement would indicate that a reconciliation is being
performed.
o The condition reported in the second paragraph on page 4 is
in error. Journal vouchers (10E005 and 10E006) were prepared
and processed on 11/3/89 for charges totalling $60,956.52.
The difference of $334.00 was processed correctly and requires

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no adjustment. (See the attachment, Audit Report '88 Program
Adjustments.) The report should state that this condition has
been corrected by the Accounting Division.
The condition reported in the third paragraph on page 4 has
been corrected. The Accounting Division was aware of this
condition prior to the review and made the correction for
$22,250 on journal voucher 9058 as shown in the attachment,
Audit Report '88 Program Adjustments. This correction was
made on September 6, 1989.
The last paragraph under part 2, page 4 of the report is
misleading. This paragraph implies that the reconciliation
between FEMA subsidiary records is the same as reconciling
FEMA records to the Treasury records as reported in last
year's report, when they are not. Additionally, as previously
mentioned, the reconciliation of the subsidiary systems occurs
at the tine of site close out, however, the report suggests
that this should be performed monthly. Finally, the
reconciliation between FEMA records and the Treasury records
does occur, however, this is not mentioned in th3 report.
V.'e agree with the recommendation 1, on page 6, however, the
second sentence of that paragraph has been resolved and does
net need to be included as a recommendation.
Effective with FY 90, procedures will be changed to perform
the reconciliation on a monthly basis as you suggest. As time
and resources are available, we will perform the same monthly
reccnciliations for FY 88 and FY 89. However, as a minimum,
tr.e FY 8: ana FY 89 reccnciliations will be performed at the
tir.i c: the site close out in accordance v.itr. present
procedures.
Page 7 titled, "Exhibit A" has several errors. The errors
involve account numbers under PLANNING AND TRAINING ACCOUNTS.
The changes should be as follows:
oo Account 9048 should be 9049;
oo Account 9049 should be 9051; and,
oo Account 9051 should be 9048.
Page 8, titled, "Exhibit B" has two errors. Schedule number
80H018 should be 80H014. The SITE/ACCOUNT NO. 3300 should
instead be 3400.

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fBl Federal Emergency Management Agency
Washington, D.C. 20472
DEC IS 1989.
MEMORANDUM FOR:	Gary J. Barard
Assistant Inspector General for Audit
Office of Inspector General
*? / / ) ¦ ' ¦"
'	t aft/1 1 ¦yyyy^r'i
FROM:	-^.-Gr^nt C. Peterson
'Associate Director
State and local Programs and
Support Directorate
SUBJECT:	Draft Report - Review of FEMA's
Administration of the Comprehensive
Environmental Response, Comprehensive
Liability Act For Fiscal Year 1988
This responds to your memo to me dated, October 30, 1989, subject
as cited above.
We concur vith your findings relating to our contractor, 0. R.
Colan Associates, paying multiple charges to the Missouri Title
Company against the Superfund Program for the same items of
costs in the Times Beach, Missouri permanent relocation project.
The contractor has been apprised of these multiple charges and
has contacted Missouri Title concerning repayment. Missouri
Title is to repay upon receipt of data fror. our contractor.
The data is tc be provided to Missouri Title the first v£=--. ir.
December. Or.ce repayments are collected, the contractor v.-ill
credit the Tir.es Beach Missouri site.
We will notify you when the repayments have been collected and
the site credited.

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