[Advisory Report on Accounting for Reimbursable Expenditures of Environmental Protection Agency Superfund Money for Fiscal Years 1998 and 1999, U.S. Fish and Wildlife Service]
[From the U.S. Government Printing Office, www.gpo.gov]

Report No. 00-i-560

Title: Advisory Report on Accounting for Reimbursable Expenditures
       of Environmental Protection Agency Superfund Money for
       Fiscal Years 1998 and 1999, U.S. Fish and Wildlife Service


Date:  July 14, 2000




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U.S. Department of the Interior
Office of Inspector General


ADVISORY REPORT
ACCOUNTING FOR REIMBURSABLE EXPENDITURES 
OF ENVIRONMENTAL PROTECTION AGENCY SUPERFUND
MONEY FOR FISCAL YEARS 1998 AND 1999,
U.S. FISH AND WILDLIFE SERVICE


REPORT NO. 00-I-560 

JULY  2000




EXECUTIVE SUMMARY

Accounting for Reimbursable Expenditures
of Environmental Protection Agency Superfund 
Money for Fiscal Years 1998 and 1999, 
U.S. Fish and Wildlife Service (No. 00-i-560)


BACKGROUND

The Comprehensive Environmental Response, Compensation and
Liability Act of 1980, amended as the Superfund Amendments and
Reauthorization Act of 1986, imposes a liability upon responsible
parties for the costs of cleanup and damages resulting from the
release of hazardous substances into the environment.  The
Environmental Protection Agency (EPA) administers the Superfund
Act and is authorized to recover cleanup and damage costs from
responsible parties.  In that regard, EPA entered into
reimbursable agreements with the U.S. Fish and Wildlife Service
(FWS) to obtain technical assistance to assess risks to natural
resources and provide information on remedial measures to protect
natural resources at Superfund sites.

OBJECTIVE

The objective of the audit was to determine whether FWS complied
with procedures for accounting for costs of reimbursable projects
funded by EPA under the Superfund Act.

RESULTS IN BRIEF

We found that FWS complied with requirements for accounting for
the costs of EPA Superfund projects for fiscal years 1998 and
1999.  FWS maintained accurate, complete, and current records on
reimbursable costs; had sufficient and adequate documentation to
support all costs charged to specific projects; and obtained
reimbursements only for costs actually incurred on projects. We
identified minor issues on FWS's maintenance of support
documentation for costs incurred under subcontracts and
inconsistencies in recovering indirect costs, which, according to
FWS, have been corrected.

RECOMMENDATIONS

The report did not contain any recommendations; therefore, a
response to this report is not required.





                                                C-IN-FWS-005-00-M
ADVISORY REPORT

Memorandum

     To:  Assistant Secretary for Fish and Wildlife and Parks

   From:  Roger La Rouche
          Acting Assistant Inspector General for Audits

Subject:  Advisory Report on Accounting for Reimbursable
          Expenditures of Environmental Protection Agency
          Superfund Money for Fiscal Years 1998  and 1999,
          U.S. Fish and Wildlife Service (No. 00-i-560)

INTRODUCTION

This  report presents the results of our review of accounting for
reimbursable expenditures of Environmental Protection Agency
(EPA) Superfund money by the U.S. Fish and Wildlife Service
(FWS).  The Superfund Amendments and Reauthorization Act of 1986
requires  Inspectors General to conduct annual audits of all
payments, obligations, and reimbursements and other uses of
Superfund money.  The objective of this review  was to determine
whether FWS complied with procedures for accounting for costs of
reimbursable projects funded by EPA under the Superfund Act.
Specifically, the review determined whether FWS (1) maintained
accurate, complete, and current records on reimbursable project
costs; (2) had sufficient and adequate documentation to support
all costs charged to specific projects; and (3) obtained
reimbursements only for costs actually incurred.

BACKGROUND

Section 107 of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (U.S.C. Title 42), which
was amended as the Superfund amendments and Reauthorization Act
of 1986, imposes a liability upon responsible parties for the
costs of cleanup and damages resulting from the release of
hazardous substances into the environment.  EPA administers the
Superfund Act and is authorized to recover from responsible
parties all costs, including survey costs, incurred in assessing
and remediating hazardous waste conditions.  To recover such
costs, EPA enters into reimbursable agreements with Federal
agencies to obtain technical assistance to assess risks to
natural resources and provide information on remedial measures to
protect natural resources at Superfund sites.  The surveys are
authorized under interagency agreements between EPA and the
Federal agencies that conduct the work.  Superfund survey costs,
including indirect costs, incurred by Federal agencies are
reimbursable.  

FWS is one of several Department of the Interior bureaus that
conduct surveys for EPA under the Superfund Act.  At FWS,
Superfund surveys were conducted under a national agreement and
regional agreements.  Records that document national agreement
expenditures are maintained at FWS's Division of Environmental
Contaminants in Arlington, Virginia, and documentation on costs
incurred on surveys authorized under the regional agreements were
maintained at the field offices where the work was performed. 

SCOPE

We reviewed FWS Superfund expenditures for fiscal years 1998 and
1999.  During this period, FWS had agreements covering 600 sites,
of which 489 were active and about 250 had expenditures charged
to them.  Also during this period, FWS claimed reimbursements of
approximately $2.5 million for costs incurred in conducting
surveys (see Appendix 1).  Approximately 90 percent ($2.2
million) of these expenditures were incurred at two offices: the
Division of Environmental Contaminants ($1.2 million) and the New
England Field Office ($1 million).  Expenditures incurred by the
Division were generally for  salaries, while the Field Office
incurred costs that included salaries, travel, supplies,
materials, fuel, communications, and contracts for research and
development.  On a judgmental basis, we reviewed costs of about
$516,000, which consisted of costs of about $61,000 that were
incurred by the Division and costs of about $455,000 that were
incurred by the Field Office. 

We performed our audit from January through March 2000 at the
Division office in Arlington; the Field Office in Concord, New
Hampshire; and the Finance Center in Lakewood, Colorado.  The
audit was made, as applicable, in accordance with the "Government
Auditing Standards," issued by the Comptroller General of the
United States.  Accordingly, we included such tests of records
and other auditing procedures that were considered necessary
under the circumstances.  

In addition, we reviewed the Departmental Report on
Accountability for fiscal year 1998, which included information
required by the Federal Managers' Financial Integrity Act of
1982, and FWS's Annual Report  for fiscal year 1998.  Based on
our review, we did not find any material weaknesses related to
the scope of our audit.    

PRIOR REVIEWS 

During the past 7 years, the Office of Inspector General has
issued one audit report on FWS's accounting for Superfund project
expenditures.  The November 1993 report "Accounting for Fiscal
Year 1991 and 1992 Reimbursable Expenditures of Environmental
Protection Agency Superfund Money, U.S. Fish and Wildlife
Service" (No. 94-I-110) stated that labor and travel costs of
$3,251 charged to the EPA Superfund were not adequately supported
and that FWS incurred Superfund labor costs totaling $5,461,
which were not charged to Superfund projects.  The report made
four recommendations, which FWS implemented.

DISCUSSION 

We found that FWS complied with requirements for accounting for
costs of EPA Superfund projects for fiscal years 1998 and 1999.
Specifically, FWS maintained accurate, complete, and current
records on reimbursable costs; had sufficient and adequate
documentation to support all costs charged to specific projects;
and obtained reimbursements only for costs actually incurred
except for those costs discussed in the paragraphs that follow.

We identified two minor weaknesses in FWS's billing process for
reimbursable expenditures for Superfund projects.  We found that
FWS did not maintain support documentation for subcontracted
costs incurred by the U.S. Geological Survey's  Biological
Resources Division and did not recover its indirect costs in a
consistent manner.  Neither of these weaknesses resulted in
questioned costs.  However, we believe that FWS should review
these matters to ensure that future billings are adequately
supported and indirect costs are recovered in a consistent
manner.

Supporting Documentation for Subcontracts

Reimbursed costs of about $83,000 that we reviewed were for
Superfund project work that was authorized under subcontracts
with the Geological Survey.  We found that FWS did not maintain
support documentation for these costs, which were billed by and
paid to the Geological Survey without FWS approval, as provided
in the authorizing interagency agreement.  Under this agreement,
which obligated FWS funds for the Geological Survey's
expenditures, the Geological Survey performed scientific work at
EPA Superfund sites.  On a quarterly basis,  the Geological
Survey billed against the obligated funds for the costs it had
incurred on Superfund projects, using the Department of the
Treasury's automated payment system.  The billing data were
transmitted to the Bureau of Reclamation's National Business
Center, which electronically paid the Geological Survey after the
Bureau  matched the information on the bill to the information on
the interagency agreement.  FWS subsequently used the Bureau's
billing and payment data to support its requests to EPA for
reimbursement.  Under its agreement with EPA, FWS was not
required to approve the billed amount before requesting
reimbursement.

Because FWS did not maintain documentation on the Geological
Survey's expenses for which it received EPA reimbursement, we
reviewed Geological Survey data on its Superfund project expenses
that were reimbursed by FWS.  We found that the Geological Survey
maintained sufficient and adequate documentation to support the
expenditures of $83,000.  However, we believe that FWS should
maintain records of all costs for which it obtains reimbursements
from EPA or that it should arrange for the Geological Survey to
contract directly with EPA for these services.  By contracting
directly with EPA, the Geological Survey would be responsible for
providing support for its costs, and the administrative burden of
having FWS and the Bureau involved in processing these repayments
would be avoided. 

Inconsistencies in Recovering Indirect Costs

We determined that the method FWS used to determine its indirect
cost rate was reasonable and proper.  We found, however, that FWS
was inconsistent in how it recovered indirect costs.  For
example, for seven requests for reimbursements, which included
subcontract expenses of $42,000, FWS did not bill EPA for its
indirect costs.  However, for two other  bills, including
subcontract payments of $83,000 from the Geological Survey,  FWS
billed EPA for its indirect costs.  Also, FWS's  policy and
practice regarding the recovery of indirect costs were
inconsistent.  Specifically, FWS policy stated that FWS would
waive the assessment of indirect costs on the Geological Survey's
expenses that were reimbursed by EPA.  However, in its
interagency agreements with EPA, FWS was authorized to fully
recover indirect costs, even on the pass-through costs incurred
by the Geological Survey.  

We did not question FWS's recovery or failure to request
reimbursement for its indirect costs because FWS spent all funds
available under the various agreements regardless of whether the
indirect cost rate was applied or not.   Nonetheless, we believe
that FWS should be consistent in how it recovers indirect costs
related to the direct costs of its Superfund projects.

On June 1, 2000, we discussed the preliminary draft of this
report with FWS officials. Based on the officials' general
concurrence with our audit results, we decided to issue the audit
report in final form.  On June 26, 2000, the Acting Director,
FWS, provided a written response (see Appendix 2) to the
preliminary draft, stating that FWS was "gratified" that the
audit was successful and that FWS had taken action to correct the
"two minor weaknesses [that] were brought to our attention."

Since this report does not contain any recommendations, a
response is not required. 

Section 5(a) of the Inspector General Act (5 U.S.C. app. 3)
requires the Office of Inspector  General to list this report in
its semiannual report to the Congress.  In addition, the Office
of Inspector General provides audit reports to the Congress.


APPENDIX 1



FWS SUPERFUND EXPENDITURES 
FOR FISCAL YEARS 1998 AND 1999


Interagency     Project   Amount      Amount        Questioned
Agreement       Number    Billed      Audited          Costs  

DW14955305     19100035  $23,605           0             0
DW14947651     19100025   30,755           0             0
DW14943579     19100003   49,276           0             0
DW14934248     19100007  711,827  $293,434[1]            0
DW14940176     19100011  300,704    161,4901             0
DW14941525     19105001   39,387           0             0
DW14941524     19105003   70,888           0             0
DW14953713     19100004    4,229           0             0
DW14953526     19100008    1,054           0             0
DW14953503     19100009   11,787           0             0
DW14932668     19100014   12,046           0             0
DW14936187     19100021  467,462   53,204[2]             0
DW14938094     19100021  735,467      8,0242             0
DW14937945     19100005      993           0             0

Total                 $2,459,480    $516,152             0



**FOOTNOTES**

[1]:Division of Environmental Contaminants, Arlington, Virginia.
[2]:Region 5, New England Field Office, Concord, New Hampshire.



APPENDIX  2




           United States Department of the Interior

                 Fish And WildLife Service
                  Washington, D.C. 20240



In Reply Refer To:
FWS/AES/DEC

Memorandum

To:	      Acting Assistant Inspector General for Audits

From:     Director

Subject:  Comments on Preliminary Draft Advisory Report on
          Accounting for Reimbursable Expenditures of 
          Environmental Protection Agency Superfund
          Money for Fiscal Years 1998 and 1999, U.S. Fish 
          and Wildlife Service  (C-IN-FWS-005-00-M)



Thank you for the opportunity to discuss the subject report in
the exit conference on June 1, for this audit. We had only two
comments on page 2: (1) first paragraph. please revise the third
sentence to read: " ... to obtain technical assistance to assess
the risks to natural resources and recommend remedial measures."
and (2) second paragraph, please revise the second sentence to
read: "... Superfund surveys were conducted ... ".

The Service is gratified that the audit was successful and that
the two minor weaknesses were brought to our attention. We will
maintain adequate supporting documentation in future
subcontracting. Also, we have rectified inconsistencies in
recovering indirect costs with the establishment of a national
interagency agreement. Regional interagency agreements have been
abolished and the Washington Office Division of Environmental
Contaminants now administers all costs including indirect charges
back to the Environmental Protection Agency.





ILLEGAL OR WASTEFUL ACTIVITIES

SHOULD BE REPORTED TO

THE OFFICE OF INSPECTOR GENERAL 


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