[Final Survey Report on the Utah Reclamation Mitigation and Conservation Commission]
[From the U.S. Government Printing Office, www.gpo.gov]
Report No. 96-I-1141
Title: Final Survey Report on the Utah Reclamation Mitigation and Conservation
Commission
Date: August 27, 1996
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United States Department of the Interior
OFFICE OF INSPECTOR GENERAL
Washington, D.C. 20240
MEMORANDUM
TO: The Secretary
FROM: Wilma A. Lewis
Inspector General
SUBJECT SUMMARY: Final Survey Report for Your Information - "Utah
Reclamation Mitigation and Conservation Commission"
(No. 96-I-1141)
Attached for your information is a copy of the subject final survey report. The
objective of our review was to determine whether the Utah Reclamation Mitigation
and Conservation Commission was created in accordance with the Reclamation
Projects Authorization and Adjustment Act of 1992 (Public Law 102-575) and was
in compliance with provisions for the receipt and expenditure of funds established
by the Act.
We found that the Commission was generally established in accordance with the Act.
Based on our review of the findings reported by the Commission's contracted
certified public accountant in a June 1995 audit report, we concluded that: (1) the
Commission did not establish adequate financial and administrative policies and
procedures and (2) the Commission's accounting records of the receipt and
expenditure of funds for fiscal years 1994 and 1995 were not auditable. As a result,
we could not determine whether administrative and mitigation funds were expended
in accordance with the Act. We also found, however, that the Commission was
actively pursuing the necessary corrective actions to implement sound administrative
and financial management systems in response to the certified public accountant's
report. Our report contained no recommendations.
If you have any questions concerning this matter, please contact me or Mr. Robert J.
Williams, Acting Assistant Inspector General for Audits, at (202) 208-5745.
Attachment
United States Department of the Interior
OFFICE OF INSPECTOR GENERAL
Washington, D.C. 20240
W-IN-BOR-003-96
SURVEY REPORT
Mr. Don Christiansen, Chairman
Utah Reclamation Mitigation and
Conservation Commission
111 East Broadway, Suite 310
Salt Lake City, Utah 84111
Subject: Final Survey Report on the Utah Reclamation Mitigation and
Conservation Commission (No. 96-I-1141)
Dear Mr. Chairman:
This report presents the results of our survey of activities of the Utah Reclamation
Mitigation and Conservation Commission for fiscal years 1994 and 1995. The
objective of the audit was to determine whether the Commission was created in
accordance with the Reclamation Projects Authorization and Adjustment Act of 1992
(Public Law 102-575) and was in compliance with requirements for the receipt and
expenditure of funds established by the Act. We performed the audit based on
Title IV, Section 402(e) of the Act, which states that the Commission's financial
management of the Utah Reclamation Mitigation and Conservation Account "shall
be subject to audit by the Inspector General of the Department of the Interior."
BACKGROUND
The Utah Reclamation Mitigation and Conservation Commission was authorized by
Section 301(a) of the Act to coordinate implementation of the Act's required
mitigation and conservation activities for the Central Utah Project among the
Federal and State of Utah fish, wildlife, and recreation agencies. Section 301(f) of
the Act states:
The Commission shall administer the mitigation and conservation funds
available under this Act to conserve, mitigate, and enhance fish, wildlife, and
recreation resources affected by the development and operation of Federal
reclamation projects in the State of Utah.
The Act (Section 301(b)(2)) also states, "The Commission shall expire twenty years
from the end of the fiscal year during which the Secretary declares the Central Utah
Project to be substantially complete." The Act (Sections 401(b) and 402(d)) specifies
that upon expiration of the Commission, the Utah Division of Wildlife Resources will
assume responsibilities for mitigation and conservation projects identified in the Act
and projects of the Colorado River Storage Project in the State of Utah.
The Act (Section 402) established the Utah Reclamation Mitigation and
Conservation Account in the U.S. Treasury and identified contributions from
Federal, State, and Project beneficiaries to be deposited into the account. The Act
(Section 402) further specified that the Federal Government, the State of Utah, and
the Central Utah Water Conservancy District, which represents Project beneficiaries,
will contribute annually no less than $10 million, $3 million, and $750,000,
respectively, until the year 2001 or until the Project is declared substantially
complete. The sources and uses of Commission funds for fiscal years 1994 and 1995,
as derived from the unaudited amounts reported in the audit report on Commission
management practices issued in June 1995 (see Prior Audit Coverage section), are
detailed in Appendix 2.
SCOPE OF SURVEY
The scope of our survey included a review of Commission activities for fiscal years
1994 and 1995. We reviewed records and correspondence, public laws, and legal
opinions pertaining to the creation and operation of the Commission. We also
interviewed officials responsible for administering and evaluating Commission
activities, which included personnel from the Commission, the Bureau of
Reclamation's administrative support and ethics groups, the Central Utah Project
Completion Act Office, and the Commission's accounting firm. During our survey,
we found that auditable financial information on the results of the Commission's
operations for fiscal years 1994 and 1995 was not available. We also found that the
Commission had obtained an audit of its management practices for the period July
1994 through February 1995. Accordingly, we limited the scope of our proposed
audit of the Commission's financial records to confirming the findings in the June
1995 audit report and determining the status of any corrective actions.
Our survey was performed from November 1995 through February 1996 at the offices
listed in Appendix 1. The review 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. Because sufficient financial
and administrative controls were not established, as identified in the audit report on
the Commission's management practices, we did not review the system of internal
controls.
2
PRIOR AUDIT COVERAGE
Neither the Office of Inspector General nor the General Accounting Office has
issued any reports on activities of the Commission. However, in February 1995, the
Commission contracted with a certified public accounting firm to conduct an audit
of the Commission's management practices that occurred from July 1994 to February
1995. On June 6, 1995, the firm issued its report, which questioned financial
decisions and actions taken by Commission members and staff. As stated in the
report, these decisions and actions included: (1) unreasonable compensation paid to
Commissioners; (2) requests for payment of duplicate expenses; (3) claims for
expenses incurred prior to employment; (4) claims for mileage to and from personal
residences; (5) personal use of Commission equipment and of the Government-issued
credit card; (6) noncompliance with Federal procurement regulations and guidelines;
and (7) the inappropriate consideration of mitigation and conservation projects that
were not identified in the authorizing legislation. We confirmed that some of the
financial decisions and actions taken by the Commission members and staff were
questionable. We subsequently requested that the Bureau of Reclamation review
these matters and provide a response to our office.
The report also stated that the Commission did not adequately document significant
actions and decisions in minutes of meetings; retain copies of source documentation
for purchase requisitions, time sheets, expense claims, and invoices; establish and use
administrative budgets or comprehensive formal financial reports; and establish a
formal policy on what constitutes a quorum majority for Commission decisions or
conflicts of interest for Commissioners and staff. In addition, the report noted that
the Commission was still in the process of establishing rules, hiring staff, developing
a 5-year mitigation plan and project proposal process, formulating administrative
budgets, and designing internal administrative and accounting control systems. Some
of the questionable decisions and actions taken by the Commission were attributable
to the initial three Commissioners' lack of Federal administrative experience.
Specifically, the report noted:
They [the Commissioners] lacked Federal executive branch administrative
experience and encountered some frustration in the process of learning how
a Federal commission works and defining how this Commission should
operate. . . . Since the Commission was new, there was some question as to
which laws and regulations applied to the Commission and how to interpret
some of the provisions of the Act.
The report made two recommendations to improve the Commission's accountability
and compliance with applicable laws and regulations and to establish and maintain
effective controls. In September 1995, the Commission accepted the report's findings
and recommendations and said that it planned to correct the reported weaknesses.
During our survey, we found that the Commission was in the process of establishing
3
basic operating policies and procedures
and regulations.
RESULTS
to ensure compliance with applicable laws
OF SURVEY
Overall, we found that the Commission was generally established in accordance with
the Reclamation Projects Authorization and Adjustment Act of 1992. We also
confirmed that the Commission did not establish adequate financial and
administrative policies and procedures. As a result, the Commission's accounting
records of the receipt and expenditure of funds for fiscal years 1994 and 1995 were
not auditable, and we could not determine whether administrative and mitigation
funds were expended in accordance with the Act. We found, however, that the
Commission was actively pursuing the necessary corrective actions to implement
sound administrative and financial management systems in response to the findings
and recommendations in the June 1995 audit report.
Commission Creation
We found that the Commission was generally established in accordance with the
Reclamation Projects Authorization and Adjustment Act of 1992 except that the
appointment of the Commissioners did not occur until 1994. According to Section
301(d) of the Act, the Commission was to be composed of 5 members selected from
representative state and local entities and appointed by the President to serve 4-year
terms. Sections 301(e), 301(f), and 301(h) of the Act authorized the Commission to
appoint a Director and staff, establish an office of operations, and enter into
contracts and agreements with universities, nonprofit organizations, and other
agencies to implement mitigation and conservation projects and features authorized
in the Act.
There are currently five appointed Commissioners. In July 1994, the first three
Commissioners were appointed, of which one was elected as the Chairman and
another was appointed as Acting Executive Director. The Commissioners, in
establishing an office, hired two administrative staff members; contracted for legal
services; leased commercial space; and purchased office furniture, equipment, and
supplies. In November 1994, two additional Commissioners were appointed, one of
which was elected Chairman in June 1995. Also, in June 1995, one of the initial
Commissioners resigned because of health reasons. A fifth Commissioner was
appointed on February 1, 1996.
In February 1995, the Acting Executive Director was succeeded by an Executive
Director hired by the Commission. The Commission hired additional administrative
staff and entered into contracts and agreements with organizations and agencies to
implement mitigation and conservation projects and features authorized in the Act,
Financial Operations
Based on our review of the findings reported in the certified public accountant's June
1995 audit report on Commission management practices (see Prior Audit Coverage
section), we concluded that the Commission's accounting records for fiscal years 1994
and 1995 were not auditable. In addition, we could not determine whether
expenditures for administration and mitigation activities during this period were
made in accordance with the Reclamation Projects Authorization and Adjustment
Act of 1992. The report identified financial and administrative deficiencies, including
decisions and actions by the Commissioners and a former staff member that were
questionable or not in accordance with applicable laws and regulations. We found
that the Commission had not completed the establishment of basic operating policies
and procedures. However, we found that the Commission was continuing its efforts
to correct reported deficiencies by contracting for financial management and
accounting services in November 1995 as a follow-on to the June 1995 audit report
on management practices. The accounting firm, which expected to complete these
services by July 1996, was taking the following actions:
- Reviewing fiscal accounting, budget, project contracting, and investment
procedures and making recommendations as to the adequacy of the existing services
and systems.
- Determining the accuracy, adequacy, and usability of accounting and/or
financial information provided by the Bureau and making recommendations that
pertained to interfacing with the Bureau's system and/or performing tasks
independently.
- Preparing financial statements for fiscal years 1994 and 1995 and assisting in
establishing property and record-keeping procedures and in completing an inventory
of equipment managed by the Commission.
The accounting firm also plans to prepare the Commission's financial statements for
the fiscal year ending September 30, 1996.
On June 3 and July 15, 1996, the Commission's Executive Director provided
comments to the draft of this report and information concerning actions taken by the
Commission to implement sound administrative and financial management systems.
These actions include the following: adopting a 5-year Mitigation and Conservation
Plan; establishing operating procedures; and establishing policies and procedures
regarding compliance with appropriate laws and regulations, including
implementation of the National Environmental Policy Act of 1969, as amended. In
addition, the Commission's accounting firm issued a financial report on May 31,
1996, that presented the results of the firm's review of the Commission's statements
of financial position and related statements of operations and changes in net
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financial position for the years ended September 30, 1994, and 1995. The report on
the review stated, "We are not aware of any material modifications that should be
made to the accompanying financial statements in order for them to be in conformity
with the Federal financial accounting standards."
We do not plan any additional audit work until the Commission's accounting firm
has completed its remaining work and the Commission has had sufficient time to
complete implementation of financial and administrative policies and procedures.
The legislation, as amended, creating the Office of Inspector General requires
semiannual reporting to the Congress on all audit reports issued, actions taken to
implement audit recommendations, and identification of each significant
recommendation on which corrective action has not been taken.
Since this report does not contain any recommendations, a response is not required.
However, if you have any questions regarding this report, please contact me at (202)
208-4252.
We appreciate the courtesies and cooperation extended to our staff during the
course of our survey.
Sincerely,
Robert J. Williams
Acting Assistant Inspector General
for Audits
cc: Executive Director, Utah Reclamation Mitigation and
Conservation Commission
Program Director, Central Utah Project Completion Act Office
Regional Director, Upper Colorado Region
APPENDIX 1
OFFICES VISITED
Office Location
Utah Reclamation Mitigation and
Conservation Commission Salt Lake City, Utah
Bureau of Reclamation,
Upper Colorado Region Salt Lake City, Utah
Department of the Interior,
Central Utah Project Completion Act
Office Provo, Utah
Hansen, Barnett, & Maxwell, Certified
Public Accountants Salt Lake City, Utah
Squire & Company, PC, Certified Public
Accountants Orem, Utah
APPENDIX 2
SOURCES AND USES OF UTAH RECLAMATION
MITIGATION AND CONSERVATION COMMISSION FUNDS FOR
FISCAL YEARS 1994 AND 19951
Fiscal Year Fiscal Year
Source
Department of the Interior
State of Utah 3,000,000 3,000,000
Department of Energy (Western
Area Power Administration)2
Central Utah Water
Conservancy District 2
Interest on Investments
(Treasury Notes)3
Totals
Uses
Commission Administrative
Expenses 2
Transfers Required by
P.L. 102-5754
Available for Mitigation and
Conservation Projects'
Invested3
Totals
5,000,000 5,135,000
750,000 772,500
184,000 768,500
$18,784,000 $25,809,000
$392,000 $1,029,000
145,500 334,000
4,562,500 10,799,000
13,684,000 13,647,000
$18,784,000 $25,809,000
Totals
$25,983,000
6,000,000
10,135,000
1,522,500
952,500
$44,593,000
$1,421,000
479,500
15,361,500
27,331,000
$44,593,000
lSources and uses of funds derived from unaudited amounts reported in the June 1995 audit
report
on Commission management practices. ,
2Sections 402(b)(3)(C) and 301(i)(2) of Public Law 102-575 state that the annual contributions
and
Commission administrative expenses "shall be increased proportionally on March 1 of each year
by
the same percentage increase during the previous calendar year in the Consumer Price Index for
urban consumers, published by the Department of Labor."
3Section 402(c) states, "All funds deposited as principal in the Account shall earn interest in the
amount determined by the Secretary of the Treasury on the basis of the current average market
yield
on outstanding marketable obligations of the United States of comparable maturities."
4Section 314(c) of the Act authorizes the transfer of 3 percent of the funds available for
implementation of mitigation and conservation projects to the Secretary of the Interior for use on
projects outside the State of Utah.
`Interagency agreements and contracts with Federal, state, local, and nonprofit environmental
organizations.
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SHOULD BE REPORTED TO
THE OFFICE OF INSPECTOR GENERAL BY:
Sending written documents to: Calling:
Within the Continental United States
U.S. Department of the Interior Our 24-hour
Office of Inspector General Telephone HOTLINE
1550 Wilson Boulevard 1-800-424-5081 or
Suite 402 (703) 235-9399
Arlington. Virginia 22210
TDD for hearing impaired
(703) 235-9403 or
1-800-354-0996
Outside the Continental United States
Caribbean Region
U.S. Department of the interior (703) 235-9221
Office of Inspector General
Eastern Division - Investigations
1550 Wilson Boulevard
Suite 410
Arlington, Virginia 22209
U.S. Department of the Interior (700) 550-7279 or
Office of Inspector General COMM 9-011-671-472-7279
North Pacific Region
238 Archbishop F.C. Flores Street
Suite 807, PDN Building
Agana, Guam 96910
Toll Free Numbers:
1-800-424-5081
TDD 1-800-354-0996
FTS/Commercial Numbers:
(703) 235-9399
TDD (703) 235-9403
HOTLINE
1550 Wilson Boulevard
Suite 402
Arlington, Virginia 22210