[Survey Report on Selected Activities of the Upper Mississippi River System Environmental Management Program, U.S. Geological Survey]
[From the U.S. Government Printing Office, www.gpo.gov]

Report No. 98-I-580

Title: Survey Report on Selected Activities of the Upper Mississippi
       River System Environmental Management Program, U.S. Geological
       Survey

Date:  July 27, 1998




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



SURVEY REPORT


SELECTED ACTIVITIES OF THE UPPER MISSISSIPPI RIVER SYSTEM
ENVIRONMENTAL MANAGEMENT PROGRAM, U.S. GEOLOGICAL SURVEY

REPORT NO. 98-I-580

JULY 1998




MEMORANDUM                                                          C-IN-GSV-001-98-R


TO:               The Secretary

FROM:             Richard N. Reback
                  Acting Inspector General

SUBJECT SUMMARY:  Final Survey Report for Your Information - "Selected Activities
                  of the Upper Mississippi River System Environmental
                  Management Program, U.S. Geological Survey" (No. 98-I-580)

Attached for your information is a copy of the subject final survey report.  The objective of
the survey was to determine whether (1) cooperative agreements with the various states and
universities involved in the Environmental Management Program were appropriate and
adequate; (2) funds provided by the Corps were used for their intended purpose, within the
time frame specified, and in the amounts authorized; (3) property was properly accounted for
in accordance with applicable regulations; (4) reported Program costs, including overhead,
were accurately supported by the accounting system; and (5) contracts were awarded and
administered in accordance with applicable regulations.

We found, for the funds expended by the Environmental Management Technical Center for
its activities conducted under the Environmental Management Program, that (1) funds
provided by the Corps were used for their intended purpose, within the time frame specified,
and in the amounts authorized; (2) reported Program expenditures, including overhead, were
accurately supported by the accounting system; and (3) acquisitions were awarded and
administered in accordance with applicable regulations.  However, we found that cooperative
agreements with the various states and universities involved in the Program were not
adequate and that property was not properly accounted for in accordance with applicable
regulations.  As a result, for the funds expended by the cooperators, the specific tasks to be
accomplished with Program funds of over $1.1 million were not defined, and the costs
incurred by cooperators were not adequately monitored.

In its response, the Survey agreed with the report's three recommendations to address
these issues. Based on the response, we considered two recommendations resolved and
implemented and one recommendation resolved but not implemented.

If  you have any questions concerning this matter, please contact me at (202) 208-5745 or
Mr. Robert J. Williams, Assistant Inspector General for Audits, at (202) 208-4252.

Attachment





SURVEY REPORT                                                           July 27, 1998


Memorandum


To:        Director, U.S. Geological Survey

From:      Robert J. Williams
           Assistant Inspector General for Audits

Subject:   Survey Report on Selected Activities of the Upper Mississippi River System
           Environmental Management Program, U.S. Geological Survey (No. 98-I-580)


INTRODUCTION

This report presents the results of our survey of selected activities conducted by the
Environmental Management Technical Center, U.S. Geological Survey, under an agreement
between the Department of the Interior and the Department of the Army to implement the
Upper Mississippi River System Environmental Management Program.  The survey was
requested by the Corps of Engineers, Mississippi Valley Division, Department of the Army.
The objective of the survey was to determine whether (1) cooperative agreements with the
various states and universities involved in the Environmental Management Program were
appropriate and adequate; (2) funds provided by the Corps were used for their intended
purpose, within the time frame specified, and in the amounts authorized; (3) property was
properly accounted for in accordance with applicable regulations; (4) reported Program costs,
including overhead, were accurately supported by the accounting system; and (5) contracts
were awarded and administered in accordance with applicable regulations.


BACKGROUND

The Upper Mississippi River Management Act of 1986 (Section 1103 of the Water
Resources Development Act of 1986) was enacted to ensure the coordinated development
and enhancement of the Upper Mississippi River System.  The Act authorized the Secretary
of the Army, in consultation with the Secretary of the Interior and the states of Illinois,
Iowa,Minnesota, Missouri, and Wisconsin, to undertake three programs to (1) plan, construct,
and evaluate measures for fish and wildlife habitat rehabilitation and enhancement; (2)
implement a long-term resource monitoring program; and (3) implement a computerized
inventory and analysis system.  Each of these three programs was to be carried out for
10 years, which was subsequently extended to 15 years by Section 107 of the Water
Resources Development Act of 1992.  Responsibility for the second and third programs was
assigned to the Department of the Interior under a memorandum of agreement with the
Department of the Army executed in 1987.  However, the memorandum of agreement stated
that the Department of the Army "will retain ultimate responsibility and report to OMB
[Office of Management and Budget] and Congress on program implementation and for
funding needs for the programs (as well as for all UMRS-EMP [Upper Mississippi River
System - Environmental Management Program] activities) in annual budget presentations."

The Department of the Interior assigned responsibility for the long-term resource monitoring
and the computerized inventory programs to the U.S. Fish and Wildlife Service.  In 1988, the
Service entered into a memorandum of agreement with the five states to delineate roles and
responsibilities for accomplishing the programs.  In addition, the Service entered into
individual cooperative agreements between 1988 and 1990, with each of the five states to
assign specific work tasks and to establish a mechanism for providing funds to the states.
Further, the Service entered into cooperative agreements with six colleges/universities to
provide staff and technical expertise to the Center to accomplish the objectives of the
long-term resource monitoring program and the computerized inventory and analysis system.

As a result of various Departmental reorganizations, overall program responsibility was
transferred from the Service to the National Biological Survey, which was established by
Secretarial Order No. 3173, dated September 29, 1993.  Secretarial Order No. 3185, dated
January 5, 1995, changed the name of the National Biological Survey to the National
Biological Service.  By Secretarial Order No. 3202, dated September 30, 1996, the National
Biological Service was transferred to the U.S. Geological Survey and was named the
Biological Resources Division, effective October 1, 1996. Notwithstanding the Departmental
reorganizations, program direction and oversight have remained the responsibility, since the
Program's inception, of the Environmental Management Technical Center, located in
Onalaska, Wisconsin, which is now part of the Biological Resources Division of the
U.S. Geological Survey.

For fiscal years 1995 through 1997, the Corps made available about $17.5 million for
expenditure by the Center for the long-term resource monitoring and the computerized
inventory programs (see Appendix 1).  The Center receives payments from the Corps based
upon periodic billings for expenditures.  As of September 30, 1997, the Center had obligated
about $17.2 million of the available funding, leaving an unobligated balance of about
$300,000. Of the $17.2 million obligated by the Center, about $8.2 million was for Center
salaries, overhead, and other operating costs, and about $9 million was obligated under
cooperative agreements with the five participating states and six colleges/universities.


SCOPE OF SURVEY

The survey was performed during November 1997 through February 1998 at the
Environmental Management Technical Center and the Bureau of Reclamation's Denver
Administrative Service Center, the latter of which performed the payment function for the
Program during fiscal years 1996 and 1997.  To accomplish the stated audit objective, we
interviewed Center and other U.S. Geological Survey personnel; examined cooperative
agreements; reviewed the Center's procedures, controls, and accounting records related to
the programs; and reviewed available single audit reports for the states and
colleges/universities that entered into cooperative agreements with the Center.  Our survey
covered costs incurred and program activities that occurred for fiscal years 1995 through
1997.  Our survey was performed without the benefit of a technical evaluation.  Accordingly,
our conclusions are qualified to the extent that a technical evaluation may affect the
allocability and allowability of reported costs.

Our survey was conducted 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.  As part of our review, we assessed the Center's system of administrative and
accounting controls applicable to the selected Program activities we reviewed and found
weaknesses related to (1) defining work tasks to be performed under cooperative agreements
with colleges/universities, (2) monitoring state and college/university financial activities
under cooperative agreements, and (3) maintaining an accurate inventory of equipment
owned by the Federal Government and conducting physical inventories.  These weaknesses
are addressed in the Results of Survey section of this report.  Our recommendations, if
implemented, should improve the internal controls in these areas.

We also reviewed the Department's Accountability Report for fiscal year 1996, which
includes information required by the Federal Managers' Financial Integrity Act of 1982, and
the U.S. Geological Survey's assurance statement for fiscal year 1997 to determine whether
any reported weaknesses were within the objective and scope of our review. While the
Secretary's assurance statement identified two reportable conditions from audited financial
statements related to Federal-state cooperative projects and property accountability and
reporting, we found that these conditions did not apply to the Center's operations.


PRIOR AUDIT COVERAGE

Neither the Office of Inspector General nor the General Accounting Office has issued an
audit report during the past 5 years on the Center's operations.  However, we identified 11
reports on audits of state and college/university cooperators that were conducted under the
Single Audit Act of 1984 (Appendix 2).  As stated in the Results of Survey section of this
report, we found that one of these reports identified deficiencies in the areas of cash
advances, monitoring subgrantee costs, financial reporting, property record adequacy, and
the timeliness of agreement expenditures.  All of these deficiencies related directly to
cooperative agreements entered into with the Center.  These deficiencies were considered in
executing our audit survey.


RESULTS OF SURVEY

We found, for the funds expended by the Environmental Management Technical Center for
its activities conducted under the Environmental Management Program, that (1) funds
provided by the Corps were used for their intended purpose, within the time frame specified,
and in the amounts authorized; (2) reported Program expenditures, including overhead, were
accurately supported by the accounting system; and (3) acquisitions were awarded and
administered in accordance with applicable regulations.  However, we found that cooperative
agreements with the various states and universities involved in the Program were not
adequate and that property was not properly accounted for in accordance with applicable
regulations.  This occurred because the Center had not adequately defined specific tasks to
be performed in amendments to cooperative agreements with colleges/universities,
adequately monitored Program funds expended by the cooperators, properly accounted for
equipment acquired with Program funds, or performed annual physical inventories of
Government equipment in the possession of state cooperators since 1994.  As a result, for
the funds expended by the cooperators, the specific tasks to be accomplished with Program
funds of over $1.1 million were not defined, and the costs incurred by cooperators were not
adequately monitored.  In addition, the Center did not have a current and accurate inventory
of Federally owned equipment. Further, we identified about $2 million that the Center
obligated for work to be performed in fiscal years subsequent to the fiscal years in which the
funds were made available by the Corps.


Cooperative Agreement Amendments

The Environmental Management Technical Center, when amending cooperative agreements
with colleges/universities, did not always specify the tasks, including deliverables, to be
performed with Program funds for the long-term resource monitoring program and the
computerized inventory and analysis system.  This occurred primarily when amendments
were executed near fiscal year-end that included additional work on the Environmental
Management Program and other Center projects. In addition to the Corps Program funding,
the Center received funding for other Center projects from sources such as other Corps of
Engineer districts, the Environmental Protection Agency, the National Biological Service,
the U.S. Fish and Wildlife Service, and the U.S. Geological Survey.  However, the Center
performed work on some of the other projects through the cooperative agreements it
executed for Program work. Center personnel told us that tasks were not defined at the time
the amendments were executed because Center management wanted some flexibility when
the tasks to be performed were identified and because they needed to obligate available funds
(from all sources) by fiscal year-end.  As a result, Program funds of about $1.1 million were
obligated under 15 cooperative agreement amendments with colleges/universities under the
Program during fiscal years 1995 through 1997 without the Program work that was to be
performed being defined.  For example:

     - A September 1996 cooperative agreement amendment with a college provided fiscal
year 1996 funding totaling about $380,000 in support of nine individual projects, including
one Program-specific project.  The amendment provided funds for the college to "continue
to provide student, faculty, and staff support to assist the NBS' [National Biological
Service's] Environmental Management Technical Center in its efforts relative to the Upper
Mississippi River Systems Environmental Management Program."

     - A September 1996 cooperative agreement amendment with a university provided
fiscal year 1996 funding totaling about $332,000 in support of 10 individual projects,
including 1 Program-specific project.  The amendment provided funds for the university to
"continue to provide student, faculty, and research associate support to assist the NBS'
[National Biological Service's] Environmental Management Technical Center in its efforts
relative to the Upper Mississippi River Systems Environmental Management Program."

Because the Center did not identify the amount of funds provided for specific projects or the
specific Program work to be performed in the amendments to the cooperative agreements,
it did not have full assurance that cooperators would use the funds for intended Program
purposes.


Monitoring Program Costs

The Center's process for monitoring costs incurred by cooperators needs to be  improved.
Specifically, the Center did not obtain or review single audit reports of the cooperators'
financial activities to aid in determining whether the cooperators complied with the
Program's financial requirements.  The Single Audit Act of 1984, as amended, requires
recipients who receive Federal assistance of more than $300,000 in any given year to
complete an organizationwide audit that includes a separate review of Federal funds.
However, Center officials stated that they did not foresee a need to review single audit
reports because they were aware of how the states and colleges/universities expended
Program funds through the annual budget process and through reviews of standard financial
reports submitted by the cooperators.  In addition, they stated that their knowledge of the
activities performed by state personnel based at the Program's field stations and the
college/university employees physically located at the Center provided assurance that
Program funds were used properly.  However, we found that the reports submitted by the
cooperators to obtain Program funds and to report on Program expenditures and fund status
provided only cumulative expenditures without any details on how the funds were used.  In
addition, we found one single audit report that contained several Program financial
deficiencies, as discussed in the following paragraphs, of which the Center was not aware.

For fiscal years 1995 and 1996, we reviewed 11 single audit reports that covered the
activities of the state and college/university cooperators.  For 10 of these reports, matters
of noncompliance with internal controls or Federal requirements or questioned costs were not
identified to any Department of the Interior programs.  However, the single audit report for
fiscal year 1996 for one cooperator identified deficiencies related to the Environmental
Management Program as follows:

     - Cash advances in excess of immediate needs were requested by the cooperator in
April 1995 and advanced by the Center in June 1995; however, the funds were not fully
disbursed by the cooperator until April 1996.

     - The cooperator did not monitor all of its Federal programs and therefore had no
assurance that all Federal program requirements were met.

     - Required financial status reports submitted by the cooperator to the Center for fiscal
year 1996 were incorrect.  Specifically, certain indirect costs were excluded from the reports,
costs incurred under a jointly funded agreement involving the cooperator were excluded from
the reports, and expenditures were reported on the cash rather than the accrual basis.

     - The cooperator's property and equipment records were not adequate.  However,
additional audit work performed enabled the auditors to satisfy themselves that the reporting
of property and equipment was acceptable.

     - The cooperator was reimbursed by the Center for costs of $117,730 that were
incurred after an amendment to the cooperative agreement expired.  (We found that
subsequent to the single audit, the cooperative agreement amendment was extended by the
Center to bring the disputed costs within the period covered by the amendment.)

Center officials told us that they did not consider these deficiencies to be significant.
However, they stated that information contained in single audit reports could be beneficial
to their overall monitoring of cooperator activities.


Equipment

We found that the Center had not properly accounted for equipment purchased with Federal
funds in accordance with applicable regulations.  Specifically, the Center had not updated
its inventory of equipment to delete state-owned equipment or conducted annual inventories
of equipment purchased with Federal funds that was located at the field stations operated by
the five cooperating states.  As of January 21, 1998, the value of all equipment as reported
in the Center's property system was about $4 million, which consisted of capitalized
equipment of $2.3 million and noncapitalized equipment of $1.7 million.  The original
cooperative agreements with the five states stated that all equipment acquired with Program
funds would be the property of the Federal Government.  However, the Code of Federal
Regulations (43 CFR 12.72), as amended on March 11, 1988, states that title to equipment
purchased by states with Federal funds vests with the states and that the equipment will be
used, managed, and disposed of in accordance with state laws and procedures.  The Center
recently recognized the change in the regulations and entered into new cooperative
agreements with Illinois, Iowa, and Wisconsin effective October 1, 1997, to incorporate the
requirements of the Code (43 CFR 12.72).  In addition, at the time of our review, the Center
was executing new cooperative agreements with Minnesota and Missouri.

The Interior Property Management Regulations (114-60.301) require that complete physical
inventories be conducted at least annually of all capitalized and noncapitalized
nonexpendable equipment.  However, the Center had not conducted a physical inventory of
equipment at the field stations since 1994.  The Center's equipment data base includes
equipment that was acquired by the Federal Government and the states with Program funds.
The Center's data base did not identify which equipment was owned by the states and
therefore should be deleted from the data base.  To establish ownership of the equipment, the
Center stated that it would have to conduct a physical inventory at all of the Program's
locations and then determine whether the equipment was acquired by the Federal
Government or the states.  Center management stated that while they intended to conduct
physical inventories and to delete state-owned equipment from the equipment data base,
other priorities, such as converting to the U.S. Geological Survey property system, had taken
precedence.  As a result, the Center's inventory of equipment did not accurately reflect the
value or the quantity of property that is owned by the Federal Government.


Timely Use of Funds

Annual funding for the long-term resource monitoring program and the computerized
inventory and analysis system made available by the Corps was not always used by the
Center for services to be performed in the same fiscal year in which the funds were made
available.  Corps Program staff told us that it was the Corps intention for the services to be
provided in the year that the funds were made available.  However, the Military
Interdepartmental Purchase Request documents that made the funding available to the Center
stated that the services to be performed pursuant to the order were properly chargeable until
December 31 of the year to which the request applied.  Center officials said that they
interpreted the provision to mean that the Center had until December 31, or 3 months after
the September 30 closure of its fiscal year, to obligate the funds.

We believe that the interpretation made by Center officials is reasonable because the source
of the funds made available by the Corps was a no-year appropriation.  However, based on
the comments of Corps staff regarding the timeliness of the Center's use of the funds, we
determined that the Center obligated funds of $1,957,235 for services to be performed after
the fiscal year in which the funds were made available as follows:


Funding
 Fiscal Year

Obligations
for Subsequent
Fiscal Year
Services *


1995


$213,576


1996


645,560


1997


1,098,099


Total


$1,957,235




*These obligations for subsequent fiscal year services all occurred from October 1 through
December 31 of the funding fiscal year.

Because we believe that the Center was in compliance with the requirements of the purchase
requests, we did not make any recommendations regarding the timely use of funds.  In
addition, Corps officials told us that the situation had been corrected in its fiscal year 1998
funding document, which stated that funds were properly chargeable until September 30.


Recommendations

We recommend that the Director, U.S. Geological Survey, require the Director,
Environmental Management Technical Center, to:

     1. Ensure that amendments to cooperative agreements are sufficiently detailed to
identify Program tasks to be performed, products to be delivered, and the funding for each
specific task.

     2. Obtain copies of single audit reports from the cooperators on an as-issued basis
for all of the Program's cooperators.  The Center should review these reports and follow up
with the cooperators to resolve reported deficiencies that have an impact on the Program.

     3. Conduct a physical inventory of the equipment located at all of the Center's field
locations to determine which equipment was acquired by and is owned by the Federal
Government and which equipment is owned by the states and delete from the Center's
equipment data base those items that are owned by the states.  Also, assurance should be
provided that physical inventories of all Federal Government capitalized and noncapitalized
(nonexpendable) equipment are performed at least annually.


U.S. Geological Survey Response and Office of Inspector General Reply

In the June 10, 1998, response (Appendix 3) to the draft report from the Associate Director,
U.S. Geological Survey, the Geological Survey agreed with the three recommendations.
Based on the response, we consider Recommendations 1 and 2 resolved and implemented
and Recommendation 3 resolved but not implemented.  Accordingly, Recommendation 3
will be referred to the Assistant Secretary for Policy, Management and Budget for tracking
of implementation.


Additional Comments on Survey Report

Regarding equipment inventories, the Geological Survey stated that the Center had
"conducted an inventory of controlled and sensitive personal property in November 1996 and
July 1997.  The inventory was completed on-site and via telecommunications.  Necessary
additions and deletions, and corrections were made."

While we are aware of the physical inventories of controlled/sensitive property at the
Center, the inventories via telecommunications of the field stations were not in compliance
with requirements of the Interior Property Management Regulations (114-60.301) that state
that "a complete physical inventory" of capitalized and noncapitalized personal property
should be conducted on an annual basis.  In that regard the Geological Survey stated that the
"Center is in the process of conducting another physical inventory of equipment located at
all Center field locations to verify which equipment was acquired by and is owned by the
Federal Government."

Since the report's recommendations are considered resolved, no further response to the
Office of Inspector General is required (see Appendix 4).

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.


APPENDIX 1


ENVIRONMENTAL MANAGEMENT TECHNICAL CENTER'S
LONG-TERM RESOURCE MONITORING PROGRAM AND
COMPUTERIZED INVENTORY AND ANALYSIS SYSTEM -
SUMMARY OF FUNDS PROVIDED AND OBLIGATED
AT SEPTEMBER 30, 1997


Fiscal Year


1995
1996
1997
Total


Funds Provided by the
Department of the Army

$5,705,500

$5,975,343

$5,825,000

$17,505,843


Funds Obligated by the
Department of the Interior:


Direct Expenditures
$2,249,105
$2,279,532
$2,217,839
$6,746,476


Overhead
563,012
496,293
425,237
1,484,542


Subtotal
$2,812,117
$2,775,825
$2,643,076
$8,231,018


Cooperative Agreements
2,713,648
3,087,266
3,181,924
8,982,838


Total Obligations
$5,525,765
$5,863,091
$5,825,000
$17,213,856


Unobligated Balance*
$179,735
$112,252
$0
$291,987


* The unobligated balance is the difference between the amount of funds provided by the
Department of the Army and the total amount of funds obligated by the Department of the
Interior.


APPENDIX 2



SINGLE AUDIT REPORTS OF ENVIRONMENTAL MANAGEMENT TECHNICAL CENTER -
STATE AND COLLEGE/UNIVERSITY COOPERATORS THAT WERE LOCATED AND REVIEWED


Audited Entity


Illinois Department of Natural Resources

State of Iowa

State of Minnesota

State of Missouri

State of Wisconsin

State of Tennessee

University of Illinois

University of Wisconsin System


Audited Period (Fiscal Years)

1996

1996

1995 and 1996

1996

1995 and 1996

1995 and 1996

1996

1995




APPENDIX 4


STATUS OF AUDIT REPORT RECOMMENDATIONS

Finding/
Recommendation
Reference
1 and 2
3

Status


Implemented.

Resolved; not
implemented.




Action Required


No further action is required.

No further response to the Office of Inspector
General is required.  The recommendation
will be referred to the Assistant Secretary for
Policy, Management and Budget for tracking
of implementation.




ILLEGAL OR WASTEFUL ACTIVITIES SHOULD BE REPORTED TO THE OFFICE OF
INSPECTOR GENERAL BY:

Sending written documents to:



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