[Survey Report on the General Administrative Expenses Appropriation, Technical Service Center, Bureau of Reclamation]
[From the U.S. Government Printing Office, www.gpo.gov]

Report No. 99-I-958

Title: Survey Report on the General Administrative Expenses Appropriation,
       Technical Service Center, Bureau of Reclamation

  Date: September 30, 1999
  
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  C-IN-BOR-001-96
  
  September 30, 1999
  
  SURVEY REPORT
  
  Memorandum
  
  To:  Assistant Secretary for Water and Science
  
  From:  Robert J. Williams
  Assistant Inspector General for Audits
  
  Subject:  Survey Report on the General Administrative Expenses Appropriation, Technical
  Service Center, Bureau of Reclamation (No. 99-I-958)
  
  INTRODUCTION
  
  This report presents the results of our survey of General Administrative Expenses (GAE)
  appropriation funds used by the Bureau of Reclamation's Technical Service Center.  The
  objective of the review was to determine whether the Center's costs charged to the GAE
  appropriation were in compliance with the Fact Finders' Act, as amended, and the Center's 
  policies and procedures.
  
  BACKGROUND
  
  In October 1994, the Bureau established the Technical Service Center.  The mission of the
  Center is  to provide technical services for managing, developing, and protecting water and 
  related resources.   Center services include providing  engineering, scientific, and technical
  support to Bureau field offices, other Federal agencies, foreign governments, and non-
  Federal clients on a cost-reimbursable basis.  The Center funds its operating costs and
  expenses through reimbursable agreements, direct appropriations, and charges to the GAE
  appropriation.
  
  The GAE appropriation funds the cost and expense of the general administration and related
  functions of the Bureau's Office of the Commissioner, the Technical Service Center, and five
  regional offices.  As provided for in the appropriation to GAE,  funding is derived  from  the
  reclamation fund with the stipulation that the cost and expense of general administration are
  to be nonreimbursable pursuant to the Fact Finders' Act.  The Fact Finders' Act provides that
  these general administration costs and expenses will not be charged as part of the
  reimbursable construction or operation and maintenance costs.  For fiscal year 1997, the
  Bureau's appropriation for general administrative expenses totaled $46 million, of which
  about $4 million was allocated to the Technical Service Center as follows:
  
  Budget  
   Allocation
  Director's Office  $364,000
  Interagency Activities  649,900
  Technical and Professional Societies  863,000
  Technical Inquiries  350,000
  Laboratory Tours/Laboratory Renovation  75,200
  Value Engineering  315,000
  Special Initiatives  45,000
  Manuals, Standards, and Publications  1,303,200
  Total  $3,965,300
  
  
  SCOPE OF SURVEY 
  
  We performed our survey at the Technical Service Center, Lakewood, Colorado.  The scope
  of our survey included the Center's costs charged to the GAE appropriation for fiscal year
  1997.  To accomplish the survey objective, we reviewed judgmentally selected payroll
  records and supporting documentation, interviewed employees who charged their time to
  GAE appropriation fund accounts, and  discussed our findings with the employees'
  supervisors to determine whether the expenses charged to GAE appropriation fund accounts
  were reasonable and proper.  We also reviewed and analyzed copies of  the Center's policies
  and guidelines, travel authorizations, travel vouchers, time and billable expense reports,
  reimbursable service agreements, and agendas from professional conferences.
  
  Our review was made 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.  We
  also reviewed the Departmental Report on Accountability for fiscal year 1997, which
  includes information required by the Federal Managers' Financial Integrity Act of 1982, and
  the Bureau's annual assurance statement on management controls for fiscal year 1997 to
  determine whether any reported weaknesses were within the objective and scope of our
  review.  Neither the Accountability Report nor the Bureau's assurance statement reported
  control weaknesses related to the objective and scope of our review.
  
  PRIOR AUDIT COVERAGE
  
  During the past 5 years, neither the General Accounting Office nor the Office of Inspector
  General has issued any reports that addressed the Technical Service Center's use of GAE
  appropriation funds.
  
  RESULTS OF SURVEY
  
  The Technical Service Center inappropriately charged costs to the GAE appropriation.  The
  appropriation to GAE provides funding for the costs and expenses incurred for the Bureau
  of Reclamation's general administration that are nonreimbursable pursuant to the Fact
  Finders' Act.  However, costs charged to the GAE appropriation were not adequately
  monitored because, according to Center officials, of an ambiguous definition for allowable
  charges and unclear instructions on what expenses could be charged to the general
  administration expense accounts.  As a result, for the $400,735 reviewed, we found that GAE
  appropriation funds totaling $17,334 should have been charged to project beneficiaries, funds
  totaling $12,455 should have been charged to the Center's overhead accounts, and funds
  totaling $26,190  were not adequately documented as allowable costs (the monetary impact
  of these amounts is in the Appendix).   
  
  Project Beneficiaries
  
  The Bureau should have charged costs totaling $17,334 to project beneficiaries as follows: 
  
  - The Center's Land Suitability and Water Quality group exceeded the total project budget
  under a service agreement with the Bureau's Great Plains Region by $19,257.  Of this
  amount, $12,270  for technical/professional society work order costs  was charged to the
  GAE appropriation.  According to a Center group manager, these costs were transferred from
  project costs to the GAE appropriation because the project costs also met the GAE definition
  of technical and professional society work.  However, we concluded, and the Bureau agreed,
  that these charges were reimbursable project costs and should not have been charged to the
  GAE appropriation because the work performed by the Center benefited the project.
  
  - An employee's labor and travel costs totaling $5,064 were charged to the technical and
  professional societies account under the GAE appropriation, even though the employee was
  performing work on a specific project.  For example, the employee traveled to Oregon and
  Washington for the purpose of evaluating several different types of  fish screen cleaners that
  could be used on a Glen Colusa Irrigation District project.  We  also noted that labor and
  travel costs of another employee who went on the same trip were charged directly to the
  project.  During our review, the Center group manager agreed that the costs should have been
  charged to the project.
  
  Overhead Account
  
  The Bureau should have charged costs totaling $12,455 to the Center's overhead account as
  follows:  
  
  -  Labor costs of $7,059 for four employees attending a training class/conference were
  inappropriately charged to the GAE appropriation.  Center policies allow the GAE
  appropriation to be charged for the purpose of presenting papers or for performing
  preparatory work for conferences but not for obtaining training. We noted that travel costs
  totaling $1,352 for these employees to attend the training were properly charged to the
  Center's overhead account.  Therefore, we concluded, and Bureau officials agreed, that the
  labor costs should have been charged to the Center's overhead account. 
  
  - Labor costs of $5,396 for an employee to create and update an Internet Web page for the
  Center were charged to the GAE appropriation.  Because the intent of this activity was to
  promote the Center and its services, we believe that this activity was part of the Center's cost
  of conducting business.  The Fact Finders' Act and the Center's  policies allow the GAE
  appropriation to be charged for expenses related to general administration functions but not
  for the cost of conducting business.  Therefore, we concluded, and Bureau officials agreed,
  that the costs were not allowable general administrative expenses and therefore should have
  been charged to the Center's overhead account.  
  
  Labor Costs
  
  Center labor costs of $26,190 charged to the GAE appropriation were not adequately
  supported on time sheets or on other documents such as calendars, journals, or time logs, and
  Center employees could not identify the type of work performed.  In addition, Center group 
  managers did not require their employees to document the time spent on general
  administrative expenses activities.
  
  Center group managers said that they were aware of the Center's policies and the
  requirements of the Fact Finders' Act and that they knew that funds from the GAE
  appropriation were not to be used for reimbursable project costs.  During the review, Center
  managers and employees said that the definitions of allowable general administrative
  expenses and similar Center overhead costs were ambiguous, which we believe contributed
  to the incorrect charges.  For example, Center policies and definitions for indirect costs allow
  charges to the Center's overhead account for activities related to technical/professional
  societies.  Similarly, the definition for indirect costs chargeable to the GAE appropriation
  allows activities related to technical/professional societies to be charged to the GAE
  appropriation if available.  We believe that the similarities in both definitions created the
  potential for confusion as to which account should be charged.  
  
  As a result of our survey, the Bureau clarified the Center's definitions and instructions for
  charging allowable costs to the GAE appropriation and the overhead accounts.  In addition,
  the Center's Senior Management Team met with the Center's group managers and
  emphasized the need for improved monitoring by the group managers of the costs charged
  to the GAE appropriation to ensure compliance with Center policies and the Fact Finders'
  Act.  Therefore, we are not making any recommendations.
  
  Since this report does not contain any recommendations, a response is not required. 
  
  Section 5(a) of the Inspector General Act (Public Law 95-452, as  amended) requires the
  Office of Inspector General to list this  report in its semiannual report to the Congress.  
  
  We appreciate the assistance of Bureau staff in the conduct of this survey.     APPENDIX
  
  
  CLASSIFICATION OF MONETARY AMOUNTS