United States General Accounting Office Washington, D.C. 20548 Accounting and Information Management Division B-276645 July 30, 1997 The Honorable Jerry Lewis Chairman The Honorable Louis Stokes Ranking Minority Member Subcommittee on Veterans Affairs, Housing and Urban Development, and Independent Agencies Committee on Appropriations House of Representatives Subject: Financial Management: Sunerfund Cost Analvsis On June 12, 1997, we briefed your staff on our study of the Environmental Protection Agency’s (EPA) Superfund accounting system. This review was called for in House Report 104-628, which accompanied the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Bill for fiscal year 1997. We had previously agreed with your staff that the objectives of our work were to determine the answers to three questions: (1) What types and amounts of overhead and direct expenses do EPA and the Department of Justice allocate’ or charge to Super-fund? (2) Do those expenses support the program’s objectives? (3) Are the expenses charged typical of the types of cleanup costs normally incurred by large petroleum or chemical companies? To satisfy these objectives, we. analyzed information on Super-fund disbursements for fiscal year 1996, reviewed the EPA Inspector General (IG) and Department of Justice IG audits of those disbursements, and held discussions with petroleum and chemical industry representatives. We conducted our work from March 1997 to June 1997, primarily at EPA headquarters and Department of Justice headquarters in Washington, D.C., in accordance with generally accepted government auditing standards. At our request, EPA aggregated fiscal year 1996 Superfund disbursements totaling about $1.4 billion into five expense categories. As shown in slides 7 and 10 of our enclosure, nearly half of the total was for contractor cleanup and the balance for categories directly related to, or supporting, the cleanup. We did not independently verify the accuracy of the disbursements, but we noted GAO/AIMD-97-131R Superfund Cost Analysis B-276645 that EPA IG and Justice IG audits of those disbursements did not disclose any discrepancies related to the charges to Super-fund. For example, the EPA IG reviewed the appropriateness of the charges to Superfund as part of its annual financial audit (see slide 14). The EPA IG’s work included statistical random samples of Superfund items separately selected at both the interim and final phases of testing. This testing did not disclose any discrepancies or questioned costs. Similarly, the Department of Justice IG’s latest annual audit of Justice’s Super-fund billings did not identify any discrepancies or questioned costs. Based on the results of the IGs’work, the expenses allocated or charged appear to support the program’s objectives. The petroleum and chemical companies we contacted advised us that a pro rata share of administration and management costs are allocated to their cleanup activities, but they were reluctant to provide us access to their accounting records. Therefore, we were unable to assess whether EPA’s expenses are typical of cleanup costs normally incurred by these companies. The companies did not identify any specific concerns with EPA’s accounting practices (see slide 17). The only concerns mentioned related to other issues, such as the relative efficiency of federal versus private cleanup efforts (see slide 18). As agreed with your staff, no further work relative to this request is warranted at this time. We requested oral comments on a draft of this letter from officials at the Department of Justice and EPA. On July 17, 1997, the GAO Liaison at EPA advised us that EPA generally concurred with the draft. However, the EPA IG’s office provided some technical comments, including clarifications on the scope of the EPA IG financial audit. We considered the comments and made changes as appropriate. On July 18, 1997, the GAO Liaison in Justice’s Environment and Natural Resources Division told us that the Department of Justice concurred with the facts presented. We are sending copies of this letter to the Chairmen and Ranking Minority Members of the House and Senate Committees on Appropriations; the Administrator and the Inspector General of the Environmental Protection Agency; the Attorney General and the Inspector General of the Department of Justice; the Director of the Office of Management and Budget; and other interested parties. Copies will also be made available to others upon request. GAO/AIMD-97-131R Superfund Cost Analysis B-276645 Enclosed is a copy of the briefing slides we presented at the June 12, 1997, meeting, amended to provide additional information requested by your staff. If you have any questions, please contact me on (202) 512-8341. Linda M. 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Financial Management: Superfund Cost Analysis
Published by the Government Accountability Office on 1997-07-30.
Below is a raw (and likely hideous) rendition of the original report. (PDF)