OFFICE OF INSPECTOR GENERAL 

Catalyst for Improving the Environment 

Audit Report 

EPA Could Improve Its 

Redistribution of Superfund 

Payments to Specific Sites 

 Report No. 2006-P-00027 

 July 31, 2006 
Report Contributors: Paul Curtis Kevin Ross 

 Margaret Bastin Shannon Schofield 

 Arthur Budelier Juliet Stebbens 

 Alfred Falciani Wendy Swan

 Robert Evans 

Abbreviations 

CERCLA Comprehensive Environmental Response, Compensation, and Liability Act 

CFO Chief Financial Officer 

EPA U.S. Environmental Protection Agency 

OARM Office of Administration and Resources Management 

OCFO Office of the Chief Financial Officer 

OFM Office of Financial Management 

OFS Office of Financial Services 

OGD Office of Grants and Debarment 

OIG Office of Inspector General 

OSWER Office of Solid Waste and Emergency Response 

RMDS Resources Management Directive System 
U.S. Environmental Protection Agency 2006-P-00027

Office of Inspector General July 31, 2006

At a Glance


Catalyst for Improving the Environment 

Why We Did This Review 

We performed this review to 

examine a potential Superfund 

cost recovery issue noted

during our audit of the U.S.

Environmental Protection 

Agency’s (EPA’s) fiscal year 

2003 financial statements. As 

of August 2003, EPA had 

recorded payments of

$97 million for Superfund 

response costs to a general site 

identifier “WQ” that should 

have been redistributed to 

specific sites or other general 

site identifiers to improve 

EPA’s cost recovery. 

Background 

EPA has the authority through 

the Superfund program to 

respond directly to releases of 

hazardous substances and seek 

recovery of its costs from the 

responsible parties. EPA 

accounts for response costs at 

a site-specific level to enable 

cost recovery. EPA obligates 

costs not readily identifiable to 

a site to the general site 

identifier “WQ,” and upon 

payment redistributes the costs 

to specific sites. 

For further information, 

contact our Office of 

Congressional and Public 

Liaison at (202) 566-2391. 

To view the full report, 

click on the following link: 

www.epa.gov/oig/reports/2006/ 

20060731-2006-P-00027.pdf 

EPA Could Improve Its Redistribution of 

Superfund Payments to Specific Sites

 What We Found 

EPA did not make timely redistributions of Superfund cooperative agreement, 

interagency agreement, and small purchase payments from the general site 

identifier “WQ” to the specific Superfund sites or other general site identifiers. 

The finance offices that we reviewed recorded the payments to “WQ” instead of 

redistributing them to the appropriate general or site-specific identifiers, as 

required. As of January 2006, $39 million was recorded in “WQ” for those 

funding vehicles. The payments remained undistributed for periods ranging from 

2 months to 10 years. As a result, the $39 million may not be considered in 

settlement negotiations and oversight billings. Consequently, these funds may not 

be recovered from responsible parties and be available for future site cleanup 

activities. 

We found various reasons why EPA did not timely redistribute the “WQ” costs. 

EPA did not establish “WQ” procedures, consistently monitor the “WQ” accounts, 

and provide “WQ” training. EPA also did not require cooperative agreement 

recipients to provide the site-specific cost detail needed. 

Subsequent to our audit, EPA provided unaudited data reports that indicated the 

undistributed “WQ” was reduced to $13 million as of May 12, 2006. 

What We Recommend 

We recommend that EPA (1) develop written “WQ” procedures, including 

timeliness standards and monitoring procedures; (2) provide training; (3) change 

cooperative agreement conditions to require recipients to provide cost details 

within 24 hours of drawing down funds, and enforce those conditions; and 

(4) redistribute the remaining historical “WQ” costs. 

EPA began corrective action on several of our recommendations before we 

completed the audit, and generally agreed with all recommendations. 
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

WASHINGTON, D.C. 20460 

OFFICE OF 

INSPECTOR GENERAL

July 31, 2006 

MEMORANDUM 

SUBJECT: EPA Could Improve Its Redistribution of Superfund Payments to 

 Specific Sites 

 Report No. 2006-P-00027 

TO: Lyons Gray 

 Chief Financial Officer 

 Susan Parker Bodine 

 Assistant Administrator for Solid Waste and Emergency Response 

 Luis A. Luna 

 Assistant Administrator for Administration and Resources Management 

This is our report on the subject audit conducted by the Office of Inspector General (OIG) of the 

U.S. Environmental Protection Agency (EPA). This report contains findings that describe the 

problems the OIG has identified and corrective actions the OIG recommends. This report 

represents the opinion of the OIG and does not necessarily represent the final EPA position. 

Final determination on matters in this report will be made by EPA managers in accordance with 

established audit resolution procedures. The estimated cost of this report – calculated by 

multiplying the project’s staff days by the applicable daily full cost billing rates in effect at the 

time – is $322,000. 

Action Required 

In accordance with EPA Manual 2750, the Office of the Chief Financial Officer (OCFO), as the 

primary Action Official, is required to provide a written response to this report within 90 

calendar days. OCFO should work with the Office of Solid Waste and Emergency Response and 

the Office of Administration and Resources Management to coordinate the response, which 

should include a corrective action plan for agreed upon actions, including milestone dates. We 

have no objection to the further release of this report to the public. This report will be available 

at http://www.epa.gov/oig. 
If you or your staff have any questions, please contact Paul Curtis at (202) 566-2523 or 

curtis.paul@epa.gov, or Meg Bastin at (513) 487-2366 or bastin.margaret@epa.gov. 

Sincerely, 

Bill A. Roderick 

Acting Inspector General 
EPA Could Improve Its Redistribution of Superfund Payments to Specific Sites 

Table of Contents 

Chapters 

1 Introduction ........................................................................................................... 1 

Purpose .......................................................................................................... 

Background .................................................................................................... 

Scope and Methodology.................................................................................

1 

1 

 3 

2 EPA Could Improve Its Superfund “WQ” Site Cost Redistribution Process... 4 

EPA Did Not Timely Redistribute “WQ” Site Costs.........................................

Various Factors Contributed to Untimely Redistributions...............................

Untimely Redistributions Impact Cost Recovery ............................................

Agency Actions to Date ..................................................................................

 Recommendations ......................................................................................... 

Agency Response and OIG Comment ...........................................................

 4 

 5 

 6 

 6 

7 

 8 

Status of Recommendations and Potential Monetary Benefits................................. 9 

Appendices 

A Details on Scope and Methodology..................................................................... 10 

B Undistributed “WQ” Costs by Region and Funding Vehicle............................. 12 

C Causes of Untimely Redistributions by Applicable Location 

and Funding Vehicle ............................................................................................. 13 

D Full Text of Agency Response ............................................................................ 14 

E Distribution ............................................................................................................ 20 
Chapter 1

Introduction 

Purpose 

We performed this review to examine a potential Superfund cost recovery issue 

noted during our audit of the U.S. Environmental Protection Agency’s (EPA’s) 

fiscal year 2003 financial statements. As of August 2003, EPA had recorded 

payments of $97 million for Superfund response costs to a general site identifier 

“WQ” that should have been redistributed to specific site identifiers to improve 

EPA’s cost recovery. The objective of our current review was to answer the 

following questions: 

1) Does EPA make timely redistributions of Superfund costs recorded in the 

“WQ” general site identifier to the specific Superfund sites? 

If EPA does not make timely redistributions: 

2) What is the cause of untimely redistributions? 

3) What is the effect of untimely redistributions? 

4) What actions are needed to ensure timely redistributions? 

Background 

EPA established the Superfund program in 1980 under the Comprehensive 

Environmental Response, Compensation, and Liability Act (CERCLA). Since its 

inception, the Superfund program has given EPA the authority to respond directly 

to releases or threatened releases of hazardous substances that may endanger 

public health or the environment. The Agency has the authority to seek the 

recovery of its costs of responding from those parties responsible for release of 

the hazardous substances. 

Since fiscal year 2004, the Superfund Trust Fund has been primarily supported by 

appropriations from general tax revenues. Replenishing the Trust Fund through 

EPA’s cost recovery has decreased significantly over several years and the Trust 

Fund no longer receives tax revenue. Therefore, Superfund cost recovery is 

critical to EPA’s continued efforts under CERCLA. 

Since EPA seeks cost recovery from responsible parties, it is essential that EPA’s 

financial management system account for response costs at a site-specific level. 

Therefore, EPA tracks Superfund costs at sites using unique alphanumeric 

1
identifiers. The first four characters of the identifier are known as the site/spill 

identifier. The first two digits are numeric, and represent the EPA region (1 of 

10) where the site is located. The next two characters identify the site. 

EPA established general site identifiers for costs that are not immediately 

identifiable to a specific site or are unrelated to a site. EPA uses the general site 

identifier “WQ” to obligate amounts funded for a site-specific response, when the 

precise amounts applicable to the individual sites cannot be determined at the time 

of obligation. According to the Superfund Program Implementation Manual, 

Fiscal Year 2006/2007, “WQ” is used to obligate bulk or block funding only, 

i.e., where site/spill identifiers exist but funds are not committed to a specific site. 

However, when disbursement/payments are made for “WQ” obligations, they 

must be associated with a site. For example, EPA could obligate management 

assistance funds to the “WQ” site identifier under a multi-site cooperative 

agreement, giving the recipient the flexibility to shift resources as needed among 

different sites. Additional general identifiers are “ZZ” for preliminary site 

assessment costs on sites that have not been assigned an identifier number and 

“00” for indirect costs not related to a specific site that will be allocated to the 

Superfund indirect cost rate. 

EPA disbursed “WQ” costs on four types of funding vehicles: contracts, 

interagency agreements, cooperative agreements, and small purchases. EPA 

processes contracts and small purchases at the Research Triangle Park Finance 

Center and interagency agreements at the Cincinnati Finance Center. EPA is 

transferring the processing of cooperative agreements from the regional offices to 

the Las Vegas Finance Center. 

Cooperative agreements and interagency agreements were the primary funding 

vehicles for EPA’s undistributed “WQ” cost payments, as shown in the following 

table. 

Funding Vehicles 

Undistributed 

“WQ” Costs as of 

January 2006 

Cooperative Agreements 

Interagency Agreements 

Small Purchases 

$31,532,427 

6,165,253 

1,798,890 

Subtotal 

Contracts (unaudited) 

39,496,570 

1,806,639 

Total $41,303,209 

A cooperative agreement is a legally binding obligating document through which 

EPA often provides funding to a State to carry out removal and/or remedial 

activities. Cooperative agreements with “block funding” provide States increased 

flexibility to shift resources among multiple activities. An interagency agreement 

is a written agreement between Federal agencies under which goods and services 

2 
are provided. The Superfund program uses interagency agreements to request 

certain Federal agencies to assist with site cleanups and associated activities and 

to provide ongoing support or services. 

Three offices have primary responsibility for the areas covered in this report. The 

Office of the Chief Financial Officer (OCFO) is responsible for EPA’s financial 

management and Superfund cost recovery system. The Office of Solid Waste and 

Emergency Response (OSWER) manages the Superfund program. The Office of 

Administration and Resources Management (OARM) is responsible for 

administering grants and cooperative agreements. 

Scope and Methodology 

We performed this audit in accordance with Government Auditing Standards, 

issued by the Comptroller General of the United States. We conducted our audit 

from January 4, 2006, through March 29, 2006. Appendix A contains a more 

extensive discussion of this section. 

3
Chapter 2

EPA Could Improve Its Superfund “WQ” Site Cost 

Redistribution Process 

While EPA has timely redistributed “WQ” costs paid through contracts, its 

redistribution process for costs paid through cooperative agreements, interagency 

agreements, and small purchases could be improved. Various factors contributed 

to certain untimely redistributions, which possibly hindered EPA’s ability to 

recover the costs from responsible parties. EPA did not establish “WQ” 

procedures, consistently monitor the “WQ” accounts, and provide “WQ” training. 

Also, EPA did not require cooperative agreement recipients to provide the sitespecific cost detail needed. The $39 million of Superfund costs not redistributed 

to specific sites may not be considered in settlement negotiations and oversight 

billings. Therefore, these funds may not be recovered from responsible parties 

and be available for future site cleanup activities. 

EPA Did Not Timely Redistribute “WQ” Site Costs 

EPA did not make timely redistributions of Superfund cooperative agreement, 

interagency agreement, and small purchase payments from the general site 

identifier “WQ” to the specific Superfund sites or other general site identifiers. 

As of January 2006, the undistributed “WQ” for those funding vehicles totaled 

$39 million. Appendix B contains a table of undistributed “WQ” costs by region 

and funding vehicle. EPA’s Comptroller Policy Announcement No. 96-01 states 

that disbursements will not be recorded against the “WQ” identifier. Once 

obligations are liquidated and disbursements are made, these costs must be 

redistributed from the “WQ” account to the appropriate site/spill identifier. The 

finance offices that we reviewed recorded the payments to the general site 

identifier "WQ" and did not redistribute payments to the appropriate general or 

site-specific identifiers, as required. 

The payments in “WQ” remained undistributed for periods ranging from 

2 months to 10 years. Although EPA did not establish a definition of timeliness, 

we consider these extended periods to be untimely. The project officers and 

finance personnel we interviewed generally believed that a timely period for 

redistributing “WQ” costs would be 1 business day for cooperative agreement 

costs, 30 days for small purchases, and 60 days for interagency agreements. 

Some locations have implemented effective procedures resulting in timely “WQ” 

redistributions. For example, the Research Triangle Park Finance Center 

redistributes contract costs within 1 business day of the project officer invoice 

approval. The Las Vegas Finance Center requires cooperative agreement 

recipients to provide the site-specific cost detail within 24 hours of drawing down 

4
funds. Region 1 requires a recipient of a block-funded cooperative agreement to 

provide the site- specific cost information with its draw down request. 

Various Factors Contributed to Untimely Redistributions 

We found various reasons why EPA did not timely redistribute the “WQ” costs 

for cooperative agreements, interagency agreements, and small purchases. 

Appendix C contains a table that matches the following causes with the applicable 

locations and funding vehicles: 

• EPA did not establish procedures to ensure the timely redistribution of 

Superfund costs, except for contracts. Although Comptroller Policy 

Announcement 96-01 provided guidance for using the “WQ” identifier, 

EPA did not establish operating procedures or set timeliness standards for 

cooperative agreements, interagency agreements, and small purchases to 

implement the policy. For contracts, Research Triangle Park Finance 

Center was proactive in identifying untimely redistributions and 

establishing operating procedures and timeliness standards. 

• EPA did not consistently monitor the amounts charged to “WQ” in the 

regional finance offices, Program Offices, and Finance Centers. Some 

offices that we reviewed monitored the “WQ” account consistently while 

others monitored on an irregular basis or not at all. 

• EPA did not provide training in the “WQ” cost redistribution process. 

Project officers and finance personnel were unaware of their 

responsibilities to redistribute “WQ” costs. According to Comptroller 

Policy Announcement 96-01, project officers are responsible for 

redistributing “WQ” disbursements in a timely manner to ensure the 

accuracy of the Agency's reporting and supporting accounting data 

contained in the Agency's financial system. 

• EPA did not establish “WQ” performance standards for project officers, 

and did not hold them accountable for their responsibilities related to 

“WQ” redistribution. 

• EPA did not provide interagency agreement project officers a standard 

format for transmitting redistribution information to the Cincinnati 

Finance Center. 

• EPA did not always request cooperative agreement recipients to provide 

the site-specific cost detail needed for redistributions. According to 

40 Code of Federal Regulations 35, Subpart O, Cooperative Agreements 

and Superfund State Contracts for Superfund Response Actions, Section 

35.6280, the recipient must identify and charge costs to specific sites, 

activities, and operable units, as applicable, for drawdown purposes as 

5
specified in the cooperative agreement. Neither the project officers nor 

the finance office requested the cost detail, although the recipients had the 

capability to provide the detail. 

• EPA did not include appropriate terms and conditions in some cooperative 

agreements requiring recipients to provide timely site-specific cost detail. 

For example, some cooperative agreements had a programmatic condition 

allowing the recipient to provide site-specific cost detail only once every 

6 months, preventing the region from making timely “WQ” 

redistributions. 

• EPA did not include a review of undistributed “WQ” costs in the closeout 

process for cooperative agreements. As a result, EPA closed some 

agreements without making the redistributions. 

Untimely Redistributions Impact Cost Recovery 

Superfund costs not redistributed to specific sites may not be considered in 

settlement negotiations and oversight billings. Therefore, these funds may not be 

recovered from responsible parties and be available for future site cleanup 

activities. Consistent and accurate site-specific charging strengthens the 

program’s cost recovery by ensuring that potentially responsible parties pay their 

fair share of site cleanup costs. 

According to EPA Comptroller Policy Announcement No. 96-01, the Agency 

needs financial information at the site level to perform analyses and make 

resource management decisions. When Superfund costs are not redistributed to 

specific sites, Agency management does not have the accurate financial 

information it needs. 

Agency Actions to Date 

EPA began corrective action on several of our findings before issuance of our 

report: 

• OCFO agreed to establish written procedures for the “WQ” cost 

redistribution process. 

• EPA is working with cooperative agreement recipients to change a 

programmatic condition allowing the recipient to provide site-specific cost 

detail only once every 6 months to a more favorable condition requiring 

the recipient to provide the information within 24 hours after every draw 

down of funds. 

• During our audit, EPA reduced the undistributed “WQ” costs in 

cooperative agreements, interagency agreements, and small purchases 

6
from $39 million to $24 million. Most of the reduction occurred in 

cooperative agreements where Region 4 redistributed $12 million “WQ” 

costs to the appropriate site identifier. Region 5 committed to 

redistributing its “WQ” costs, having obtained the cooperation of its 

recipients to provide the necessary site-specific cost detail. The Cincinnati 

Finance Center worked with interagency agreement project officers to 

reduce the undistributed interagency agreement “WQ” costs from $6 

million to $4 million. Subsequent to our fieldwork, EPA provided data 

reports as of May 12, 2006, that indicated further reductions in the 

undistributed “WQ” costs from $24 million to $13 million. (Appendix B 

contains a table of undistributed “WQ” costs by region and funding 

vehicle.) 

• Region 5 began requiring cooperative agreement recipients to provide 

detailed site identifier cost information when the recipients draw down 

funds. 

Recommendations 

We recommend that OCFO, OSWER, and OARM: 

1. As agreed, develop written procedures for implementing EPA’s Superfund 

site-specific accounting policies related to the general site identifier 

“WQ,” including a timeliness standard for redistributions for each funding 

vehicle, an explanation of project officers’ responsibilities, monitoring 

procedures, and “WQ” cost reviews at the time of closeout. Develop a 

standard format for project officers of interagency agreements to transmit 

cost redistribution information to the Cincinnati Finance Center. 

2. Evaluate the need for training on “WQ” redistribution procedures for each 

type of funding vehicle and provide the appropriate level of training to the 

responsible personnel. 

3. Continue working with the regions to redistribute the historical costs 

remaining in the “WQ” site identifier. 

We recommend that OSWER and OARM: 

4. Complete ongoing efforts to change the cooperative agreement conditions 

to require the recipient to provide site-specific cost details within 24 hours 

of drawing down funds, and enforce those conditions. 

5. Amend the closeout process for cooperative agreements to include 

procedures to verify that “WQ” costs are redistributed. 

7
6. Promote accountability for “WQ” redistributions among project officers 

and finance office personnel. 

Agency Response and OIG Comment 

EPA agreed with our findings and recommendations. For each recommendation, 

EPA provided a corrective action plan, milestone date, and the responsible office. 

We consider EPA’s actions to be appropriate. The Agency’s full response to the 

draft report is in Appendix D. 

8
Status of Recommendations and 

Potential Monetary Benefits 

POTENTIAL MONETARY 

RECOMMENDATIONS BENEFITS (in $000s) 

Planned 

Rec. 

No. 

Page 

No. Subject Status1 Action Official 

Completion 

Date 

Incurred 

Amount 

Agreed To 

Amount 

1 7 Develop written procedures for implementing 

EPA’s Superfund site-specific accounting 

policies related to the general site identifier 

“WQ,” including a timeliness standard for 

redistributions for each funding vehicle, an 

explanation of project officers’ 

responsibilities, monitoring procedures, and 

“WQ” cost reviews at the time of closeout. 

Develop a standard format for project officers 

of interagency agreements to transmit cost 

redistribution information to the Cincinnati 

O CFO, 

Assistant Administrator 

for OSWER, and 

Assistant Administrator 

for OARM 

October 

2006 

$0 $0 

Finance Center. 

2 7 Evaluate the need for training on “WQ” 

redistribution procedures for each type of 

funding vehicle and provide the appropriate 

level of training to the responsible personnel. 

O CFO, 

Assistant Administrator 

for OSWER, and 

Assistant Administrator 

for OARM 

November 

2006 

$0 $0 

3 7 Continue working with the regions to 

redistribute the historical costs remaining in 

the “WQ” site identifier. 

O CFO, 

Assistant Administrator 

for OSWER, and 

Assistant Administrator 

Ongoing 

Completed 

 $13,000 

$26,000 

$13,0002 

$26,0003 

for OARM 

4 7 Continue working to change the cooperative 

agreement conditions to require the recipient 

to provide site-specific cost details within 24 

hours of drawing down funds, and enforce 

those conditions. 

O Assistant Administrator 

for OSWER and 

Assistant Administrator 

for OARM 

October 

2006 

$0 $0 

5 7 Amend the closeout process for cooperative 

agreements to include procedures to verify 

that “WQ” costs are redistributed. 

O Assistant Administrator 

for OSWER and 

Assistant Administrator 

for OARM 

October 

2006 

$0 $0 

6 8 Promote accountability for “WQ” 

redistributions among project officers and 

finance office personnel. 

O Assistant Administrator 

for OSWER and 

Assistant Administrator 

for OARM 

November 

2006 and 

Ongoing 

$0 $0 

1 O = recommendation is open with agreed-to corrective actions pending; 

 C = recommendation is closed with all agreed-to actions completed; 

 U = recommendation is undecided with resolution efforts in progress 2 In the response to the Draft Report, the Agency agreed to redistribute the remaining $13 million recorded in the WQ site identifier. 3 During the course of the audit, the Agency redistributed an aggregate of $26 million in costs recorded in WQ. 

9
Appendix A 

Details on Scope and Methodology 

We reviewed EPA’s processes for Superfund “WQ” site cost redistributions. To gain an 

understanding of the processes, we interviewed finance office personnel in Regions 1 and 5; the 

Finance Centers at Cincinnati, Research Triangle Park, and Las Vegas; and the Program Costing 

Staff within OCFO. 

We obtained data reports of undistributed “WQ” costs for cooperative agreements, interagency 

agreements, small purchases, and contracts. 

We conducted field work for cooperative agreements and small purchases in Regions 4 and 5, 

the locations with the highest levels of undistributed “WQ” costs. We conducted field work for 

interagency agreements in the Cincinnati Finance Center where the interagency agreement 

processing occurs. We tested a sample of undistributed “WQ” costs to determine whether EPA 

redistributed them timely and, if not, the causes and effects of untimely redistributions. We did 

not test contract costs because we found during preliminary research that EPA monitored the 

“WQ” contract costs and redistributed them timely. 

We used the monetary unit method of statistical sampling to select undistributed “WQ” 

payments for testing. We conducted sample testing of cooperative agreements and small 

purchases in Regions 4 and 5. We gathered additional information in Region 7 because it had 

unfavorable cooperative agreement terms with its recipients that prevented timely “WQ” 

redistributions. For testing interagency agreements, we selected a statistical sample from the 

universe of undistributed “WQ” costs in all locations. The resulting samples included “WQ” 

costs from Headquarters and Regions 1, 4, 5, and 9. The Headquarters interagency agreement 

samples covered activities in Regions 1, 2, 3, 4, 5, 7, and 10. 

We assessed EPA’s internal controls related to obligating, disbursing, and redistributing “WQ” 

costs. We gained an understanding of the internal controls through interviews of finance office 

and grant management personnel, Superfund project officers, and cooperative agreement 

recipients. We also reviewed internal controls by examining supporting documentation for 

selected “WQ” disbursement transactions. We did not review the internal controls over EPA’s 

Integrated Financial Management System from which we obtained data reports, but relied on the 

review conducted during the audit of EPA’s fiscal year 2005 financial statements. For our 

current review we identified deficiencies in internal controls and recommended improvements. 

Although there were no prior reports on Superfund cost recovery related directly to the “WQ” 

general site identifier, we reviewed the following five EPA OIG reports related to cost recovery 

and management of assistance agreements: 

10
Prior Reports Reviewed 

Report Title Report No. Date 

EPA Can Better Manage Superfund 

Resources 

2006-P-00013 February 28, 2006 

EPA Managers Did Not Hold Supervisors and 

Project Officers Accountable for Grants 

Management 

2005-P-00027 September 27, 2005 

Additional Efforts Needed to Improve EPA’s 

Oversight of Assistance Agreements 

2002-P-00018 September 30, 2002 

Superfund Consolidated Cooperative 

Agreement Awarded to Ohio EPA 

2000-P-00020 September 15, 2000 

Superfund “ZZ” Accounts E1SFF2-11-0051-3100266 July 2, 1993 

We reviewed EPA’s internal study released in April 2004, SUPERFUND: Building on the Past, 

Looking to the Future, commonly known as the 120-Day Study, that made recommendations for 

improving Superfund. The 120-Day Study did not identify any findings or recommendations 

directly related to the “WQ” general site identifier. 

11
Appendix B 

Undistributed “WQ” Costs by Region 

and Funding Vehicle 

The table below illustrates the undistributed “WQ” costs by region and funding vehicle at the 

beginning and end of our audit and the subsequent date of May 12, 2006.4 

Region 

Undistributed “WQ” (Decrease) Increase 

in “WQ” 

January 2006 to 

May 12, 2006 

January 2006 March 2006 May 12, 2006 

(Unaudited) 

Cooperative Agreements 

Region 1 $545,825 $304,400 $0 $(545,825) 

Region 2 0 0 0 0 

Region 3 0 0 0 0 

Region 4 11,900,245 33,864 0 (11,900,245) 

Region 5 16,894,959 17,299,651 7,343,954 (9,551,005) 

Region 6 0 0 0 0 

Region 7 2,141,975 816,857 73,277 (2,068,698) 

Region 8 0 0 0 0 

Region 9 0 0 0 0 

Region 10 49,423 0 0 (49,423)

 $31,532,427 $18,454,772 $7,417,231 $(24,115,196)

Interagency Agreements 

Region 1 $593,716 $51,000 $51,000 $(542,716) 

Region 2 480,215 468,351 562,144 81,929 

Region 3 42,308 42,308 42,352 44 

Region 4 816,549 82,332 16,532 (800,017) 

Region 5 493,126 413,126 213,126 (280,000) 

Region 6 50,057 1,126 1,126 (48,931) 

Region 7 41,475 6,475 0 (41,475) 

Region 8 740,901 252,821 53,023 (687,878) 

Region 9 306,976 180,935 182,587 (124,389) 

Region 10 67,615 67,615 74,070 6,455 

HQ 2,532,315 2,532,315 2,589,268 56,953

 $6,165,253 $4,098,404 $3,785,228 $(2,380,025)

Small Purchases 

Region 1 $25,455 $32,858 $27,581 $2,126 

Region 2 0 0 0 0 

Region 3 11,145 11,145 11,145 0 

Region 4 872,108 830,812 840,222 (31,886) 

Region 5 493,474 493,474 493,474 0 

Region 6 0 0 0 0 

Region 7 65,589 65,083 65,083 (506) 

Region 8 293,481 262,456 262,456 (31,025) 

Region 9 32,638 32,638 32,638 0 

Region 10 5,000 5,000 5,000 0

 $1,798,890 $1,733,466 $1,737,599 $(61,291)

Totals $39,496,570 $24,286,642 $12,940,058 $(26,556,512) 

4

 Subsequent to our audit, EPA provided updated data reports for undistributed “WQ” costs as of May 12, 2006. We 

did not audit this data. 

12

Appendix C 

Causes of Untimely Redistributions by Applicable 

Location and Funding Vehicle 

Causes of Untimely Redistributions 

Applicable Locations and 

Types of Funding Vehicles 

Cooperative 

Agreements 

Interagency 

Agreements 

Small 

Purchases 

EPA did not: 

Establish procedures or set timeliness 

standards for redistributions. 

Regions 4, 5 Regions 1, 4, 

5, 9, and HQ* 

Regions 4, 5 

Consistently monitor the “WQ” amounts. Regions 4,5 Regions 1, 4, 

5, 9, and HQ 

Region 4 

Provide training in the “WQ” cost 

redistribution process. 

Regions 4, 5 Regions 1, 4, 

5, 9, and HQ 

Region 4 

Establish “WQ” performance standards for 

project officers and hold them accountable 

for “WQ” redistributions. 

Regions 4, 5 Regions 1, 4, 

5, 9, and HQ 

Region 4 

Provide interagency agreement project 

officers a standard format for transmitting 

cost redistribution information to the 

Finance Center. 

Regions 1, 4, 

5, 9, and HQ 

Require cooperative agreement recipients 

to provide the site-specific cost detail 

needed for redistributions. 

Region 5 

Establish a cooperative agreement 

condition requiring the recipient to provide 

timely site-specific cost detail. 

Region 7 

Review undistributed “WQ” costs during 

the closeout process. 

Region 5 

* We reviewed five interagency agreements assigned to a Headquarters project officer that 

included activities for Regions 1, 2, 3, 4, 5, 7, and 10. 

13
Appendix D 

Full Text of Agency Response 

July 13, 2006 

MEMORANDUM 

SUBJECT: Response to OIG Audit “Superfund Could Improve its Redistribution to Specific 

Sites” dated May 22, 2006 

FROM: Lorna McAllister, Director /s/ 

Office of Financial Management 

Milton Brown, Director /s/ 

Office of Financial Services 

Mike Cook, Director /s/ 

Office of Site Remediation and Technology Innovation 

Howard Corcoran, Director /s/ 

Office of Grants and Debarment 

TO: Paul C. Curtis, CPA, Director 

Financial Statement Audits 

We appreciate the opportunity to respond to the findings and recommendations made in 

the audit report, "Superfund Could Improve its Redistribution to Specific Sites." Attached is our 

response to the specific audit findings and recommendations made in the report. 

We would like to express our appreciation for the Office of Inspector General’s 

recognition of various actions and initiatives taken by the OCFO to resolve current and prior 

bulk funding findings related to the redistribution of Superfund payments from the general site 

identifier (WQ) to specific sites. 

If you have any questions concerning the audit response, please contact Ofelia Moore, 

Financial Policy and Planning Staff, at 564-4943. 

Attachment 

cc: Maryann Froehlich 

 Josh Baylson 

Bill Samuels 

Art Budelier 

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Tina Vanpelt 

Iantha Gilmore 

Raffael Stein 

Alan Lewis 

Jim Wood 

Douglas Barrett 

Ofelia Moore 

Lorna McAllister 

 Milton Brown 

 David Bloom 

Krista Mainess 

 Regional Comptrollers 

Regional Superfund Accountants 

Linda Yancey, OARM 

Johnsie Webster, OSWER 

Vince Velez, OECA 

Margaret Bastin 

Rita Wilson 

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 ATTACHMENT 

EPA Responses to Specific Findings and Recommendations 

In general, all offices and regions agree with the findings and recommendations of the 

audit. EPA is aware of the need for timely site redistribution of the WQ accounts. Even before 

the audit began, regions had been working to close out old WQ balances on Cooperative 

Agreements, Simplified Acquisitions, and Interagency Agreements. Due to the consolidation of 

duties for processing these transactions at the EPA finance centers, EPA is now taking an 

opportunity to streamline and standardize the financial policies and procedures in the Las Vegas, 

Cincinnati, and Research Triangle Park finance centers. In addition, the Office of Financial 

Management (OFM) is in the process of updating the Resource Management Directive Systems 

2550D (RMDS) to consolidate financial and accounting policies into one manual. This will 

allow us to update and expound on the WQ portion of the Comptroller Policy Announcement 96-

01 – Superfund Site Specific Accounting. 

A. OIG Findings and EPA Responses 

1. EPA Did Not Timely Redistribute WQ Site Costs 

EPA did not make timely redistributions of Superfund cooperative agreements, 

interagency agreements, and small purchase payments from the general site identifier 

WQ to the specific Superfund sites or other general site identifiers. As of January 2006, 

the undistributed WQ for those funding vehicles totaled $39 million. However, by May 

12, 2006, the total was tremendously reduced by $26 million to $13 million. 

EPA concurs with this finding. 

2. Untimely Redistributions Impact Cost Recovery 

Superfund costs not redistributed to specific sites may not be considered in 

settlement negotiations and oversight billings. Therefore, these funds may not be 

recovered from responsible parties and be available for future site cleanup activities. 

Consistent and accurate site-specific charging strengthens the program’s cost recovery by 

ensuring that potentially responsible parties pay their fair share of site cleanup costs. 

According to EPA Comptroller Policy Announcement No. 96-01, the Agency 

needs financial information at the site level to perform analyses and make resource 

management decisions. When Superfund costs are not redistributed to specific sites, 

Agency management may not have the accurate financial information it needs. 

EPA concurs with this finding. 

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B. Agency Actions to Date 

EPA began corrective action on these findings before issuance of the OIG report, as 

outlined below: 

• EPA agreed to establish written procedures for the WQ cost redistribution process. 

• EPA is working with cooperative agreement recipients to change a programmatic 

condition allowing the recipient to provide site-specific cost detail only once every 

6 months to a more favorable condition requiring the recipient to provide the 

information on a more timely basis. 

• Subsequent to the IG’s audit, EPA provided data reports as of May 12, 2006 that 

indicated further reductions in the undistributed WQ costs from $39 million to $13 

million or a 67% drop from the start of the audit. Most of the reduction occurred in 

cooperative agreements where Region 4 redistributed $12 million WQ costs to the 

appropriate site identifier. 

• The Cincinnati Finance Center worked with interagency agreement P roject Officers 

to reduce the undistributed interagency agreement WQ costs from $6 million to $4 

million. 

• Region 5 began requiring cooperative agreement recipients to provide detailed site 

identifier cost information when the recipients draw down funds. 

C. OIG Recommendations and EPA Planned Corrective Actions 

We recommend that OCFO, OSWER, and OARM: 

1. As agreed, develop written procedures for implementing EPA’s Superfund sitespecific accounting policies related to the general site identifier WQ, including a timeliness 

standard for redistributions for each funding vehicle, an explanation of project officers’ 

responsibilities, monitoring procedures, and WQ cost reviews at the time of closeout. 

Develop a standard format for project officers of interagency agreements to transmit cost 

redistribution information to the Cincinnati Finance Center. 

EPA Corrective Action: For all funding vehicles, OCFO will or has begun drafting 

appropriate WQ accounting policies to enhance the Comptroller Policy Announcement 

96-01. WQ redistribution procedures will be incorporated into Chapter 4 “Direct Site 

Charging” of the RMDS 2550D, also known as “Financial Management of the 

Superfund Program,” which is in the process of being updated by OCFO/OFM. 

OCFO/OFS is also developing standard operating procedures for simplified 

acquisitions similar to Superfund contracts for the processing of payments. 

Milestone Date: October 2006 

Responsible Office: OCFO 

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2. Evaluate the need for training on WQ redistribution procedures for each type of 

funding vehicle and provide the appropriate level of training to the responsible personnel. 

EPA Corrective Action: OSWER and OARM, in cooperation with OCFO/OFM, will 

evaluate the need for training on WQ redistribution procedures for each type of 

funding vehicle. OCFO/OFM has provided OARM with project officer training 

materials for IAGs to include in its on-line officer training course. 

Milestone Date: November 2006 

Responsible Office: OSWER, OARM 

3. Continue working with the regions to redistribute the historical costs remaining in the 

WQ site identifier. 

EPA Corrective Action: EPA has prioritized this issue in order for the balances to come 

in line with current WQ payments only and is working with States and other Agencies 

to ensure compliance. For instance, Region III has a small backlog that they plan to 

eliminate. Region V is working to eliminate the backlog before the Cooperative 

Agreement processing migrates to OFS/LV this winter and has already redistributed 

$9.6 million. Region V is also committed to redistributing the balance of $7.3 million by 

December 2006, having obtained the cooperation of its recipients to provide the 

necessary site-specific cost detail. OCFO/OFS has aggressively worked to redistribute 

simplified acquisition backlog and has provided the regions with reports for their use in 

eliminating their own backlog. The Las Vegas Finance Center, in coordination with the 

regions and grant recipients, has already redistributed to the correct sites all 

outstanding cooperative agreement WQ balances for the regions it services. 

Milestone Date: Ongoing 

Responsible Offices: OCFO, OARM, and OSWER 

4. Continue working to change the cooperative agreement conditions to require the 

recipient to provide site-specific cost details within 24 hours of drawing down funds, and 

enforce those conditions. 

EPA Corrective Action: OCFO and OSWER are currently working together to agree on 

the time frame to provide site specific cost details within one business day of the 

payment draw down. This will include providing the award officials with appropriate 

programmatic terms and conditions to be included in future grants. OCFO has 

updated the Cooperative Agreement WQ site distribution policy which is being 

included in a draft of Chapter 9, RMDS on Cooperative Agreements and has updated 

the chapter to address the OIG’s recommendation. 

Milestone Date: October 2006 

Responsible Offices: OCFO, OARM/OGD, Regional Grants Management offices 

and OSWER 

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5. Amend the closeout process for cooperative agreements to include procedures to 

verify that WQ costs are redistributed. 

EPA Corrective Action: OCFO, OARM, and OSWER will coordinate changes in 

closeout procedures to ensure and verify that WQ costs are redistributed. OCFO, and 

OSWER are in the process of amending the latest draft of 2550D Chapter 9 to include 

language that would require all WQ payments to be redistributed at the time of Grants 

closeout. 

Milestone Date: October 2006 

Responsible Office: OCFO, OSWER 

6. Promote accountability for WQ redistributions among project officers and finance 

office personnel. 

EPA Corrective Action: OCFO, OARM, and OSWER will issue guidance that assigns 

specific responsibilities to ensure that WQ costs are redistributed in a timely manner. 

As discussed above, OCFO, OARM, and OSWER will promote such accountability 

through the update and revision of relevant policies and the evaluation of training 

needs on an ongoing basis. OCFO/OFS will continue to monitor WQ payment balances 

for all funding vehicles on at least a quarterly basis to ensure that appropriate project 

officers and grantees are held accountable. 

Milestone Date: November 2006 and Ongoing 

Responsible Offices: OCFO, OARM and OSWER 

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Appendix E 

Distribution 

Office of the Administrator 

Assistant Administrator for Solid Waste and Emergency Response 

Assistant Administrator for Administration and Resources Management 

Associate Administrator for Congressional and Intergovernmental Relations 

Associate Administrator for Public Affairs 

Director, Office of Financial Management 

Director, Office of Site Remediation and Technology Innovation 

Director, Office of Grants and Debarment 

Audit Liaison, Office of the Chief Financial Officer 

Audit Liaison, Office of Solid Waste and Emergency Response 

Audit Liaison, Office of Administration and Resources Management 

Agency Followup Official (the CFO) 

Agency Followup Coordinator 

General Counsel 

Regional Administrators (1-10) 

Assistant Regional Administrators (1-10) 

Regional Comptrollers (1-10) 

Audit Followup Coordinators, Regions (1-10) 

Acting Inspector General 

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