Financial Management

Pursuant to a legislative requirement, GAO reported on its review of the Environmental Protection Agency's (EPA) Superfund accounting system, focusing on: (1) types and amounts of overhead and direct expenses that EPA and the Department of Justice (DOJ) allocate to Superfund; (2) whether those expenses support the program's objectives; and (3) whether the expenses are typical of the types of cleanup costs normally incurred by large petroleum or chemical companies. GAO did not independently verify the accuracy of the disbursements EPA aggregated into five expense categories.

GAO noted that: (1) at GAO's request, EPA aggregated fiscal year 1996 Superfund disbursements totalling about $1.4 billion into five expense categories; (2) nearly half of the total was for contractor cleanup and the balance for categories directly related to, or supporting, the cleanup; (3) the EPA Inspector General (IG) reviewed the appropriateness of the charges to Superfund as part of its annual financial audit; (4) the EPA IG's work included statistical random samples of Superfund items separately selected at both the interim and final phases of testing; (5) this testing did not disclose any discrepancies or questioned costs; (6) similarly, the DOJ IG's latest annual audit of DOJ Superfund billings did not identify any discrepancies or questioned costs; (7) based on the results of the IGs' work, the expenses allocated or charged appear to support the program's objectives; (8) the petroleum and chemical companies that GAO contacted advised GAO that a pro rata share of administration and management costs are allocated to their cleanup activities, but they were reluctant to provide GAO access to their accounting records; (9) therefore, GAO was unable to assess whether EPA's expenses are typical of cleanup costs normally incurred by these companies; (10) the companies did not identify any specific concerns with EPA's accounting practices; and (11) the only concerns mentioned related to other issues, such as the relative efficiency of federal versus private cleanup efforts.