Financial Audit:

EPA's Financial Statements for Fiscal Years 1988 and 1987

AFMD-90-20: Published: Mar 16, 1990. Publicly Released: Mar 16, 1990.

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Pursuant to a legislative requirement, GAO examined the Environmental Protection Agency's (EPA) consolidated financial statements for the years ended September 30, 1988 and 1987, focusing on: (1) EPA internal accounting controls; (2) EPA compliance with laws and regulations; and (3) the Superfund program's financial condition.

GAO found that: (1) EPA estimated a $30-billion cleanup cost for about 1,200 hazardous waste sites, but it may have underestimated the cost; (2) as of September 30, 1988, EPA had identified over 30,000 waste sites and had completed preliminary assessments at over 26,000 sites and inspections at over 9,000 sites; (3) at the end of 1988, EPA had started cleanup work at 201 of the 1,200 sites, and had completed work at 27 sites; (4) the new EPA reporting system did not provide satisfactory accounting information; and (5) EPA did not timely reconcile its general ledger and external reports. GAO also found that: (1) EPA did not correct previously reported property management internal control problems; (2) the EPA subsidiary accounting system for property and related internal controls did not adequately account for or maintain control over those assets; and (3) the property management system did not reasonably safeguard EPA assets or provide the appropriate information in financial statements. GAO also found that EPA complied with the provisions of laws and regulations that could have a material effect on its consolidated financial statements.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: EPA stated that it has refined procedures to control and account for property assets; completed a wall-to-wall physical inventory; and initiated a full reconciliation of property and accounting records.

    Recommendation: To improve EPA accounting for and control over all property assets, the Administrator, EPA, should ensure that the new accounting system and the property control system provide accurate and reliable financial and management control records (including the type of asset, date of acquisition, cost, estimated useful life, applicable depreciation data, physical location, and identity of custodial officers) to account for and control property assets.

    Agency Affected: Environmental Protection Agency

  2. Status: Closed - Implemented

    Comments: In fiscal year 1994, on the basis of recommendations from an internal quality action team, EPA decided to replace its existing Personal Property Accountability System with a new Fixed Asset Module, which would be implemented with its new accounting system. EPA completed the implementation of the Fixed Asset Module in fiscal year 1997.

    Recommendation: To improve EPA accounting for and control over all property assets, the Administrator, EPA, should ensure that the new accounting system and the property control system contain a common data element or interface to permit the reconciliation of accounting and property systems data.

    Agency Affected: Environmental Protection Agency

  3. Status: Closed - Implemented

    Comments: EPA agreed with the recommendation and has developed new procedures and established policy to reconcile property records with accounting records. Property officers have certified that property records are correct.

    Recommendation: To improve EPA accounting for and control over all property assets, the Administrator, EPA, should address the property-related findings and implement the recommendations reported by the Superfund auditor in its fiscal year 1988 audit report dated September 22, 1989.

    Agency Affected: Environmental Protection Agency

 

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