AUDIT REPORT ON FINAL AUDIT OF CONSTRUCTION GRANT C120405-01
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
SOUTHERN DIVISION. SUITE 51 5
1371 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30309
REGIONAL OFFICE:
EARLE CABELL BLOG.. RM. 2F50
DALLAS. TX 75242
May 25, 1983
MEMORANDUM
SUBJECT: Audit Report No. E2cW2-04-0278-31114
Report on Final Audit of
Construction Grant C120405-01
City of Clearwater, Florida
FROM: Inspector General
TO: Chief, Facilities Construction Branch
Region IV
Transmitted are three copies of the subject audit report. We have no
objection to the further release of this report at the discretion of
the action official.
In accordance with EPA Orders 2750.1A and 2750.2A, you are required to
submit a report of action taken within 120 days. However, since there
are no unresolved audit issues, a report of action taken is not required.
Please refer to the audit report number on related correspondence.
Contact Mr. Richard Solomon or Mr. Leslie Buie, Southern Division, at
(404) 881-3623 or FTS 257-3623 if you have any questions concerning
this report. M7:
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~ the Inspector General
Enclosure
cc: Regional Administrator, Region IV
Chief, Financial Management Branch, Region IV
Robert Hess, EPA Auditor
Chief, Grants Admfnistration Unit
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
SOUTHERN DIVISION. SUITE 515
1371 PEACHTREE STREET. N.E.
ATLANTA. GEORGiA 30309
REGIONAL OFFICE:
EARLE CABELL BLOG.. RM. 2F50
DALLAS. TX 75242
Audit Report No. E2cW2-04-0278-31114
Report of Final Audit
Construction Grant C120405-01
City of Clearwater, Florida
PURPOSE AND SCOPE
We have completed the audit of costs reported by the City of Clearwater,
Florida under grant number C120405-04 through final Outlay Report and
Report for Reimbursement number five. The purpose of our audit was to
determine whether the costs claimed were reasonable, allowable and
allocable under the terms of the grant and applicable regulations.
The audit was made in accordance with generally accepted auditing standards
and, accordingly, included such tests of the accounting and other records
and such other auditing procedures as were considered necessary in the
circumstances. Our review was a limited field review and did not
encompass all areas as specified in the EPA Audit Guide for Construction
Grants Program dated May 1980.
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BACKGROUND
The grant was awarded on September 30, 1974 under P.L. 92-500 and provides
for seventy five percent federal participation. The amount of the grant
through Amendment number 2 is as follows:
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Total Eligible Cost
$7,662,187
Grant Amount
$5,746,640
The approved grant project was for the expansion and upgrading of the
grantee's existing Marshall Street 4.0 MGD secondary treatment facility
to a 8.0 MGD modified advanced waste treatment activated sludge facility.
Final inspection of the project was completed by EPA technical representatives
in September 1980. The EPA engineer reported that construction of the
facilities had been satisfactorily completed and the facilities ~/ere
operating satisfactorily and meeting all the NPDES permit requirements.
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RESULTS OF AUDIT
The results of audit, detailed in Exhibit A, are:
Claimed
Accepted Questioned
For Federal Participation $7,756,289 $7,662,187 $94,102
Federal Share @ 75%
$5,817,217 $5,746,640
EPA Payments through 8/16/82
Funds Due EPA
5,746,640
$ -0-
ENGINEERING FEES
We noted that compensation for engineering services was based upon the
percentage-of-construction-costs and multiplier methods of contracting.
The use of these methods of computing engineering fees has been accepted
because at the time the contractual arrangement was made, these methods
of contracting were not prohibited and were in accordance with industry
practice. The fee curve method of contracting is prohibited by.40 CFR,
Part 35, Subpart E, Appendix D, dated December 17, 1975.
If additional audit assistance is required, please contact Mr. Richard
Solomon on (404) 881-3623.
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Audit Report No. E2cW2-04-0278
EXHIBIT A
REPORT OF FINAL AUDIT
CONSTRUCTION GRANT C120405-01
CITY OF CLEARWATER, FLORIDA
SUMMARY OF COSTS REPORTED THROUGH FINAL OUTLAY REPORT NO. 5
AND RESULTS OF AUDIT
COST CATEGORY CLAIMED ACCEPTED QUESTIONED REFER.
Administrative Expense $ 24,866 $ 302 $24,564 Note 1
A&E Basic Fees 403,170 402,272 898 Note 2
Other A&E Fees 50,000 50,000 -0-
Project Inspection Fees 244,192 227,997 16,195 Note 3
Construction Costs 7,034,061 7,015,585 18,476 Note 4
( 33,969) 33,969 Note 5
Total for Federal Participation $7,756,289 $7,662,187 $94,102.
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Federal Share @ 75% $5,817,217 $5,746,640
EPA Payments Through 8/16/82 $5,746,640
Funds Due EPA $ -0-
Note 1: Administrative Expense - Fees charged by the consulting engineer,
Briley, Wild and Associates, for services considered to be out-
side the scope of the grant project are questioned as follows:
A. Services performed during the period April
1971 through September 27, 1974, prior to
the grant award on September 30, 1974, re-
lated to the preparation and coordination
of grant application, I/I analysis, environ-
mental assessment statements, project interim
plan and miscellaneous correspondence, are
questioned as being outside the scope of the
grant project per CFR 35.940-2(e).
$21,512
B. Services performed during the period 9/28/74
through 2/28/75 related to preparation and
coordination of the grant application are
questioned per CFR 35.940-2(g)
3,052
$24,564
To ta 1
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Note 2: A&E Basic Fees - The engineer's fee at two percent of con-
construction cost for the construction phase applicable to
construction cost determined to be ineligible by the EPA
Project Officer are questioned as follows:
Biltmore Construction Co. - C.O #1
C.O.#3
C.0.#4
C.0.#5
C.0.#6
C.O.#7
$ 1,500
299
900
23,658
1,786
16,744
$44,887
X 2% =
$898
Note 3: Project Inspection Fees - The engineer's fees for
inspection services performed after the approved contract
completion date of 8/15/79 are questioned as not being
allowable per EPA Construction Grants Handbook of
Procedures and EPA's Audit Guide. These costs are
questioned as being outside the scope of the grant
project per CFR 35.940-2(g).
Services performed from 8/25/79 thru 9/18/81
~.$16,195
Note 4: Construction Costs - Construction costs determined to be
ineligible by the EPA Project Officer are questioned as
follows:
Amount of Change Orders #1 through 7 to
Biltmore Construction Co. contract
determined to be ineligible as detailed
in Note 2 above
$44,887
Less: Amount eliminated from claim by
grantee - Total contract price $7,060,472
Amount Claimed 7,034,061
26,411
$18,476
Balance questioned
Note 5: Remainder of Costs Claimed In Excess of Total Eligible Grant
Costs - The grantee claimed costs in the amount of $94,102
in excess of the total eligible grant costs. Since costs
questioned as unallowable or ineligible in Notes 1 through
4 above amount only to $60,133, the balance of the excess
costs of $33,969 is also questioned as ineligible.
Total costs reported
Total eligible costs through
Grant Amendment #2
$7,756,289
7,662,187
Excess Cost Claimed $
Less: Costs questioned in Notes 1 - 4
94,102
60,133
33,969
Balance of excess costs questioned $
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