LEGISLATIVE BUDGET AND AUDIT COMMITTEE Division of Legislative Audit P.O. Box 113300 Juneau, AK 99811-3300 (907) 465-3830 FAX (907) 465-2347
[email protected] SUMMARY OF: A Special Report on the Department of Environmental Conservation, Division of Spill Prevention and Response, Oil and Hazardous Substance Release Prevention and Response Fund, March 18, 2008. PURPOSE OF THE REPORT In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted a performance audit of the Department of Environmental Conservation (DEC), Division of Spill Prevention and Response (Division). Specifically, we were asked to review the expenditures and cost recovery revenues from the Oil and Hazardous Substance Release Prevention and Response Fund (Fund). REPORT CONCLUSIONS The conclusions are as follows: all expenditures are not recorded according to activities compliance with statutory cost recovery requirements is unclear Division is not efficiently and effectively recovering costs most expenditures were appropriate legal costs need an improved budgeting process certain contractual oversight practices are weak detailed information on the Fund’s financial activities is incomplete During the audit we reviewed a $9 million reimbursable services agreement between the Division and the Department of Law for legal services related to two transit pipeline spills on the North Slope. The contract was funded by the Response Account without specific legislative appropriation. It would have been more prudent to follow the established legislative budget process, especially for long-term legal activities. FINDINGS AND RECOMMENDATIONS 1. The Division Director should improve the accountability for the Division’s activities and reporting of Fund expenditures.