ASSIST AUDIT OF COSTS AND PROPERTY EDGERTON, GERMESHAUSEN, AND GRIER, INC. (Sanitized)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP64B00187A000700150002-5
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 4
• Document Creation Date: December 9, 2016
• Document Release Date: June 20, 2001
• Sequence Number: 2
• Publication Date: October 23, 1959
• Content Type: MEMO

DEPARTMENT OF THE AIR FORCE
HEADQUARTERS UNITED STATES AIR FORCE
WASHINGTON 25. D. C. DPD-.72+1-59
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Auditor General
Comptroller, USAF
Eastern District
Liaison Office
P.O. Box 8155, S.W. Station
Washington, D. C.
23 October 1959
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SUBJECT: Assist Audit of Costs and Property
Edgerton, Germeshausen and Grier, Inc.
Contract No. TE-2191
TO: Contracting Officer
REF: Assist Audit Requested by LOU.
1. Purpose of Examination. An examination has been made of
the contraccar s reco to delERmine the propriety and reasonable-
ness of the direct costs incurred under the subject contract during
the period 1 May 1957 to 30 June 1959. In addition, tests were made
to determine that property accounting procedures, as they pertain to
contractor-acquired property, were being consistently adhered to.
2. Scope of Examination. Inasmuch as materiel and services
costs comprised approximately 60% of the total costs incurred, the
auditor directed the greater effort to this area.
(a) Direct Costs. Material charges were tested by ref-
erence to paid invoices and to receiving records where applicable.
Travel expense was traced selectively to individual expense reports
and compared with employee labor charges in the same period. Freight
and express was examined to the extent deemed necessary by reference
to paid freight and moving bills. Other direct charges were examined
and found to consist solely of telephone, telegraph, and TWX costs,
which were tested for accuracy and presence of proper controls.
Direct labor costs were confirmed only by reference to cost ledger-
records and, to an extent, by comparison with travel expense charges,
previous audit having established that adequate controls were employed.
AppRl,ase; 2Q 1,/d
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CHAN[ E IN CLASS ^
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DATE a~2"" - REVIEWER. 018313
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(b)i Property. Contractor acquired non-expendable pro-
perty examined ine cost audit was traced into accountable prop-
erty records.
3. Results of Examination.
(all Direct Costs. As a result of the examination, no
costs were questioned, subject to the contracting officer's treat-
ment of the items outlined in Paragraph 4.
(b)i Property. Minor discrepancies in property records
resulted from misinterpretation of what constituted expendable and
non-expendable property. Buildings and fixtures are not carried on
records.
The pending visit of the contracting officer's repre-
sentative in Los Angeles precluded audit of GEP. However, discus-
sion with the local property administrator indicates that weaknesses
disclosed by the initial survey have not been corrected. Therefore,
because supply channels have been so complex, it is recommended that
lists of GEP from the various sources be furnished the audit group
from time to time rather than at completion of the contract.
4. Auditor's Comments. The following relates to the auditor's
acceptanc)w th reserva .on, of certain costs incurred during the
period 1 May 1957 to 30 June 1959:
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(b) Overtime. Examination of available documents dis-
closed that approval was not requested or secured for all overtime.
The total incurred is $8,207.12.
(c) Travel Expense. The auditor did not Question approxi-
mately 25X1A
$13,000 of per diem generated at the during the
six-month period ended 30 June 1959. A fixed amount, $7.50 per day
for seven days per week, is paid to upward of thirteen employees
as incentive for working at the site daily, which necessitates travel
of approximately one hundred miles round trip from home each day,
with no mileage reimbursement. In addition, their working day is
not based on portal-to-portal. In view of the circumstances prevail-
ing in this particular phase of the operation, it is the opinion
of the auditor that these "per diem" costs for a five-day working
week are reasonable, also for Saturday and Sunday, but only if the
employees are physically at the site. The contractor's representa-
tive informed the auditor that acapany policy with respect to travel
was outlined in
from, which the
following was e__:rac -...In lieu o_ ac ua__ e} ennses...a per
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diem allowance of $7.50 shall be allowed at the
"
This operation, however, is not in the
or the
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information of the contracting officer, the co
zan
auditor
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was not available for discussion of this technicality.
5. General. Numerous minor differences were noted between
cost summary furnished the auditor and cost ledger amounts on the
books. Attached is a summary of costs as they appear on
the books of the - facility.
W. F. Edwards
Audit Liarson Officer
Eastern District
Auditor General
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