Financial Control System Problems at the Community Services Administration Will Not Be Fully Solved by the Current System Redesign Project

AFMD-81-96: Published: Aug 19, 1981. Publicly Released: Aug 19, 1981.

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GAO reviewed the Community Services Administration's automated Financial Control System. The objectives were to determine whether the accounting and management control systems ensure that: (1) cash advances received, money expended, and balances on hand are properly and accurately reported; and (2) cash advances are not requested prematurely causing balances to exceed immediate and reasonable cash needs.

The review of the Financial Control System revealed such a state of disarray that it is clear that managers are not receiving the information they need to adequately control and accurately report grantee use of funds totaling millions of dollars. For the grants examined, the unexpended cash advances held by grantees as recorded in the system were grossly overstated. In addition to being inaccurately accounted for, most of the cash held by the grantees was in excess of their immediate and reasonable needs and should not have been drawn down until needed to make payments under the grant. Some grantees had cash on hand in excess of a year's requirements. Agency managers were aware that information in the system could not be relied on, and they often kept manual memorandum records to compensate for this weakness. This created additional administrative costs. The cause of unreliable information in the system is a combination of system design problems and failure to follow procedures. Specifically, grantees and agency personnel have failed to ensure that expenditures are promptly entered into the system and, as a result, the system does not provide agency personnel with the reliable information needed to monitor cash balances. The Administration has a system redesign project underway which is a major step toward correcting the situation. However, this will not eliminate the erroneous information in the system or address the lack of compliance with proper accounting and control procedures.

Recommendations for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Director of the Community Services Administration should immediately issue instructions to purify the information on the financial status of grants in the Financial Control System.

    Agency Affected: Community Services Administration

  2. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: If the Community Services Administration continues to exist as a separate, independent agency after September 30, 1981, the Director should issue instructions that management controls be developed and implemented to ensure that agency personnel and grantees will fully comply with prescribed accounting and control procedures.

    Agency Affected: Community Services Administration

  3. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: If the Community Services Administration continues to exist as a separate, independent agency after September 30, 1981, the Director should issue instructions that the design of the new system conform to the principles and standards approved by the Comptroller General on April 15, 1979, and be submitted to the Comptroller General for approval.

    Agency Affected: Community Services Administration

 

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