Improvements Needed in the Accounting and Financial Management of the National Credit Union Administration

AFMD-82-21: Published: Dec 16, 1981. Publicly Released: Dec 16, 1981.

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During a recent examination of the National Credit Union Administration's (NCUA) 1980 financial statements, GAO tested the NCUA internal controls and the manner in which its accounting functions were performed.

GAO tests disclosed numerous areas in which improvement can be made. The weaknesses GAO found in internal controls and accounting practices did not materially affect the financial statements taken as a whole. For this reason, GAO was able to render an unqualified opinion on the NCUA financial statements for calendar year 1980. However, GAO tests of accounting practices and internal controls at NCUA disclosed that: (1) cash was not properly controlled through periodic reconciliations; (2) fixed assets were not properly controlled through periodic inventories; (3) uncollectible loans assumed from failed credit unions were not identified and written off; (4) unclaimed shareholders' moneys were not converted from an insured status to a noninsured status in accordance with current policies; (5) interest income was not recorded in the proper accounting period; (6) commercial bills and travel vouchers were not approved before payment, and employee duties related to voucher payments were insufficiently separated; and (7) payroll data were not updated correctly, resulting in inaccuracies in the payroll system.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Chairman of the Board of the National Credit Union Administration (NCUA) should take additional steps to further strengthen the NCUA accounting and financial management by directing management to: (1) establish policies and procedures to monthly reconcile the NCUA cash accounts with U.S. Treasury records; (2) follow the stated policy of inventorying fixed assets biannually, preferably taking one of the inventories at the close of the fiscal year; (3) review loans acquired from failed credit unions and write off loans determined to be uncollectible; (4) follow up on the NCUA efforts to convert unclaimed shareholders' moneys from an insured to a noninsured status; (5) adhere to the procedures for recording interest income on the accrual basis; and (6) prescribe procedures to record interest income waived on financial assistance loans and investments and provide full disclosure in the financial statements for material amounts of interest waived.

    Agency Affected: National Credit Union Administration

  2. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Chairman of the Board of the National Credit Union Administration should direct management to: (1) improve procedures to strengthen internal controls, including separation of duties over the audit, approval and certification of payments of commercial bills, and travel vouchers; and (2) establish controls and procedures to ensure that pertinent employee personnel file information is provided to the General Services Administration on payroll operations.

    Agency Affected: National Credit Union Administration

 

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