Auditing and Financial Management:

Continuing Financial Management Problems at the Equal Employment Opportunity Commission

AFMD-82-72: Published: May 17, 1982. Publicly Released: Jun 14, 1982.

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GAO was asked to review the financial operations of the Equal Employment Opportunity Commission (EEOC) with emphasis on determining the extent of deficiencies in EEOC controls over appropriated funds. GAO was requested to issue an interim report in October 1981 on the results of the review at that time.

GAO found that: (1) accounting records and reports were unreliable, due to problems such as the failure to keep general ledgers and subsidiary ledgers in agreement, to promptly input accounting transactions, and to reconcile obligation balance differences between the centralized accounting system and obligations records maintained by program and field offices; (2) receivables, payables, and advances were inaccurately reported, due to the agency's failure to validate obligations, collect receivables, accurately record outstanding loans, settle travel advances, and perform contract audits; and (3) internal controls were weak due to improper segregation of duties, insufficient training and supervision of key accounting and budget personnel, and inadequate internal audit coverage of financial operations. EEOC in recent years has committed a number of questionable acts, some of which violate federal statutes. Specifically EEOC has: (1) obligated funds in one fiscal year (FY) to cover goods and services that were clearly to satisfy needs in future years; (2) failed to review the validity of the unliquidated obligations as recorded; (3) certified year-end reports for FY 1980 and 1981 as accurate under conditions clearly indicating that the reports contained erroneous data; and (4) entered, with questionable authority, into agreements whereby money was either loaned or granted to private persons.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Office of Audit now develops an annual work plan which is approved by the chairman. The plan provides for periodic reviews of financial procedures and program operations throughout the year.

    Recommendation: The Chairman, EEOC, should direct the EEOC Office of Audit to periodically review financial activities with emphasis on determining whether promised corrective actions are completed and whether procedures for recording data and reconciling records are being followed.

    Agency Affected: Equal Employment Opportunity Commission

  2. Status: Closed - Implemented

    Comments: EEOC corrected the figures reported to Treasury in its FY 1982 year-end report.

    Recommendation: The Chairman, EEOC, should submit revised fiscal 1981 year-end reports to the Department of the Treasury and the Office and Management and Budget after corrective actions promised by the Acting Chairman and recommended in this report are implemented.

    Agency Affected: Equal Employment Opportunity Commission

  3. Status: Closed - Implemented

    Comments: Two employees were designated to serve full time as claims collection officers. Procedures covering debt collection and collection of overpayments due to erroneous pay were developed and implemented.

    Recommendation: The Chairman, EEOC, should designate an individual as claims collection officer and establish written collection procedures.

    Agency Affected: Equal Employment Opportunity Commission

  4. Status: Closed - Implemented

    Comments: EEOC provided documentation on the actions taken thus far on all recommendations. However, due to staff constraints, GAO was unable to visit EEOC and verify that all of the changes were actually implemented.

    Recommendation: The Chairman, EEOC, should collect all existing and future receivables in accordance with the Federal Claims Collection Act and adjust records to accurately report all valid receivables.

    Agency Affected: Equal Employment Opportunity Commission

  5. Status: Closed - Implemented

    Comments: New procedures covering issuance of travel advances were developed. EEOC employees are required to submit a travel voucher to cover their last advance before being issued a subsequent advance. Advances that remain overdue after 30 days are sent demand letters prior to instituting payroll deduction action.

    Recommendation: The Chairman, EEOC, should establish clear responsibility and procedures to control travel advances and, when appropriate, use payroll deductions to collect outstanding advances.

    Agency Affected: Equal Employment Opportunity Commission

  6. Status: Closed - Implemented

    Comments: New procedures covering clearances of employees were developed. A separate debt review is required to take place prior to issuance of the employee's final salary check or release of lump-sum annual leave funds. Collection efforts were taken to recover funds from all former employees owing EEOC funds.

    Recommendation: The Chairman, EEOC, should establish clearance procedures that prevent employees from leaving EEOC with unsettled advances and take appropriate action to recover funds owed by former EEOC employees or others.

    Agency Affected: Equal Employment Opportunity Commission

  7. Status: Closed - Implemented

    Comments: All 4,424 travel folders maintained on EEOC employees and 1,224 state/local agency employee folders were reconciled. Subsidiary travel folders are now reconciled on a rotating basis each month by professional accountants assigned to the finance branch.

    Recommendation: The Chairman, EEOC, should determine reasons for differences in travel advance balances as reported in the centralized accounting system and in individual travel records and bring the two records into agreement.

    Agency Affected: Equal Employment Opportunity Commission

  8. Status: Closed - Implemented

    Comments: A task force composed of the EEOC contracting officer and attorneys from three headquarter offices was established to review all contracts where reimbursement to the government might be necessary. A total of $1.6 million in deobligations were prepared on 130 contracts. Accounts receivable was set up for 22 contracts.

    Recommendation: The Chairman, EEOC, should determine the validity of questionable contract charges reported by the EEOC Office of Audit, and when appropriate, establish the amounts as receivables and initiate aggressive collection action.

    Agency Affected: Equal Employment Opportunity Commission

  9. Status: Closed - Implemented

    Comments: EEOC redesigned the structure of its finance branch to maximize processing efficiency while avoiding overlapping responsibilities which might create an internal control problem.

    Recommendation: The Chairman, EEOC, should direct prompt completion of the corrective actions in process, which are assignments of duties so that no individual controls all phases of an activity or transaction.

    Agency Affected: Equal Employment Opportunity Commission

  10. Status: Closed - Implemented

    Comments: Formal week-long training was held for district offices and a 2-day program was held for headquarters administrative staff on all aspects of financial management. A desk reference manual was prepared for use by the administrative staff.

    Recommendation: The Chairman, EEOC, should direct prompt completion of the corrective actions in process, which are the proper training of all personnel responsible for performing financial management functions, such as the input of obligations and reconciliation of obligation balances.

    Agency Affected: Equal Employment Opportunity Commission

  11. Status: Closed - Implemented

    Comments: The Office of Audit now develops an annual work plan which is approved by the chairman. The plan provides for periodic reviews of financial procedures and program operations throughout the year.

    Recommendation: The Chairman, EEOC, should direct prompt completion of the corrective actions in process, which are uses of the increased Office of Audit staff to perform periodic reviews of the agency's financial operations as necessary to provide assurance that accounting functions are properly conducted.

    Agency Affected: Equal Employment Opportunity Commission

  12. Status: Closed - Implemented

    Comments: EEOC issued voucher examination and imprest fund management procedures.

    Recommendation: The Chairman, EEOC, should direct prompt completion of the corrective actions in process, which are issuances of formal preaudit voucher and imprest fund operation procedures.

    Agency Affected: Equal Employment Opportunity Commission

  13. Status: Closed - Implemented

    Comments: Imprest funds in every district office were reduced below the level existing in May 1982.

    Recommendation: The Chairman, EEOC, should direct prompt completion of the corrective actions in process, which are reductions of all imprest funds to authorized limits based on demonstrated need.

    Agency Affected: Equal Employment Opportunity Commission

  14. Status: Closed - Implemented

    Comments: The EEOC claims collection officer continually monitors the status of these cases. GAO is closing this recommendation as EEOC has these receivables under adequate controls and pursued aggressive collection efforts during the last 4 years.

    Recommendation: The Chairman, EEOC, should recover funds owed EEOC from the loan fund venture and, in the future, prohibit any similar program unless the agency obtains specific congressional authority.

    Agency Affected: Equal Employment Opportunity Commission

  15. Status: Closed - Implemented

    Comments: All of the contracts awarded at the end of FY 1980, 1981, and 1982 were reviewed and charged against the appropriate FY.

    Recommendation: The Chairman, EEOC, should review contracts awarded and costs incurred near the end of the past three FY's to establish the amount of costs improperly charged against FY appropriations and adjust records as necessary.

    Agency Affected: Equal Employment Opportunity Commission

  16. Status: Closed - Implemented

    Comments: All unliquidated obligations existing at the time of the review were validated. A formal process was established to validate, on an ongoing basis, all obligations which remain open in a subsequent FY.

    Recommendation: The Chairman, EEOC, should require a comprehensive review of the validity of all unliquidated obligations now being carried on the agency's records.

    Agency Affected: Equal Employment Opportunity Commission

  17. Status: Closed - Implemented

    Comments: EEOC fully cooperated with Justice regarding the inquiry into the improper Treasury report certifications made in FY 1980 and 1981.

    Recommendation: The Chairman, EEOC, should complete the investigation surrounding the year-end certifications for FY's 1980 and 1981 and, if conditions warrant, refer the case to the Department of Justice.

    Agency Affected: Equal Employment Opportunity Commission

  18. Status: Closed - Implemented

    Comments: EEOC implemented a 3-day turnaround requirement for budget allowance holders to review and reconcile their monthly accounting reports.

    Recommendation: The Chairman, EEOC, should direct EEOC employees to follow established procedures such as recording transactions promptly and complying with reconciling procedures to identify inaccuracies in recorded data.

    Agency Affected: Equal Employment Opportunity Commission

  19. Status: Closed - Implemented

    Comments: EEOC designated a procurement executive to oversee the operation of the EEOC procurement system, revise and strengthen procurement procedures and develop a contract monitoring directive.

    Recommendation: The Chairman, EEOC, should better monitor contracts with state and local enforcement agencies to prevent problems similar to those occurring in FY 1980.

    Agency Affected: Equal Employment Opportunity Commission

 

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