Internal Control Problems at the U.S. Army Corps of Engineers Should Be Corrected

AFMD-86-4: Published: Nov 5, 1985. Publicly Released: Nov 5, 1985.

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GAO reviewed the Corps of Engineers' system of accounting and internal controls to identify those controls that need management's attention, specifically, the controls over collections, receivables, disbursements, and imprest funds.

GAO found that: (1) the internal control weaknesses identified in recent Army Audit Agency (AAA) reports suggest that the Corps accounting system is not operating in accordance with established procedures and guidelines; (2) collections were not properly logged or adequately safeguarded; (3) accounts receivable were not sufficiently managed at most of the accounting stations; (4) the proper receipt forms were not always used for over-the-counter collections; (5) efforts to collect outstanding receivables were neither prompt nor aggressive; and (6) disbursement controls were weak at all stations. GAO also found that: (1) four stations did not file required information tax returns for personal service contractors; (2) government transportation requests were not effectively reconciled or adequately safeguarded; (3) controls over check-signing machines and blank government checks were insufficient; (4) verifications and audits of imprest funds were not made at required intervals; (5) obligations were sometimes incurred before the availability of funds was determined; and (6) internal control weaknesses occurred either because of deficiencies in Corps-wide policies and procedures or because established procedures were not consistently followed.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DOD has taken action to improve its internal controls. Local Corps of Engineers management have been directed by Corps headquarters to comply with this recommendation. The Corps will monitor local management's actions through quality assurance reviews. The Corps developed an overall quality assurance plan and has planned quality assurance reviews at various locations.

    Recommendation: The Secretary of the Army should direct the Administrator of the Corps of Engineers to ensure that: (1) cash collections are protected at all times by being logged in promptly, signed upon transfer, and stored in safes which have their combinations changed when appropriate; (2) all accounts receivable are collected according to federal claims collection standards; (3) the use of blank travel orders is limited; (4) disbursement transactions are properly authorized so that travel vouchers and credit card purchases receive appropriate supervisory approval; (5) information tax returns are filed as required by federal tax laws; and (6) the quality assurance function is implemented in field installation. To facilitate full implementation and monitoring, the Corps should develop an overall plan for conducting its quality assurance reviews at all Corps installations and include provisions for verifying the adequacy of corrective actions on the deficiencies identified by AAA.

    Agency Affected: Department of Defense: Department of the Army

  2. Status: Closed - Implemented

    Comments: DOD concurred with this recommendation. The Army internal control officer stated that there were no new material weaknesses identified in its fiscal year (FY) 1985 annual statement. The weaknesses regarding its quality assurance function, identified as a material weakness in the FY 1984 statement, was corrected June 4, 1985, with the establishment of a Quality Assurance Branch.

    Recommendation: The Secretary of the Army should, in its annual statements required by the Federal Managers' Financial Integrity Act, discuss any weaknesses identified that have not been corrected.

    Agency Affected: Department of Defense: Department of the Army

 

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