Internal Controls:

Improvements Needed in a USDA Receivable System

AFMD-87-3: Published: Jun 23, 1987. Publicly Released: Jun 23, 1987.

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GAO evaluated the Department of Agriculture's (USDA) billings and collections system (BLCO) to assess: (1) the adequacy of BLCO automated data processing controls and internal controls over processing; (2) the actions USDA took to correct BLCO weaknesses; and (3) BLCO compliance with certain legal requirements in the areas of cash and debt management.

GAO noted that BLCO is operated by the USDA National Finance Center (NFC) and serves the Agricultural Marketing Service (AMS), Animal and Plant Health Inspection Service (APHIS), Federal Grain Inspection Service (FGIS), and Food Safety and Inspection Service (FSIS). GAO found that: (1) NFC used the new version of BLCO before completing program modifications and formal testing and certification, contrary to applicable policies and guidelines; (2) there was little assurance that the new version met security requirements and accurately and reliably performed all processing tasks consistent with the previous version; (3) restrictions on NFC personnel's access to BLCO data and programs were inadequate to safeguard data files and programs from unauthorized changes or use; and (4) BLCO program documentation was outdated and failed to conform to applicable policies and guidelines. GAO also found that: (1) BLCO processing controls were insufficient to ensure prompt and accurate processing and reporting of billing and collection data; (2) NFC and the inspection agencies needed data origination and entry control improvements to reduce the rate of transaction rejections and better ensure data accuracy; (3) NFC and the inspection agencies did not implement certain control measures required by debt collection regulations; and (4) NFC had not assessed the cost-effectiveness of its 2-year-old lockbox operation, an arrangement whereby payments were sent directly to a specific bank.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Software was developed in August 1987.

    Recommendation: The Secretary of Agriculture should direct the Director, NFC, to periodically review edit reject suspense listings to determine whether errors are consistently made by certain data entry clerks or inspection agency offices, so that appropriate actions can be taken to improve accuracy.

    Agency Affected: Department of Agriculture

  2. Status: Closed - Implemented

    Comments: Written procedures were fully implemented.

    Recommendation: The Secretary of Agriculture should direct the Director, NFC, to make prompt contacts with inspection agencies about bills returned by the post office to ensure that correct addresses are obtained and entered into the system.

    Agency Affected: Department of Agriculture

  3. Status: Closed - Implemented

    Comments: Various agency actions were taken.

    Recommendation: The Secretary of Agriculture should direct the Administrators, AMS, APHIS, FGIS, and FSIS, to: (1) implement procedures for submitting inspection documents to NFC that will ensure prompt billing for inspection services rendered; and (2) emphasize to its personnel the importance of accurately completing BLCO transaction documents and submitting current account maintenance information, such as applicant addresses.

    Agency Affected: Department of Agriculture

  4. Status: Closed - Not Implemented

    Comments: The data supporting this recommendation was developed in 1986. Because of the passage of time and changes made in the interim by USDA, GAO can no longer support this recommendation without substantial additional audit work. This recommendation should be dropped.

    Recommendation: The Secretary of Agriculture should direct the Administrators, AMS and FGIS, to redesign their inspection forms to conform with the BLCO external procedures manual requesting the standardized placement of key billing data.

    Agency Affected: Department of Agriculture

  5. Status: Closed - Implemented

    Comments: An August 6, 1987, letter caused revisions to wording.

    Recommendation: The Secretary of Agriculture should direct the Director, NFC, and the Administrators, AMS, APHIS, FGIS, and FSIS, to coordinate revision of the wording on BLCO notifications to delinquent applicants so that each notice becomes stronger.

    Agency Affected: Department of Agriculture

  6. Status: Closed - Implemented

    Comments: Debt management regulations were drafted and sent to the USDA Office of the General Counsel. They will be implemented by the end of fiscal year (FY) 1988.

    Recommendation: The Secretary of Agriculture should direct the Administrator, APHIS, to develop and implement regulations that will allow the termination of inspection services to delinquent customers.

    Agency Affected: Department of Agriculture

  7. Status: Closed - Implemented

    Comments: The Office of Financial Management (OFM) and Treasury will jointly review this during FY 1988.

    Recommendation: The Secretary of Agriculture should direct the Director, NFC, to work with the Department of the Treasury in monitoring lockbox bank performance and periodically assessing the actual cost-effectiveness of lockbox operations until Treasury guidelines are published.

    Agency Affected: Department of Agriculture

  8. Status: Closed - Implemented

    Comments: NFC agreed with this recommendation, within existing resource constraints.

    Recommendation: The Secretary of Agriculture should direct the Director, NFC, to ensure system testing, certification reviews, and completion of all related reports before placing new or modified systems into operation.

    Agency Affected: Department of Agriculture

  9. Status: Closed - Implemented

    Comments: New procedures were issued in February 1987.

    Recommendation: The Secretary of Agriculture should direct the Director, NFC, to permit access to operational system data to only those individuals who have a specific need, and for whom there is written justification and authorization.

    Agency Affected: Department of Agriculture

  10. Status: Closed - Implemented

    Comments: Personnel will be added to the security staff in FY 1988.

    Recommendation: The Secretary of Agriculture should direct the Director, NFC, to establish procedures to monitor the actions of BLCO and other users that have been granted time sharing option access in order to use the FOCUS report software package.

    Agency Affected: Department of Agriculture

  11. Status: Closed - Implemented

    Comments: One element is currently being added. Five more are expected with equipment upgrade.

    Recommendation: The Secretary of Agriculture should direct the Director, NFC, to require key verification of data elements that are critical to the accuracy of billing and recording inspection services.

    Agency Affected: Department of Agriculture

  12. Status: Closed - Implemented

    Comments: Elements are expected with new equipment in FY 1988.

    Recommendation: The Secretary of Agriculture should direct the Director, NFC, to modify data entry terminal programs so that BLCO data can be entered in the same sequence as shown on transaction source documents to facilitate accuracy and production.

    Agency Affected: Department of Agriculture

  13. Status: Closed - Implemented

    Comments: NFC assigned duty to one person.

    Recommendation: The Secretary of Agriculture should direct the Director, NFC, to date stamp collection envelopes received in the NFC mailroom and control collections received at the point at which collection envelopes are opened.

    Agency Affected: Department of Agriculture

  14. Status: Closed - Implemented

    Comments: Current reconciliations are being performed timely.

    Recommendation: The Secretary of Agriculture should direct the Director, NFC, to ensure that monthly reconciliations are performed and needed adjustments are made promptly to bring the general ledger and BLCO subsidiary accounts into agreement.

    Agency Affected: Department of Agriculture

  15. Status: Closed - Implemented

    Comments: Every effort will be made consistent with resource limitations.

    Recommendation: The Secretary of Agriculture should direct the Director, NFC, to implement and enforce policies, procedures, and practices consistent with departmental information processing standards, Federal Information Processing Standards guidelines, and Office of Management and Budget Circular A-130, Appendix III.

    Agency Affected: Department of Agriculture

  16. Status: Closed - Implemented

    Comments: OFM began implementation in April 1986. Joint criteria for all agencies will be implemented by December 1987.

    Recommendation: The Secretary of Agriculture should direct the Director, NFC, and the Administrators, AMS, APHIS, FGIS, and FSIS, to coordinate in developing joint referral criteria, including time frames, for delinquent BLCO account referrals to the NFC claims units and to private collection agencies.

    Agency Affected: Department of Agriculture

 

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