Financial Management:

Overall Plan Needed To Guide System Improvements at Education

AFMD-88-15: Published: Dec 31, 1987. Publicly Released: Dec 31, 1987.

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GAO reviewed the Department of Education's financial management system to: (1) assess the reliability and effectiveness of the system to account for and control Education's funds and resources; (2) identify any major system weaknesses; and (3) examine the actions Education took to correct those weaknesses.

GAO found that: (1) Education's loan records for its Higher Education Facilities and College Housing loans were inadequate; (2) a private financial consultant estimated that it could cost $75 million to bring loan files up to commercial standards in order to sell them to the public; (3) because of its inadequate accounting system, Education cannot properly oversee its property or protect it from fraud and mismanagement; (4) schools receiving Pell Grant funds had serious accounting and internal control weaknesses, resulting in an estimated $600 million in overpayments over a 2-year period; (5) Education's computer system, which supports its general ledger and subsidiary accounting system, is inadequate and contains unreliable data; and (6) because its system could not correctly transfer information, Education had to estimate the value of its assets when reporting its financial condition.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Education has: (1) solicited new proposals for a new central accounting system; (2) completed improvements to its Payment Management System; (3) purified its financial system database; (4) reconciled current financial management system records with records maintained by Treasury and other central regulatory agencies; and (5) completed a 5-year financial management improvement plan.

    Recommendation: The Secretary of Education should develop an overall design for a departmentwide financial management system that: (1) addresses known financial management problems, including weaknesses in Education's audit resolution and tracking programs; (2) considers managers' short- and long-range financial information needs; (3) establishes specific objectives, goals, priorities, and milestone dates for component system projects that, when taken together, will implement the conceptual design; and (4) sets the overall goals and timetables to be used in the planning and budgeting system for the department's short- and long-range automatic data processing (ADP) improvement plans.

    Agency Affected: Department of Education

  2. Status: Closed - Implemented

    Comments: Education's Management Improvement Service has reviewed the procedures used by each of Education's principal operating components for tracking pledged corrective actions as well as for managing all other aspects of the audit resolution and follow-up process. No deficiencies were noted.

    Recommendation: The Secretary of Education should develop and implement audit recommendation tracking and follow-up systems for nonmonetary recommendations for contractor and grantee operations that track the implementation of pledged corrective actions.

    Agency Affected: Department of Education

  3. Status: Closed - Implemented

    Comments: Education has implemented an automated management information system to track all changes to its ADP improvement plans and budgets and progress on approved and funded projects.

    Recommendation: The Secretary of Education should revise the Department's planning and budgeting system for ADP plans to document discussions and decisions regarding the funding of projects.

    Agency Affected: Department of Education

 

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