Financial Management:

The U.S. Mint's Accounting and Control Problems Need Management Attention

AFMD-89-88: Published: Jul 26, 1989. Publicly Released: Aug 16, 1989.

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Pursuant to a congressional request, GAO reviewed aspects of the U.S. Mint's numismatic programs and overall financial management, focusing on: (1) whether the Mint complied with legal requirements involving the shipment of Statue of Liberty coins; (2) internal controls for die inventories and coins; (3) cost accounting systems, funds control systems, and management information reports; and (4) the budgetary fund structure for numismatic programs.

GAO found that the: (1) Mint did not comply with a legal requirement that it ship Statue of Liberty coins to customers only after payment or guarantees of payment, but the number of coins incorrectly sent represented less than 1 percent of the 15.5 million coins shipped; (2) Mint had weak internal controls over dies and coins; (3) physical inventories of dies were not frequent enough; (4) resolution of die inventory discrepancies was not independently reviewed; and (5) Mint did not always report coin shortages to field mint security offices. GAO also found that the: (1) Mint's June 30, 1987, reports on revenues and expenses related to numismatic programs were unreliable; (2) Mint's cost accounting system was manual and decentralized and did not produce reliable cost information; (3) Mint's funds control system had deficiencies in its design, reporting, and use of financial plans; (4) Mint has not developed management information reports needed to support decisionmaking; and (5) Mint accounted for its numismatic programs through its annual salaries and expenses appropriation, instead of through a revolving fund.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: P.L. 102-390, title II, subtitle B, section 221, Reform of U.S. Mint Operations, was enacted on October 6, 1992. The act establishes a Numismatic Public Enterprise Fund and requires Mint to: (1) prepare annual budget submissions to the President and Congress; (2) prepare audited financial statements; and (3) include statements of the fund's financial condition in the annual reports.

    Matter: Congress should establish a public enterprise revolving fund, subject to the appropriations process, to finance the Mint's numismatic program operations.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Mint directives were revised to require an annual inventory of dies by serial number. If the quarterly inventories show discrepancies, a follow-up inventory by serial number will be performed after the quarterly inventory. Since December 1990, inventories have been completed at all four field Mints by serial number with no discrepancies noted.

    Recommendation: To ensure that field mints have adequate internal control procedures for die inventories, the Director of the Mint should match serial numbers of dies in inventory to serial numbers recorded in die inventory records.

    Agency Affected: Department of the Treasury: Center for Applied Financial Management

  2. Status: Closed - Implemented

    Comments: Mint headquarters has established a die inventory tracking system and it is being used by the San Francisco Mint to track the movement of dies between the die room and chroming.

    Recommendation: To ensure that field mints have adequate internal control procedures for die inventories, the Director of the Mint should ensure that the San Francisco Mint implements adequate internal controls over dies released by its die room to its chroming unit.

    Agency Affected: Department of the Treasury: Center for Applied Financial Management

  3. Status: Closed - Implemented

    Comments: Field mints were instructed orally to report all unreconciled die discrepancies to Treasury IG staff and Mint police. The revised Mint Directive, MD 16B-1, also contains these requirements. Both IG and the San Francisco Mint Security Office were notified of unreconciled die inventory amounts, as required.

    Recommendation: To ensure that field mints have adequate internal control procedures for die inventories, the Director of the Mint should ensure that independent representatives from the Department of the Treasury's Office of Inspector General (IG) and the field mints' security offices are notified of all unreconciled differences between die records and the number of dies found during physical inventories.

    Agency Affected: Department of the Treasury: Center for Applied Financial Management

  4. Status: Closed - Implemented

    Comments: The revised directive, MD 16B-1, contains a provision requiring the head of each field mint to appoint a representative independent of the Coining Division to conduct all die inventories. Referral of unresolved items to Mint Security and the Inspector General, as required, provides for independent review.

    Recommendation: To ensure that field mints have adequate internal control procedures for die inventories, the Director of the Mint should ensure that the resolution of discrepancies identified during field mint die inventories are reviewed by mint representatives who are independent of the inventory process so that complete resolution is ensured.

    Agency Affected: Department of the Treasury: Center for Applied Financial Management

  5. Status: Closed - Implemented

    Comments: On August 15, 1989, the Director of the Mint issued a reminder to San Francisco that all shortages of coins, blanks, and dies are to be reported to Mint police. The Director also visited San Francisco in September 1989 to ensure procedures were followed. At that time, disciplinary actions were taken against managers who had not taken appropriate actions to report shortages.

    Recommendation: To ensure that the San Francisco Mint follows established bullion coin control procedures, the Director of the Mint should direct the San Francisco Mint to notify its security office of bullion coin shortages shown on weight and piece count reports.

    Agency Affected: Department of the Treasury: Center for Applied Financial Management

  6. Status: Closed - Implemented

    Comments: The December 1989 FMFIA report noted that online terminals to track die information were placed in production areas Mint-wide. In July 1990, the Mint tested controls over dies at the field mints and no weaknesses were reported. The new Mint-wide Die Information System was fully operational on August 1, 1990 and satisfactorily addresses this recommendation.

    Recommendation: The Director of the Mint, through the Mint's Federal Managers' Financial Integrity Act (FMFIA) program, should direct that: (1) a current and comprehensive assessment of its vulnerability to theft and loss of dies be undertaken; and (2) annual reports made under the act discuss progress on initiatives to improve its die inventory control system and practices.

    Agency Affected: Department of the Treasury: Center for Applied Financial Management

  7. Status: Closed - Implemented

    Comments: The Mint has implemented an interim cost accounting system, and it will be testing a fully integrated system in 1994. Mint management attests to the reliability of this information, which is based on revised cost accounting standards. The system provides managers with timely cost, revenue, production, and sales information reports, which are used for decisionmaking.

    Recommendation: To modernize critical elements of the Mint's financial management system through improved cost, funds control, and management information, the Director of the Mint should develop an automated cost-accounting system to provide accurate and timely information on the cost of operations.

    Agency Affected: Department of the Treasury: Center for Applied Financial Management

  8. Status: Closed - Implemented

    Comments: In October 1988, the Mint began developing an automated funds control system. The Mint's funds control system is operational at all locations. Mint financial plans are the basis for controlling obligations and Mint funds control reports now show balances available for obligation.

    Recommendation: To modernize critical elements of the Mint's financial management system through improved cost, funds control, and management information, the Director of the Mint should enhance the Mint's funds control system to: (1) provide data to help managers ensure that funds are not overobligated or overexpended; (2) generate standard, consistent, and reliable funds control reports from information in the accounting system; and (3) use the Mint's financial plans as the basis for controlling funds at both the headquarters and field mint levels.

    Agency Affected: Department of the Treasury: Center for Applied Financial Management

  9. Status: Closed - Implemented

    Comments: Improved management information reports are available by coin program showing costs, revenues, coins produced, and coins sold. Reports include graphics based on financial data derived from the system for trend analysis. Mint managers attest that these reports are used to manage programs and costs.

    Recommendation: To modernize critical elements of the Mint's financial management system through improved cost, funds control, and management information, the Director of the Mint should develop management information reports that will give Mint managers a range of program and financial information, including summarized or comparative reports on programs showing, by time period, information such as the numbers of coins produced and sold, revenues and expenses, and unit costs.

    Agency Affected: Department of the Treasury: Center for Applied Financial Management

  10. Status: Closed - Implemented

    Comments: The Mint has issued and used Interim Cost Accounting Policies and Procedures Manuals since October 1992. The procedures are referred to as interim because the Mint plans to integrate this system with its primary accounting system. The Mint has documented its automated funds control system and plans to draft Bureau-level policies and procedures required by OMB Circular A-34 after its new financial management system is fully integrated. Full integration of cost accounting and funds control subsystems with the Mint's new Information Financial Management System (IFMS) is targeted for late 1996. In the interim, the Mint has adopted the Treasury Department's administrative procedures for funds control.

    Recommendation: To comply with the Comptroller General's internal control standard that control systems be documented, the Director of the Mint should initiate projects that will update the Mint's written policies and procedures for cost accounting and for funds control.

    Agency Affected: Department of the Treasury: Center for Applied Financial Management

  11. Status: Closed - Implemented

    Comments: Mint directives were revised in October 1989 to require quarterly die inventories by total number and face. A quarterly inventory was taken March 1990. Of the four field Mints, only San Francisco Mint noted discrepancies between the physical inventory and die records. As of June 1991, all four field Mint die inventories were completed with no discrepancies.

    Recommendation: To ensure that field mints have adequate internal control procedures for die inventories, the Director of the Mint should conduct physical inventories of dies quarterly so that lost dies can be identified sooner than under the present annual inventory procedures.

    Agency Affected: Department of the Treasury: Center for Applied Financial Management

 

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