Financial Management:

Inadequate Accounting and System Project Controls at AID

AFMD-93-19: Published: May 24, 1993. Publicly Released: May 24, 1993.

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GAO reviewed key accounting and reporting weaknesses in the Agency for International Development's (AID) financial management systems, and evaluated AID efforts to improve these systems.

GAO found that: (1) AID has experienced serious accounting system and financial reporting problems; (2) AID overseas offices did not promptly and accurately report disbursements, and AID could not ensure that disbursements against valid, pre-established obligations were valid; (3) at the end of fiscal year 1991, AID property management systems overstated vehicle acquisitions by 44 percent and disposals by 14 percent, reported more than 20,000 items valued at $1.9 million that could not be located, and understated property balances in overseas offices by $19 million; (4) AID did not use automated techniques to exchange information and report financial and quantitative data, which resulted in inaccurate and inefficient information; (5) top management did not effectively support and oversee two major system improvement initiatives; and (6) AID has not established a steering committee to ensure top management involvement or formulated a detailed system development, testing, and implementation plan.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: AID eliminated the 17 systems noted in the report from the systems inventory. In addition to the above eliminated systems, AID is using its new ORACLE software to convert the data files of 11 existing legacy systems into a single AID-wide ORACLE relational database system called the AID Washington Accounting and Control System (AWACS). Once completed, AWACS will eliminate there 11 systems that will no longer be used by AID.

    Recommendation: The Administrator, AID, should direct the Chief Financial Officer, in conjunction with the Office of Financial Management, Office of Information Resources Management, and appropriate AID headquarters and overseas offices to eliminate from AID system inventory those systems that are not used.

    Agency Affected: United States Agency for International Development

  2. Status: Closed - Implemented

    Comments: AID is updating the documentation for its mission-critical financial systems and will fully document the new generation of corporate systems developed under its information systems plan. AID has 5 major accounting system modules that are expected to be implemented in October 1995--general ledger, accounts receivable, accounts payable, funds distribution/budget execution, and cost accumulation. Business Area Analyses of these modules have been completed and the software for the modules is currently being written.

    Recommendation: The Administrator, AID, should direct the Chief Financial Officer, in conjunction with the Office of Financial Management, Office of Information Resources Management, and appropriate AID headquarters and overseas offices to review all financial management systems and revise system documentation and user manuals to reflect existing system designs.

    Agency Affected: United States Agency for International Development

  3. Status: Closed - Not Implemented

    Comments: AID stated that full resolution of property accounting problems would take about 2 years, when AID expected to implement its new financial systems. AID has completed an inventory of all property at its Washington, D.C., headquarters, and inventory discrepancies are being resolved. Reporting procedures for personal property have been revised to strengthen accountability and control. AID still identifies the accounting for nonexpendable property as a material weakness. AID's current work on the Business Area Analysis for property management will cover procedures for controlling nonexpendable property. This work is expected to be completed by October 1995.

    Recommendation: The Administrator, AID, should direct the Chief Financial Officer, in conjunction with the Office of Financial Management, Office of Information Resources Management, and appropriate AID headquarters and overseas offices to ensure that the property data are kept up-to-date by enforcing existing requirements for: (1) promptly entering property acquisitions and dispositions; and (2) conducting annual physical inventories.

    Agency Affected: United States Agency for International Development

  4. Status: Closed - Not Implemented

    Comments: AID stated that full resolution of property accounting problems would take about 2 years, when AID expected to implement its new financial systems. AID has completed an inventory of all property at its Washington, D.C., headquarters, and inventory discrepancies are being resolved. Reporting procedures for personal property have been revised to strengthen accountability and control. AID still identifies the accounting for nonexpendable property as a material weakness. AID's current work on the Business Area Analysis for property management will cover procedures for controlling nonexpendable property. This work is expected to be completed by October 1995.

    Recommendation: The Administrator, AID, should direct the Chief Financial Officer, in conjunction with the Office of Financial Management, Office of Information Resources Management, and appropriate AID headquarters and overseas offices to verify property records by taking a physical inventory of all property on hand at Headquarters and at overseas offices, comparing the results to amounts recorded in AID property systems, investigating and resolving discrepancies, and adjusting records as appropriate.

    Agency Affected: United States Agency for International Development

  5. Status: Closed - Implemented

    Comments: AID agreed that it needed to improve its management of in-transit accounts and included this as a priority area in its 5-year CFO plan submitted to the Office of Management and Budget in August 1992. As of July 15, 1993, AID has reduced its in-transit accounts (unmatched disbursements with appropriate obligations or unliquidated obligations) by 50 percent. It plans to have no in-transit disbursement accounts older than 12 months by late 1994. As of January 3, 1995, AID's accounting system records show unliquidated obligations of $10,074,237. As of January 27, 1995, AID's Inspector General reported unliquidated obligations of $10,016,693. AID has made a substantial effort to reduce its unliquidated obligations from about $400 million to about $10 million (a drop of over 97 percent). According to the IG, the majority of the remaining unliquidated obligations (98 percent) are either in the closeout process or being reconciled in the missions.

    Recommendation: The Administrator, AID, should direct the Chief Financial Officer (CFO), in conjunction with the Office of Financial Management, Office of Information Resources Management, and appropriate AID headquarters and overseas offices to develop and implement a plan and timetable to match unmatched disbursements with appropriate obligations.

    Agency Affected: United States Agency for International Development

  6. Status: Closed - Implemented

    Comments: On March 24, 1993, the directors of the the Offices of Financial Management (OFM) and Information Resources Management (OIRM) signed, with the approval of the CFO, the AWACS Project Charter. The charter laid out the full set of goals, objectives, and scope of AWACS and formally established the AWACS Steering Committee under the direction of the CFO and Joint FM-IRM Working Committee. Subsequently, these committees have met regularly. As of April 3, 1995, AID has defined its system development efforts into five major business areas--CORE accounting (the AWACS Project), acquisition and assistance (A&A), budget, operations, and human resources. Each of these areas have designated executive sponsors who report to AID's Assistant Administrator for Management.

    Recommendation: The Administrator, AID, should direct the Chief Financial Officer to develop and implement a long-term plan for directing the AID Washington Accounting and Control System (AWACS) activities and ensuring continuity of management regarding this and related system development efforts. The plan should include establishing a steering committee, appointing a project manager, and specifying the goals, objectives, and scope of AWACS.

    Agency Affected: United States Agency for International Development

 

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