Financial Management: Energy's Material Financial Management Weaknesses Require Corrective Action
AIMD-93-29
Published: Sep 30, 1993. Publicly Released: Sep 30, 1993.
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Highlights
GAO examined the Department of Energy's (DOE) efforts to: (1) improve financial control and accountability over its integrated contractors' financial operations; and (2) correct the financial management-related weaknesses cited in its Federal Managers' Financial Integrity Act report.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Energy | The Secretary of Energy should direct the Office of Procurement Assistance and Program Management to: (1) include all pertinent standard financial management clauses in future integrated contractor contracts, with exceptions approved in advance by the Chief Financial Officer (CFO); and (2) with respect to the cost accounting standards, eliminate the use of contract clauses that limit contractor liability. |
Closed – Implemented
DOE has developed and implemented a process to ensure that a standard non-liability clause is included in all new M&O contracts. The process includes CFO review of proposed contracts to ensure that the standard clause is used.
|
| Department of Energy | The Secretary of Energy should direct the CFO to require that the cost accounting standards clause be included in the CFO list of standard contract clauses related to financial management. |
Closed – Implemented
The CFO sent a memorandum to field CFOs that stipulates the applicability of cost accounting standards to M&O contractors. The memo was issued on November 24, 1993. The non-liability for cost accounting standards clause was added in first quarter of 1996.
|
| Department of Energy | The Secretary of Energy should direct the CFO to improve financial information that managers use to oversee integrated contractor operations by: (1) defining the financial information program managers and Congress need; and (2) developing ways to gain more consistency in integrated contractors' program category cost data. |
Closed – Implemented
An internal study group reviewed DOE's operating environment and recommended improvements in the financial information available to DOE managers. In response to the group's recommendations, the CFO streamlined the budget formulation process and began to standardize procedures to promote consistency among the integrated contractors. The CFO also made revisions to the cost structure used by DOE contractors to conform to required reports and achieve consistency. Other improvements have been completed to further improve the financial information managers receive.
|
| Department of Energy | The Secretary of Energy should provide the CFO authority over field finance office staffing allocations and direct the CFO to develop strategies to achieve adequate staffing levels. |
Closed – Implemented
The CFO was granted indirect authority over field finance office operations when the most recent CFO organizational plan was approved by OMB. The CFO exercises functional but not administrative control or guidance over the field finance offices.
|
| Other | The Inspector General should consider alternatives to increased reliance on the integrated contractors' internal auditors to perform allowable cost audits. |
Closed – Not Implemented
The Inspector General disagreed with this recommendation and planned no further action.
|
| Other | The Inspector General should review the alternatives presented in this report, identify other alternatives, and choose an approach that best protects the government's interest. |
Closed – Not Implemented
The Inspector General disagreed with this recommendation and believes that the cooperative audit strategy involving the M&O contractors' internal auditors adequately protects the government's interest. No further action planned.
|
| Department of Energy | The Secretary of Energy should direct the DOE CFO to ensure that Federal Managers' Financial Integrity Act reports disclose financial management as a material weakness until such time as corrective actions and their effectiveness are validated. |
Closed – Not Implemented
DOE reported that its financial management systems weaknesses have been corrected. DOE did not report any financial management weaknesses in its FMFIA report. The IG reviewed and concurred with the FMFIA report.
|
| Department of Energy | The Secretary of Energy should extend CFO authority to the remaining 12 finance offices. Exceptions may be appropriate for individual offices based on CFO assessments that confirm whether an office is adhering to CFO financial management and reporting policies. |
Closed – Implemented
The most recent CFO organization plan extends the CFO some authority over the field offices, but this authority is limited. This action does not fully address the recommendation.
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Topics
Contract oversightFederal agency accounting systemsFinancial management systemsFinancial recordsGeneral management reviewsStaff utilizationInternal controlsMaterialityFinancial managementChief financial officers