Financial Management:

Briefing on the Federal Aviation Administration Property, Plant, and Equipment Accountability Review

AIMD-99-208R: Published: Jun 11, 1999. Publicly Released: Jun 11, 1999.

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Linda M. Calbom
(202) 512-8341
contact@gao.gov

 

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Pursuant to a congressional request, GAO identified: (1) key issues the Federal Aviation Administration (FAA) must resolve in order to achieve accountability over its property, plant, and equipment (PP&E); and (2) the status of FAA's efforts to resolve these issues.

GAO noted that: (1) GAO concluded from analyzing the Department of Transportation Office of Inspector General (OIG) workpapers related to its audit of the fiscal year 1998 financial statements that FAA's systems, procedures, and controls do not ensure that accountability is maintained for PP&E on an ongoing basis; (2) many problems in PP&E result from the lack of a reliable system to accumulate the cost of projects and record these costs in appropriate PP&E accounts; (3) the OIG found that substantial portions of the incurred costs were improperly charged to expense accounts instead of being recorded as assets and that FAA's historical records necessary to support and permit the verification of PP&E balances are incomplete or inaccurate; (4) the OIG found that FAA does not move project costs from the work-in-process account to appropriate operating asset accounts in a timely manner; (5) although FAA has not actively focused on improvements in the past, it now has extensive efforts underway to establish historical PP&E costs and reduce the work-in-process backlog; (6) it has also recently begun to address systems issues; (7) in January 1999, GAO designated FAA's financial management as a high-risk area because of serious and long-standing accounting and financial reporting weaknesses; (8) these weaknesses, including those described above, render FAA vulnerable to waste, fraud, and abuse; undermine its ability to manage its operations; and limit the reliability of financial information provided to Congress; and (9) FAA's high-risk designation means GAO will be giving sustained attention to monitoring its efforts to correct its financial management deficiencies.

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