FAA Financial Management: Further Actions Needed to Achieve Asset Accountability
AIMD-99-212
Published: Jul 30, 1999. Publicly Released: Jul 30, 1999.
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Highlights
Pursuant to a congressional request, GAO assessed the Federal Aviation Administration's (FAA) property, plant, and equipment (PP&E) and inventory asset accountability problems, focusing on: (1) the key issues FAA must resolve in order to achieve accountability over its PP&E and inventory; and (2) whether FAA is taking appropriate actions to resolve these issues in a timely manner.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Transportation | The Secretary of Transportation should direct the Administrator, FAA, to ensure timely completion of efforts to identify, record, and provide support for all PP&E owned by FAA in order to establish a baseline of PP&E costs. |
Closed – Implemented
As of September 30, 1999, the FAA prepared a baseline of PP&E. This baseline was audited by the DOT IG, who gave the FAA an unqualified audit opinion on its fiscal year 1999 financial statements.
|
| Department of Transportation | The Secretary of Transportation should direct the Administrator, FAA, to perform a comprehensive internal control assessment of PP&E accounting practices and identify and implement new PP&E controls where necessary to ensure ongoing accountability. |
Closed – Implemented
FAA implemented its standalone version of the Oracle Fixed Assets Module in fiscal year (FY) 2001. FAA property accounting is now controlled by a consolidated centralized system that includes controls over transactions presented to the system, processes to submit excepted transactions back for correction, and a quality assurance program to validate the supporting documentation for selected material transactions on a regular basis. For the first time in agency financial reporting, for FY2000 FAA property accounting was reduced to a reportable condition rather than an ongoing material internal control weakness.
|
| Department of Transportation | The Secretary of Transportation should direct the Administrator, FAA, to prioritize the acquisition of systems that are capable of accurately accounting for PP&E efficiently and effectively on an ongoing basis. |
Closed – Implemented
The FAA has developed an action plan for new systems to account for PP&E on ongoing basis, and installed the fixed assets module of the new accounting system. The outputs of the new fixed assets module will be tested by the DOT IG during the fiscal year 2000 year-end audit.
|
| Department of Transportation | The Secretary of Transportation should direct the Administrator, FAA, to ensure timely implementation of planned procedures to improve inventory accountability, including performing periodic cycle counts at the Logistics Center to substantiate inventory quantities on an ongoing basis. |
Closed – Implemented
During fiscal year (FY) 1999, the FAA started cycle counts at the Logistics Center totaling 30 percent of the inventory items and 63 percent of the inventory dollar value. FY1999 cycle counts were part of a 3 year inventory cycle. FAA received a clean audit opinion for its 1999 financial statements including the inventory accounts.
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| Department of Transportation | The Secretary of Transportation should direct the Administrator, FAA, to ensure timely implementation of planned procedures to improve inventory accountability, including conducting a comprehensive field spares inventory by September 30, 1999, resolving count differences, and making appropriate adjustments to establish a field spares inventory baseline. |
Closed – Implemented
The FAA conducted physical inventories of all field-spares locations in fiscal year 1999. All count differences were resolved and audited by the DOT IG. By this the FAA established a baseline for field spares as of September 30, 1999. FAA received a clean audit opinion for its 1999 financial statements, including inventory accounts.
|
| Department of Transportation | The Secretary of Transportation should direct the Administrator, FAA, to ensure timely implementation of planned procedures to improve inventory accountability, including implementing the planned bar coding system for the Logistics Center and for field spares to capture inventory information from the time of receipt and through subsequent movements and ultimate disposition. |
Closed – Not Implemented
DOT issued its 60 day letter to Congress in December 1999, and concurred with the GAO recommendation. The bar coding system for the Logistic Center is in place for all current shipments and receipts, but the bar coding for field spares is not expected until additional property systems changes are made which is expected to take 3-4 years.
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| Department of Transportation | The Secretary of Transportation should direct the Administrator, FAA, to perform an internal control assessment of field spares accountability practices and implement new field spares controls where necessary to ensure ongoing accountability. |
Closed – Not Implemented
DOT issued its 60-day letter to Congress in December 1999, and concurred with the GAO recommendation. However, based on GAO's inquiry, no comprehensive internal control assessment of field spares has been performed and documented since the recommendation (July 1999).
|
| Department of Transportation | The Secretary of Transportation should direct the Administrator, FAA, to implement a program of periodic field spares cycle counts to substantiate inventory quantities on an ongoing basis. |
Closed – Not Implemented
As of September 2000, the FAA has made progress towards implementing perpetual inventory system for field-spares. During fiscal year (FY) 2000, the FAA performed a combination of cycle counts and annual counts based on the results of the FY1999 wall-to-wall field spares inventory. However, since perpetual system has not been fully implemented, this recommendation is closed as not implemented.
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| Department of Transportation | The Secretary of Transportation should direct the Administrator, FAA, to revise FAA order 4250.9B, Field Material Management and Control, to clearly indicate the official who has ultimate responsibility for the accountability of field spares and the procedures required to carry out this responsibility. |
Closed – Implemented
As of fiscal year (FY) 2003, FAA implemented a change in accounting principle and capitalized field spare inventory as Property, Plant and Equipment. This accounting change was made as part of the FY 2002 financial statement audit process, and was recommended by FAAs independent auditors. As a result of the accounting reclassification of field spares inventory, property custodial responsibles are now assigned in accordance with Order 4650.21C, Management and Control of In-Use Personal Property which states "Property custodian responsibles are assigned to the SMO Manager, who may delegate property custodian responsibles for specific custodial areas."
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Topics
AccountabilityAccounting proceduresFederal agency accounting systemsInformation resources managementInternal controlsInventory control systemsSpare partsStrategic planningInventoryReal property