National Transportation Safety Board:

Weak Internal Control Impaired Financial Accountability

GAO-01-1032: Published: Sep 28, 2001. Publicly Released: Sep 28, 2001.

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The National Transportation Safety Board (NTSB) promotes transportation safety through accident investigations, special studies, and recommendations intended to prevent accidents. Separate reviews at NTSB by PricewaterhouseCoopers, LLP (PwC) and GAO found significant shortcomings in the design and operation of NTSB's internal controls during 1999 and 2000. These deficiencies indicated insufficient or ineffective management attention to establishing and maintaining an effective system of internal control over financial management operations. The resulting weaknesses exposed the agency to waste, fraud, and mismanagement. Some basic controls were not always clearly and consistently incorporated into NTSB policies and procedures, and, in some cases, the written policies were ambiguous and contributed to possible improper transactions. Furthermore, NTSB's payment review and approval process--the last and best opportunity to detect and address inadequate documentation and other policy violations prior to payment--was often ineffective. Separate reviews of different aspects of NTSB's 1999 and 2000 financial activities and related internal controls, done by PwC at NTSB's request, documented various internal control weaknesses, including problems with the completeness and clarity of policies, the recording and review of transactions, and the tracking and reporting its use of funds.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The agency used the GAO Internal Control Management and Evaluation Tool in preparing and completing its assessment of agency internal controls for the 2001 reporting period, identifying four material weaknesses that have now been addressed, and filed the required reports in a timely manner.

    Recommendation: To aid NTSB in building an effective internal control environment and addressing the specific weaknesses identified during GAO's and PwC's reviews, the Board and Managing Director or their designees should ensure that NTSB management fully and consistently carries out its responsibilities under OMB Circular A-123 and the Federal Managers' Financial Act of 1982 to develop and implement effective controls, monitor and assess control adequacy, correct control deficiencies, and report annually on the adequacy of controls and existence of material weaknesses in agency controls.

    Agency Affected: National Transportation Safety Board

  2. Status: Closed - Implemented

    Comments: The agency reviewed its financial policies and has issued or revised 48 official policies since the issuance of our report, some of which define the roles and responsibilities of individuals in payment transaction processes.

    Recommendation: To aid NTSB in building an effective internal control environment and addressing the specific weaknesses identified during GAO's and PwC's reviews, the Board and Managing Director or their designees should comprehensively review and, as necessary, revise administrative policies and procedures to ensure that they incorporate--in a clear and unambiguous manner--sufficient controls to ensure that management's control objectives are being achieved. Specifically, the Board and Managing Director or their designees should ensure that policies and procedures clearly and unambiguously specify the nature and extent of supporting documentation required for each type of payment transaction and define the roles and responsibilities of individuals responsible for initiating, processing, reviewing, and approving transactions for payment.

    Agency Affected: National Transportation Safety Board

  3. Status: Closed - Implemented

    Comments: In addition to issuing 48 new or revised financial policies, many of them dealing with payment transactions and safeguarding assets, management provided training on the use of government purchase and travel cards, appropriation law, and a new financial management system. Affected staff are required to attend certain of these training sessions annually.

    Recommendation: To aid NTSB in building an effective internal control environment and addressing the specific weaknesses identified during GAO's and PwC's reviews, the Board and Managing Director or their designees should ensure that management and staff are properly trained in the internal control-related responsibilities in initiating, processing and, to the extent applicable, reviewing and approving each type of transaction; safeguarding assets; and complying with applicable laws and regulations.

    Agency Affected: National Transportation Safety Board

  4. Status: Closed - Implemented

    Comments: The agency has implemented new procedures and systems including a prepurchase review of every non-accident spending request, regardless of amount or purpose, by the Board Chairman, and an electronic procurement system with a fixed path of approvals required to process purchases over $2,500. Documentation supporting all accident-related purchases made by investigators is reviewed by an approving official in the investigator's office and by the Chief Financial Officer. Use of electronic approval systems and moving purchase approvals to senior management level has strengthened internal control to ensure agency policies are followed.

    Recommendation: To aid NTSB in building an effective internal control environment and addressing the specific weaknesses identified during GAO's and PwC's reviews, the Board and Managing Director or their designees should institute a regular and comprehensive process for monitoring the performance of those responsible for initiating, processing, reviewing, and approving each type of transaction and the adequacy of related supporting documentation. The Board and Managing Director or their designees should ensure that those responsible for each function are held accountable for carrying out their responsibilities.

    Agency Affected: National Transportation Safety Board

  5. Status: Closed - Implemented

    Comments: The agency issued new guidance regarding its travel policy that specifically prohibits the use of the government travel card and contract air fares for personal travel.

    Recommendation: To aid NTSB in building an effective internal control environment and addressing the specific weaknesses identified during GAO's and PwC's reviews, the Board and Managing Director or their designees should clarify travel policies to specifically prohibit the use of government travel cards and contract airfares for personal travel of any type.

    Agency Affected: National Transportation Safety Board

  6. Status: Closed - Implemented

    Comments: The agency prepared constructive cost analyses for 23 trips taken during fiscal year 1999, which we had identified as potentially having excess cost reimbursements. NTSB's analysis indicated that the government incurred an additional cost of $957 for the identified trips. Based on that result, the agency concluded that there was minimal risk of exposure to reimbursement of excess costs during subsequent periods and that further analysis and collection efforts would not be cost effective. We concur with that conclusion. The agency also reissued its travel policy, specifically limiting travel reimbursements to the cost of direct travel and prohibiting use of the government travel card for expenses not related to official government travel. They also implemented Travel Manager software to ensure that all trip requests, itineraries, and reimbursements are subjected to reviews and approvals as required by agency policy.

    Recommendation: To aid NTSB in building an effective internal control environment and addressing the specific weaknesses identified during GAO's and PwC's reviews, the Board and Managing Director or their designees should, for all Alternative Home Base rule and indirect travel occurring since the start of fiscal year 1999, ensure that constructive cost analyses are prepared from appropriate supporting documentation and determine whether any reimbursements exceeded the amounts permitted by NTSB policy. The Board and Managing Director or their designees should pursue recovery of any excess travel reimbursements or, if recovery of an excess reimbursement is not sought, document the authority, basis, and rationale for the decision.

    Agency Affected: National Transportation Safety Board

  7. Status: Closed - Implemented

    Comments: The agency reviewed the travelers who used annual orders and reduced the number by 17 percent from 2001 to 2002, primarily by limiting their use only to personnel who make emergency travel as part of their normal duties. The agency eliminated use of all annual travel orders for fiscal year 2004.

    Recommendation: To aid NTSB in building an effective internal control environment and addressing the specific weaknesses identified during GAO's and PwC's reviews, the Board and Managing Director or their designees should minimize, to the extent practical, use of annual orders to authorize travel. Specifically, the Board and Managing Director or their designees should consider restricting the use of annual travel orders to those trips for which the exigencies of crash investigations or other emergencies make it impossible or impractical to obtain advance, trip-specific, supervisory review and approval of all pertinent travel provisions.

    Agency Affected: National Transportation Safety Board

  8. Status: Closed - Implemented

    Comments: NTSB no longer uses annual travel orders.

    Recommendation: To aid NTSB in building an effective internal control environment and addressing the specific weaknesses identified during GAO's and PwC's reviews, the Board and Managing Director or their designees should ensure that all annual travel orders include estimated costs of the travel being authorized by the annual travel order as required by the Federal Travel Regulation.

    Agency Affected: National Transportation Safety Board

  9. Status: Closed - Implemented

    Comments: Changes made to NTSB's procurement and expenditure systems for items costing $2,500 or less have improved control over these transactions. Proposed non-accident purchases are subjected to approval by a committee that includes the Chairman of the Board and the Chief Financial Officer (CFO), who has up-to-date budget information on hand to ensure funds are available for purchases that the committee approves. Accident-related expenses are subject to approval by the investigator-in-charge and are reviewed by the CFO for evidence of prepurchase approval and for funding availability. The agency has reduced the number of non-investigator purchase cards to four, which are used by procurement officials. Convenience checks are issued only to some accident investigators and agency policy limits use of the checks to accident-related expenditures only. The agency's accounting system balances are updated for each day's purchase card and convenience check transactions every workday. The agency concluded that these revised policies and procedures provide adequate compensating controls over approval of purchases and use of available funds. We concur with that conclusion.

    Recommendation: To aid NTSB in building an effective internal control environment and addressing the specific weaknesses identified during GAO's and PwC's reviews, the Board and Managing Director of their designees should establish formal requirements for uniformly documenting the prepurchase determination of funds availability and approval to use available funds for the purchase of products or services costing $2,500 or less.

    Agency Affected: National Transportation Safety Board

  10. Status: Closed - Implemented

    Comments: The agency conducted a physical inventory of accountable property and recorded information about each item in an inventory control record. The agency is now completing a review of its accounting records from fiscal 1998 forward to identify capital assets acquired during that period that might not have been identified through the physical inventory and to link the cost and acquisition financial information to the accountable inventory control record.

    Recommendation: To aid NTSB in building an effective internal control environment and addressing the specific weaknesses identified during GAO's and PwC's reviews, the Board and Managing Director or their designees should identify each item of NTSB's existing accountable property, the accountable office, and the accountable employee through physical inventory and a review of accounting records, and ensure that information about each item of accountable property is entered in the property control in accordance with NTSB policy.

    Agency Affected: National Transportation Safety Board

  11. Status: Closed - Implemented

    Comments: The agency reissued its policy on property management in May 2002, including a detailed description of accountable property, the responsibilities of personnel involved directly in the stewardship of accountable property, and information about the recordation, physical inventory, and disposal of accountable property. Also, the agency's new financial management system, specifically the funds validation process, requires accurate accounting strings, including budget object classification, to be entered before a request can be processed. The cost and acquisition financial information is linked to the accountable inventory control record.

    Recommendation: To aid NTSB in building an effective internal control environment and addressing the specific weaknesses identified during GAO's and PwC's reviews, the Board and Managing Director or their designees should ensure that all control information required by NTSB's property management policy is recorded in the property control record for each new accountable property item that is acquired.

    Agency Affected: National Transportation Safety Board

  12. Status: Closed - Implemented

    Comments: The agency corrected the guidance for 2001 cycle performance awards.

    Recommendation: To aid NTSB in building an effective internal control environment and addressing the specific weaknesses identified during GAO's and PwC's reviews, the Board and Managing Director or their designees should review and revise policy guidance applicable to performance awards to ensure that it clearly and accurately documents the basis or bases on which managers are permitted to determine employee performance awards. In so doing, the Board and Managing Director or their designees should ensure that the revised policy guidance complies with applicable Office of Personnel Management (OPM) regulations.

    Agency Affected: National Transportation Safety Board

  13. Status: Closed - Implemented

    Comments: In 2004, NTSB substantially completed corrective action by implementing the use of a template, which helps estimate the aggregate annual compensation of employees. In addition, NTSB added edit checks to its payroll system in order to systematically stop payments that would violate applicable compensation regulations.

    Recommendation: To aid NTSB in building an effective internal control environment and addressing the specific weaknesses identified during GAO's and PwC's reviews, the Board and Managing Director or their designees should establish specific procedures, in accordance with applicable OPM regulations, for determining estimated aggregate annual compensation, award and bonus amounts (both paid and deferred), and amounts eligible for retention allowances.

    Agency Affected: National Transportation Safety Board

  14. Status: Closed - Implemented

    Comments: In November 2005, NTSB completed its review of payroll records for employees who received retention allowance payments during 1999, 2000, and 2001 and provided us with documentation supporting their work, which we reviewed. NTSB's review of 1999, 2000, and 2001 compensation paid identified no additional instances of employees who were paid in excess of the aggregate annual compensation limit, or who received award or bonus payments or deferrals that caused annual compensation to exceed the limit, or retention allowances that exceeded OPM guidance.

    Recommendation: To aid NTSB in building an effective internal control environment and addressing the specific weaknesses identified during GAO's and PwC's reviews, the Board and Managing Director or their designees should use these procedures to review calendar year 1999, 2000, and 2001 determinations of aggregate annual compensation, award and bonus payments and deferrals, and retention allowance payments for all applicable NTSB employees.

    Agency Affected: National Transportation Safety Board

  15. Status: Closed - Implemented

    Comments: The agency has substantially completed corrective action related to our recommendation to determine and document what action is to be taken on identified instances of payments or deferred amounts that exceed amounts allowable under statute and OPM regulation. NTSB acted on the three instances of overpayment that we identified. The first of the three overpayments was identified, acted upon and corrected by NTSB prior to our review. The second overpayment was resolved by the agency reducing the employee's retention allowance, which allowed deferred bonus amounts to be paid and, in part, through use of a documented waiver for collection of an erroneous payment to employees. The third overpayment, to a person now retired from NTSB, was resolved in September 2005 by NTSB documenting its approval of an overpayment collection waiver, which was filed on behalf of the former employee by the NTSB General Counsel. NTSB did not find additional instances of overpayments during its review of 1999-2001 employee compensation. According to an agency official, NTSB now has other mechanisms in place to identify potential overpayment. It manually performs compensation estimate calculations twice a year using the agency's revised compensation testing template. Also, its new payroll system automatically monitors and reports planned compensation payments that would not comply with OPM regulations prior to processing the payment.

    Recommendation: To aid NTSB in building an effective internal control environment and addressing the specific weaknesses identified during GAO's and PwC's reviews, the Board and Managing Director or their designees should determine and document what action is to be taken to correct for any payments or deferred amounts that exceed amounts allowable under statute and OPM regulations (e.g., pursue repayment, reduce deferred amounts carried forward, and/or suspend retention allowance payments).

    Agency Affected: National Transportation Safety Board

  16. Status: Closed - Implemented

    Comments: NTSB has implemented the Federal Personnel Payroll System (FPPS) through Department of the Interior to process their payroll. An NTSB representative told us that FPPS automatically monitors and generates debt collection documents for payments of benefit premiums on behalf of employees in LWOP status so that such payments are identified, tracked, controlled, and collected on a timely basis.

    Recommendation: To aid NTSB in building an effective internal control environment and addressing the specific weaknesses identified during GAO's and PwC's reviews, the Board and Managing Director or their designees should establish and document policies that ensure that all amounts owed to NTSB--including those associated with the payment of salary advances and insurance benefit premiums for student employees in LWOP status--are identified, tracked, controlled, and collected on a timely basis.

    Agency Affected: National Transportation Safety Board

  17. Status: Closed - Implemented

    Comments: The agency has prepared an action plan including task, completion date, and responsible office, for each of the recommendations made by PwC and updates it on a regular basis. Of 107 separate action steps planned in response to the PwC recommendations, 90 were completed as of July 25, 2002.

    Recommendation: To aid the National Transportation Safety Board (NTSB) in building an effective internal control environment and addressing the specific weaknesses identified during GAO's and PricewaterhouseCooper's (PwC) reviews, the Board and Managing Director or their designees should regularly monitor implementation of the corrective actions planned by NTSB in response to each PwC recommendation.

    Agency Affected: National Transportation Safety Board

  18. Status: Closed - Implemented

    Comments: The agency halted the practice of paying advances to employees and collected all amounts identified as advances to current employees, except for a $200 amount to one employee, against whom garnishment action has been initiated.

    Recommendation: To aid NTSB in building an effective internal control environment and addressing the specific weaknesses identified during GAO's and PwC's reviews, the Board and Managing Director or their designees should review past employee advance transactions to identify those that have not been repaid and pursue collection of the amounts owed.

    Agency Affected: National Transportation Safety Board

 

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