United States Merchant Marine Academy
Internal Control Weaknesses Resulted in Improper Sources and Uses of Funds; Some Corrective Actions Are Under Way
GAO-09-635, Sep 9, 2009
Additional Materials:
Contact:
The U.S. Merchant Marine Academy (Academy), a component of the Department of Transportation's Maritime Administration (MARAD), is one of five U.S. service academies. The Academy is affiliated with 14 non-appropriated fund instrumentalities (NAFI) and two foundations. GAO was asked to determine whether there (1) were any potentially improper or questionable sources and uses of funds by the Academy, including transactions with its affiliated organizations; (2) was an effective control environment with key controls in place over the Academy's sources and uses of funds; and (3) were any actions taken, under way, or planned to improve controls and accountability. GAO analyzed selected transactions from fiscal years 2006, 2007, and 2008 to identify improper or questionable sources and uses of funds and reviewed documents and interviewed cognizant officials to assess the Academy's internal controls, and identify corrective actions to improve controls.
GAO identified numerous instances of improper and questionable sources and uses of funds by the Academy and its affiliated organizations. These improprieties and questionable payments GAO identified demonstrate that, while MARAD and the Academy have been taking action to improve the Academy's internal controls, the Academy did not have assurance that it complied with applicable fund control requirements, including the Antideficiency Act (ADA). Further, the Academy had numerous breakdowns in its important stewardship responsibilities with respect to maintaining accountability over the receipt and use of funds. For example, GAO identified improper and questionable midshipmen fee transactions related to: (1) fee collections and uses of fees unrelated to goods and services provided to all midshipmen, (2) fee collections that exceeded the actual expense to the Academy for the goods or services, and (3) the use of accumulated excess midshipmen fees for improper and questionable purposes. GAO found that a weak overall control environment and the flawed design and implementation of internal controls were the root causes of the Academy's inability to prevent or effectively detect numerous instances of improper and questionable sources and uses of funds. Specifically, GAO found that there was a lack of awareness or support for strong internal control and accountability across the Academy at all levels and risks, such as those that flow from a lack of clear organizational roles and responsibilities and from significant activities with affiliated organizations. The internal control weaknesses GAO identified were systemic and could have been identified in a timely manner had Academy and MARAD management had a more effective oversight and monitoring regimen. For example, GAO found that the Academy did not routinely prepare financial reports and information for use by internal and external users. GAO found that various actions were taken and in process that were intended to improve the Academy's internal controls, including actions to address issues of accountability with its affiliated organizations. For example, a permanent position of Assistant Chief Financial Officer (CFO) for the Academy was established in March 2009 with direct reporting responsibility to the MARAD CFO. This action provides a senior financial official at the Academy with authority to conduct needed oversight and monitoring of financial activities on a real time basis. Further, following discussions GAO had with Department and MARAD officials, the MARAD CFO took steps to secure and protect accumulated reserves held in commercial bank accounts of an affiliated organization. However, even though MARAD and the Academy have taken actions, much more needs to be done, including determining the amount of midshipmen fees that were used to cover official Academy expenses, performing a comprehensive analysis of the risks posed by the Academy's organizational structure and its relationships with its affiliated organizations, and establishing and implementing policies, procedures, and internal controls over many Academy activities.
Status Legend:
Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
- In Process
- Open
- Closed - implemented
- Closed - not implemented
Recommendations for Executive Action
Recommendation: To improve internal controls over processing of vendor invoices and accounting for repairs and maintenance expenses and additions to capital assets, the Academy should establish polices and procedures for periodic reporting of financial information for repairs and maintenance expenses and capital additions to assist users in monitoring these items as well as the funding sources--annual appropriations or no-year appropriations for long-term improvement projects.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve internal controls over accruals and to resolve potential issues surrounding past "parking" of appropriated funds, the Academy should perform an analysis to identify all activities involving accrual accounts used to "park" appropriated funds with the FCO, including all sources and uses of funds for fiscal years 2006 and 2007.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve internal controls over activities with Global Maritime and Transportation School (GMATS), the Academy should establish targeted internal controls for each direct and indirect activity between the Academy and GMATS.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve internal controls over activities with Global Maritime and Transportation School (GMATS), the Academy should establish formal written policies and procedures that, among other things, specify the allowable activities and transactions between the Academy and GMATS, and details the necessary approvals and reviews required for each activity.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve internal controls over activities with Global Maritime and Transportation School (GMATS), the Academy should, for each payment that is determined to be for other than a proper governmental purpose and that is not consistent with law, regulation, and policy, consider pursuing recovery from the organization or individual that benefited from the payment.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve internal controls over activities with Global Maritime and Transportation School (GMATS), the Academy should perform an analysis to identify all activities between the Academy and the NAFI, GMATS, during fiscal years 2006 and 2007 and determine for each activity: the nature of the activity; the amounts collected by the Academy or others for the benefit of the Academy; the nature and amounts paid, by the Academy or by others for the benefit of the Academy from the funds collected; the business purpose; the reason for Academy involvement; and if the activity complies with law, regulation, and policy.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To address funds held in commercial bank accounts of the FCO from prior years' reserves and Superintendent's Reserves and to resolve issues surrounding the past collections and uses of funds for excess midshipmen fee collections, the Academy should require that: (1) bank reconciliations be prepared for all activity in the commercial bank accounts of the FCO used for these reserves during fiscal years 2006, 2007 and 2008; (2) documentation be prepared for all questionable items as well as the related follow-up; and (3) going forward such bank reconciliations be timely prepared and independently reviewed by Academy staff with no direct involvement in the reconciliations or the activity in the bank accounts.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To address funds held in commercial bank accounts of the FCO from prior years' reserves and Superintendent's Reserves and to resolve issues surrounding the past collections and uses of funds for excess midshipmen fee collections, the Academy should finalize actions to protect and recover Academy funds held in commercial bank accounts by the FCO from current and prior years' midshipmen fees that totaled approximately $2 million at September 30, 2008.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To address funds held in commercial bank accounts of the FCO from prior years' reserves and Superintendent's Reserves and to resolve issues surrounding the past collections and uses of funds for excess midshipmen fee collections, the Academy should investigate the unexplained $100,000 transaction(s) in September 2007 per the off-line or "cuff" accounting records maintained by FCO and take actions as appropriate.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To address funds held in commercial bank accounts of the FCO from prior years' reserves and Superintendent's Reserves and to resolve issues surrounding the past collections and uses of funds for excess midshipmen fee collections, the Academy should perform an analysis to identify all activities in the prior years' and other reserves including all sources and uses of funds for fiscal years 2006, 2007 and 2008 by reviewing all the questionable payments and other activity, including payments that we identified that according to FCO records total $605,347 and for each payment that is determined to be for other than a proper governmental purpose and that is not consistent with law, regulation, and policy, consider pursuing recovery from the organization or individual that benefited from the payment.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve accountability and internal controls over the acquisition of personal services from NAFIs, and to resolve potential issues surrounding past personal services activities and payments, the Academy should develop written policy guidance on acquiring services from NAFIs that complies with the requirements of law, regulation, and policy on the proper use of funds by the Academy.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve internal controls over accruals and to resolve potential issues surrounding past "parking" of appropriated funds, the Academy should, for each payment that is determined to be for other than a proper governmental purpose, consider pursuing recovery from the organization or individual that benefited from the payment.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve internal controls over accruals and to resolve potential issues surrounding past "parking" of appropriated funds, the Academy should establish written policy guidance on the accrual of items of expense at year-end.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve internal controls over accruals and to resolve potential issues surrounding past "parking" of appropriated funds, the Academy should establish targeted internal controls that, among other things, provide the criteria for accruals, specify the documentation requirements for accruals, and provide management's review and approval procedures.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve internal controls over processing of vendor invoices and accounting for repairs and maintenance expenses and additions to capital assets, the Academy should establish written policies and procedures for repairs and maintenance expenses and capital asset additions that require: (1) periodic reviews of recorded amounts for repairs and maintenance expenses and capital asset additions to identify and timely address issues requiring management attention; and (2) correction of errors before financial reports are prepared from the books and records.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve internal controls over processing of vendor invoices and accounting for repairs and maintenance expenses and additions to capital assets, the Academy should perform an analysis to identify the causes of the errors in the recording of repairs and maintenance expenses that should have been capitalized totaling $5,076,198, and $3,431,725 of expenses that were improperly funded with the no-year capital improvement appropriation, during fiscal years 2006 and 2007.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve internal controls over camps and clinics operated by the Athletics Association NAFI or others on Academy property, the Academy should establish targeted internal controls that include: approvals required; costs to be recovered by the Academy; requirements (such as advance approval) for participation by Academy employees in the activities; and other matters of importance such as, insurance requirements, security, and required accountings to be provided to the Academy on the sources and uses of funds from each event.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve internal controls over camps and clinics operated by the Athletics Association NAFI or others on Academy property, the Academy should establish written policies and procedures for camps and clinics operated by the Athletics Association NAFI or others on Academy property.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve internal controls over camps and clinics operated by the Athletics Association NAFI or others on Academy property, the Academy should perform an analysis to identify practices at the Academy involving camps and clinics operated by the Athletics Association or others using Academy property and other assets. Document the nature and scope of such activities, including all sources and uses of funds for fiscal years 2006 and 2007 and take corrective action on any improper transactions.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve internal controls over activities from usage of the training vessel--Kings Pointer and other Academy-owned boats--by others, the Academy should, in coordination with the Department or MARAD legal counsel, as appropriate, determine if the Academy had the legal authority to retain and use any collections from the use of the Academy-owned training vessel the Kings Pointer and other boats; otherwise, deposit them in the general fund of the U.S. Treasury.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve internal controls over activities from usage of the training vessel--Kings Pointer and other Academy-owned boats--by others, the Academy should establish policy for the timing and extent of the analysis required for periodic updates to the usage-rate study.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve internal controls over activities from usage of the training vessel--Kings Pointer and other Academy-owned boats--by others, the Academy should perform or contract out for a comprehensive usage-rate study to establish usage rates. Such a study should include (1) consideration of the full cost to the Academy of the training vessels and other boats, including salaries and benefits of Academy personnel, major repairs, routine maintenance, non-routine maintenance and long-term repairs, fuel and dockage; and (2) identification of indirect expenses and imputed costs as appropriate (e.g., depreciation).
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve internal controls over activities from usage of the training vessel--Kings Pointer and other Academy-owned boats--by others, the Academy should establish written policies and procedures to govern the use of the Academy-owned training vessel the Kings Pointer and other boats, including addressing issues for ship's crews, insurance, security, billing procedures, and other responsibilities.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve internal controls over activities from usage of the training vessel--Kings Pointer and other Academy-owned boats--by others, the Academy should perform an analysis to identify all activity involving the use of the Kings Pointer and Academy-owned boats by others, including all sources and uses of funds for fiscal years 2006 and 2007 by identifying and recovering the cost of any unreimbursed non-governmental uses, to the extent authorized by law and for each payment, including payments to affiliated organizations, that is determined to be for other than a proper governmental purpose and that is not consistent with law, regulation, and policy, consider pursuing recovery from the organization or individual that benefited from the payment.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve accountability and internal controls over the acquisition of personal services from NAFIs, and to resolve potential issues surrounding past personal services activities and payments, the Academy should perform an analysis to identify the nature and full scope of personal services activities and the associated sources and uses of funds to include a review of all questionable payments, including those that we identify in this report for personal services totaling more than $8 million for fiscal years 2006 and 2007. For each such personal services arrangement: (1) determine if the amounts paid were consistent with the services received by the Academy; (2) quantify the amounts, if any, paid by the Academy for personal services that were not received by the Academy; and (3) document the decisions made with respect to any payments by the Academy for personal services that were not received, including decisions to seek recovery from other organizations for such amounts.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve internal controls over financial information, the Academy should implement policies and procedures to obtain the information necessary to timely comply with the requirement identified in this report for annual reports to the Congress that provides all expenditure and receipt information for the Academy and its affiliated organizations.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve internal controls over activities with its affiliated organizations, the Academy should perform an analysis to identify each activity involving the Academy and its affiliated organizations and for each activity determine: the business purpose; the reason for Academy involvement; the business risk that each activity presents; and if the activity complies with law, regulation, and policy. Design a robust system of checks and balances for each activity with each affiliated organization that is consistent with the business risk that each activity presents considering, among other things, the nature and volume of the activities with each affiliated organization.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve internal controls over activities with its affiliated organizations, the Academy should require that all affiliated organizations have approved governing documents and that the functions they will perform in the future are consistent with their scope of authority.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve internal controls over activities with its affiliated organizations, the Academy should perform a comprehensive review and document the results of an analysis of the risks posed by the Academy's organizational structure and its relationships with each of its affiliated organizations, including: address the inherent organizational conflicts of interest that we identify in this report regarding Academy managers having responsibility for activities with affiliated organizations that are in conflict with the managers' Academy responsibilities, and determine whether the current organizational structure should be maintained or whether an alternative organizational structure would be more efficient and effective, while at the same time reducing risk and facilitating improvement in internal control and accountability.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve the design and operation of the internal control system at the Academy, the Secretary of the Department of Transportation should direct the Administrator of MARAD, in coordination with the Superintendent of the Academy, to implement a program to monitor the Academy's performance, including: reviews of periodic financial reports prepared by Academy officials; and reviews of the Academy's documentation and analysis from its review of its periodic financial reports and associated items, such as the results of its follow-up on unusual items and balances.
Agency Affected: Department of Transportation
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve the design and operation of the internal control system at the Academy, the Secretary of the Department of Transportation should direct the Administrator of MARAD, in coordination with the Superintendent of the Academy, to establish a comprehensive risk-based internal control system that addresses the core causes and the challenges to proper administration that we identify in this report, including the risks and challenges that flow from the close organizational and transactional relationships between the Academy and its affiliated organizations and implement internal controls that address the elements of our Standards for Internal Control in the Federal Government, including the role and responsibilities of management and employees to establish and maintain a positive and supportive attitude toward internal control and conscientious management, and the responsibility for managers and other officials to monitor control activities.
Agency Affected: Department of Transportation
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To provide reasonable assurance that the Academy will comply with the ADA and other applicable laws and regulations, the Secretary of the Department of Transportation should perform a review of the funds control processes at the Academy and take actions to correct any deficiencies that are identified.
Agency Affected: Department of Transportation
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To determine whether the Academy complied with the ADA, the Secretary of the Department of Transportation should determine the amount of midshipmen fees that were used to cover official Academy expenses without legal authority to do so and adjust the Academy's accounts, as necessary, to charge available appropriations for such expenses. To the extent that insufficient appropriations remain available, report ADA violations as required by law.
Agency Affected: Department of Transportation
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To determine whether the Academy complied with the ADA, the Secretary of the Department of Transportation should determine whether legal authority exists to retain payments to the Academy from the Global Maritime and Transportation School (GMATS), both in Academy appropriations accounts and in commercial bank accounts of affiliated organizations, and if not, adjust the Academy's appropriations accounts to charge available Academy appropriations and expense accounts for the amount of official Academy expenses that were paid by funds received from GMATS or paid directly by GMATS on behalf of the Academy. To the extent that insufficient appropriations remain available for these expenses report ADA violations as required by law.
Agency Affected: Department of Transportation
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve internal controls over activities with its affiliated organizations, the Academy should establish formal written policies and procedures for each activity involving the Academy and an affiliated organization and specify for each activity: the required documentation requirements, necessary approvals and reviews, and requirements for transparency (e.g., require regular financial reports for each activity for review and approval by Academy management and MARAD officials charged with oversight). Establish internal controls for each activity with each affiliated organization, including (1) the planned timing of performance of the control activity (e.g., periodic reconciliations of billings with collections); (2) the responsibilities for oversight and monitoring and the documentation requirements for those performing oversight and monitoring functions; and (3) the necessary direct, compensating and mitigating controls for each activity.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve accountability and internal controls over midshipmen fee activities and to resolve potential issues surrounding the past collections and uses of midshipmen fees, the Academy should perform an analysis to identify all midshipmen fee collections for fiscal years 2006, 2007, and 2008, to include: identifying those items for which the fee collected is attributable to (1) an activity between the midshipmen as customer and a NAFI as service provider (e.g., collections for haircuts); and (2) an activity between the midshipmen as customer and the Academy as service provider (e.g., collections for personal computers) by determining if the (1) fee collected for each item was for a personal item of the midshipmen and consistent with law, regulation, and policy for such collections; (2) amount of the fee collected for each item was properly supported, based on, among other things, an analysis of the cost to the Academy for the good or service; and (3) amount collected exceeded the cost of the good or service and determining if any liability may exist for collections that (1) are not consistent with law, regulation, and policy as personal items of the midshipmen; (2) were not properly supported, in whole or part; and (3) exceeded the cost to the Academy for the good or service.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve accountability and internal controls over midshipmen fee activities and to resolve potential issues surrounding the past collections and uses of midshipmen fees, the Academy should perform an analysis to identify all payment activity and other uses of the funds collected for midshipmen fees for fiscal years 2006, 2007, and 2008, to include: reviewing payment activity to identify the payees, amounts, and other characteristics of the uses of the funds collected and conducting a detailed review of payment activity and other uses (e.g., transfers to prior years' reserves) for items considered as high risk by reviewing all questionable payments, and other questionable uses of funds, such as transfers to commercial checking accounts for the excess of collections over funds used, as well as the questionable payments that we identify in this report and for each payment and other use of funds that is determined to be for other than a proper governmental purpose and that is not consistent with law, regulation, and policy, consider pursuing recovery from the organization or individual that benefited from the payment.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve internal controls over financial information, the Academy should identify and evaluate the potential misstatements of amounts in the financial records for the Academy in fiscal years 2006, 2007, and 2008 to determine if restatement or reassurance of budget and financial reports and statements prepared from those records is appropriate, including: (1) $5,076,198 of errors in accounting for repairs and maintenance expenses and capital additions, and $3,431,725 of expenses that were improperly funded with no-year capital improvement appropriations; (2) $6,410,242 and $6,038,061 of recorded revenue and expenses, respectively, from GMATS training programs; (3) amounts for midshipmen fee collections and payment activity including effects on reported revenues, expenses, assets and liabilities; and (4) amounts for sources and uses of funds handled "off- book" that we identify in this report, including transactions in three Superintendent's Reserves and with GMATS and Fiscal Control Office (FCO).
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve internal controls over financial information, the Academy should implement comprehensive policies and procedures for the review of financial reports, to include requiring: reviews by the preparers of the financial reports as to their completeness and accuracy; evidence of departmental management reviews; and written records of identified anomalies and questioned items, as well as requirements for maintaining evidence of the results from associated follow-up on all identified anomalies and questioned items.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve internal controls over financial information, the Academy should implement financial reporting policies and procedures that, among other things, will provide visibility and accountability to Academy activities and balances to facilitate oversight and monitoring, including: (1) periodic reporting of actual and budget amounts for revenues and expenses for the current and cumulative period; (2) periodic reporting of amounts for activity and balances with affiliated organizations in detail; and (3) identification of items of revenue and expense for each funding source, including annual and no-year appropriated funds and other collections.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve accountability and internal controls over midshipmen fee activities and to resolve potential issues surrounding the past collections and uses of midshipmen fees, the Academy should perform an analysis to determine whether and, if applicable, the extent to which appropriated funds and midshipmen fees collected should be used to pay for contracted medical services.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve accountability and internal controls over midshipmen fee activities and to resolve potential issues surrounding the past collections and uses of midshipmen fees, the Academy should establish written policy for internal reviews of monthly reports of midshipmen fee activity and balances, identified anomalies, and questioned items as well as the results from the associated follow-up.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve accountability and internal controls over midshipmen fee activities and to resolve potential issues surrounding the past collections and uses of midshipmen fees, the Academy should utilize the information obtained from the analysis of midshipmen fees collected in prior years and other work to determine the amount of midshipmen fees that should be charged to midshipmen for personal items in subsequent years.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve accountability and internal controls over midshipmen fee activities and to resolve potential issues surrounding the past collections and uses of midshipmen fees, the Academy should establish written policy for the underlying analysis that is required and the approvals that must be obtained before changes are made in the baseline of midshipmen fee items, or before a change is made in the amount of such fees, or in the approved uses of the fees collected.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve accountability and internal controls over midshipmen fee activities and to resolve potential issues surrounding the past collections and uses of midshipmen fees, the Academy should establish written policy and criteria for determining the baseline items that are properly due from midshipmen for personal items, the amount of fees to be collected (based on underlying studies), and the approved uses of the fees collected.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve accountability and internal controls over midshipmen fee activities and to resolve potential issues surrounding the past collections and uses of midshipmen fees, the Academy should establish policies and procedures and perform the necessary analysis to support annual reports to the Congress to address changes in "any item or service" in midshipmen fees from that existing in 1994 as required by law.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve accountability and internal controls over midshipmen fee activities and to resolve potential issues surrounding the past collections and uses of midshipmen fees, the Academy should establish policies and procedures that require those charged by the Academy with the responsibility for midshipmen fee collections and payments to: (1) maintain detailed accounting records for all midshipmen fee activity that reflect accurate and fully supported information on collections, payments, and other activity that is consistent with document retention practices; (2) implement written review and approval protocols for all midshipmen fee collections and uses of funds consistent with policies and procedures established by the Academy and MARAD; and (3) provide monthly detailed reports of all midshipmen fee activity in the aggregate and by item to Academy and MARAD officials.
Agency Affected: Department of Transportation: Maritime Administration: Merchant Marine Academy
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.