Unreliable Evaluations Detract From Treasury's Progress To Implement the Financial Integrity Act

GGD-86-10: Published: Oct 10, 1985. Publicly Released: Oct 10, 1985.

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GAO reviewed the Department of the Treasury's progress in evaluating its internal controls and accounting systems under the Federal Managers' Financial Integrity Act (FMFIA).

GAO found that Treasury is: (1) correcting the two material weaknesses GAO identified in its previous FMFIA report; and (2) improving its accounting systems to bring them into conformance with FMFIA requirements. GAO also found that, while vulnerability assessments are a crucial part of the FMFIA process, Treasury's assessments are unreliable because: (1) managers of identical functions rated like variables differently; (2) managers frequently did not consider major operations of assessed functions; and (3) it failed to evaluate certain significant automatic data processing (ADP) systems and internal controls. The Customs Service is developing an alternative approach to vulnerability assessments that may improve the reliability of future assessments. In addition, GAO found that 6 of Treasury's 26 accounting systems conformed with the Comptroller General's requirements, 2 systems did not conform, and 18 systems conformed in all material respects with limited instances of nonconformance.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Responsibility for implementing FMFIA at the Secret Service was moved to the Executive Assistant to the Director on March 16, 1986.

    Recommendation: The Secretary of the Treasury should require auditors, other than those from the Secret Service's Office of Inspection, to be assigned to audit the Service's implementation of the act or assign the Service's FMFIA implementing responsibility to another Service office official.

    Agency Affected: Department of the Treasury

  2. Status: Closed - Not Implemented

    Comments: The Office of Management and Budget (OMB) revised the requirement placing less emphasis on process and allowed agencies greater flexibility in the approach used. GAO agreed with the deemphasis of process.

    Recommendation: The Secretary of the Treasury should require the Secret Service to involve its field personnel in its vulnerability assessments.

    Agency Affected: Department of the Treasury

  3. Status: Closed - Not Implemented

    Comments: OMB revised the FMFIA evaluation process to provide all agencies greater flexibility. Under the revised process, it is not necessary to conduct vulnerability assessments of all units.

    Recommendation: The Secretary of the Treasury should require the Secret Service to conduct vulnerability assessments on those units which were omitted from the process.

    Agency Affected: Department of the Treasury

  4. Status: Closed - Implemented

    Comments: The Customs' approach was not completed in time for consideration as a departmental alternative for fiscal year (FY) 1987. Treasury developed a revised approach, based on the revised OMB Circular A-123, for use in FY 1987. The revised approach looks more promising than the Customs' approach at this time.

    Recommendation: The Secretary of the Treasury should monitor the Customs Service's implementation of its alternative vulnerability assessment approach and, once its feasibility is proven, test the approach on a sample basis at several bureaus to determine whether it should be adopted departmentwide.

    Agency Affected: Department of the Treasury

  5. Status: Closed - Implemented

    Comments: Treasury did not provide documentation to support its position that the ongoing monitoring process addresses this point.

    Recommendation: The Secretary of the Treasury should require bureaus conducting vulnerability assessments in FY 1986 to detail how they plan to ensure that their assessments are reliable, and evaluate the adequacy of such plans relative to the problems discussed in this report.

    Agency Affected: Department of the Treasury

  6. Status: Closed - Implemented

    Comments: Treasury issued a directive that: (1) stated minimum security requirements to which all sensitive Treasury systems must conform; (2) cited minimal controls that must be evaluated; and (3) defined responsibilities for evaluating risk management. Treasury directed its bureaus to submit: (1) an inventory of all sensitive automated information systems and facilities; and (2) plans and status reports.

    Recommendation: The Secretary of the Treasury should define ADP facilities, systems, and controls which are to be evaluated through the Risk Management Program and/or FMFIA evaluation process.

    Agency Affected: Department of the Treasury

  7. Status: Closed - Implemented

    Comments: ADP and personal property weaknesses were reported in FY 1986 as continuing. Internal Revenue Service weaknesses were reported in FY 1986 as completed.

    Recommendation: The Secretary of the Treasury should continue to report all previously identified material weaknesses in the Department's annual report until they are fully corrected.

    Agency Affected: Department of the Treasury

  8. Status: Closed - Implemented

    Comments: As of December 31, 1986, Treasury had completed its first cycle of accounting system evaluations. According to Treasury's FMFIA report for FY 1986, all of its accounting systems were evaluated in operation.

    Recommendation: The Secretary of the Treasury should not report systems to be in conformance with the Comptroller General's requirements until they have been adequately evaluated in operation.

    Agency Affected: Department of the Treasury

  9. Status: Closed - Implemented

    Comments: Treasury issued guidelines to the bureaus which provide for expanded system testing.

    Recommendation: The Secretary of the Treasury should expand system testing to include: (1) both valid and invalid transactions; (2) general controls over automated systems; and (3) concurrent reviews of internal controls.

    Agency Affected: Department of the Treasury

  10. Status: Closed - Implemented

    Comments: Treasury bureaus were directed to justify their use of contractors in FY 1985 to do accounting system evaluations. As a result, contractors reviewed 5 accounting systems in 1985 versus 11 systems in FY 1984.

    Recommendation: The Secretary of the Treasury should provide for increased staff involvement in accounting system reviews to the extent resources permit.

    Agency Affected: Department of the Treasury

  11. Status: Closed - Implemented

    Comments: Treasury directed the bureaus, in its accounting system guidelines and training program, to include regional locations in the section four evaluations, where applicable. Additional field locations were reviewed in FY 1985. Further, Treasury included two accounting subsystems not previously evaluated.

    Recommendation: The Secretary of the Treasury should expand the 3-year cycle examinations and testing to include regional/field accounting operations and all accounting systems.

    Agency Affected: Department of the Treasury

  12. Status: Closed - Implemented

    Comments: Treasury provided documentation of visits to the bureaus for FMFIA monitoring purposes.

    Recommendation: The Secretary of the Treasury should improve departmental monitoring, including requiring departmental FMFIA staff to periodically visit the bureaus to review various phases of the process and provide feedback to the bureaus on their FMFIA efforts.

    Agency Affected: Department of the Treasury

  13. Status: Closed - Implemented

    Comments: Treasury prepared the schedules depicting the extent that its accounting systems were evaluated and included them in the FY 1985 FMFIA report.

    Recommendation: The Secretary of the Treasury should disclose in the year-end report the extent to which the systems have been evaluated.

    Agency Affected: Department of the Treasury

 

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