Justice and Law Enforcement:

Fiscal Controls in the Federal Trade Commission's Public Participation Program Should Be Strengthened

HRD-79-129: Published: Oct 1, 1979. Publicly Released: Oct 9, 1979.

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The Federal Trade Commission (FTC) has authority to provide compensation to certain persons in order for them to participate in rulemaking proceedings. Despite the $1 million statutory ceiling for any fiscal year, the Congress authorized funding for participant compensation of only $500,000 for each of fiscal years 1976, 1977, and 1978. The Congress authorized $750,000 for fiscal year 1979, and FTC has requested the same amount for fiscal year 1980. According to an FTC official, fiscal year 1979 obligations will probably not exceed $375,000, or 50 percent of the total authorization. In addition to participant compensation costs, the program incurs costs for administrative support, which includes three full-time employees and some part-time support staff. FTC estimated that the total cost of administering the Public Participation Program for fiscal year 1979 would be about $93,000.

The audit by FTC of program expenditures and agency efforts to collect amounts disallowed in the audit were generally satisfactory. The scope of agency internal audits of the Public Participation Program has been limited to examining financial transactions. These audits have concentrated on determining whether cost reimbursements claimed by participants are reasonable and allowable under agreements with program participants. However, the audits have not included a review of program participant eligibility determinations, which is a major consideration in auditing compliance with legal requirements under the program. Criteria for determining participants' financial eligibility are vague. It was also noted that the independence and objectivity of auditors may be inhibited when they are subordinate to agency officials whose functional responsibilities are regularly subject to audit. The guidance by FTC to program participants for claiming reimbursement for overhead costs was not clear, and reimbursement claims for these costs were not properly established. FTC needs to improve its fiscal procedures to assure that unpaid obligations at the end of the year are being adequately reconciled to obligation documents and validated. Accounting procedures need strengthening to assure that program costs are properly charged to the applicable fiscal year appropriation.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendation for Executive Action

    Recommendation: The Chairman of FTC should: (1) establish criteria for determining financial eligibility of Public Participation Program applicants, and (2) require internal auditors to review periodically participant eligibility determinations. The Chairman should relocate the internal audit functions to the highest practical organizational level. The Chairman must revise the program instructions to provide adequate guidance on allowability and accounting for indirect cost claims. The Chairman must ensure that yearend validations of obligations are properly made and documented as required. The Chairman should strengthen the accounting practice of FTC, so that program costs are charged to the applicable fiscal year appropriation.

    Agency Affected:

    Status: Closed

    Comments: Please call 202/512-6100 for additional information.

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