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Second-Year Implementation of the Federal Managers' Financial Integrity Act in the Department of Education

HRD-85-78 Published: Sep 26, 1985. Publicly Released: Sep 26, 1985.
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Highlights

GAO reviewed the Department of Education's efforts to implement and comply with the Federal Managers' Financial Integrity Act of 1982 (FMFIA).

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Education The Secretary of Education should include, in future year-end FMFIA reports, information disclosing the significance of internal control weaknesses to Department operations.
Closed – Implemented
Information on significance of 1986-identified material weaknesses were included in the 1986 year-end FMFIA report.
Department of Education The Secretary of Education should establish responsibility within its steering committee, or elsewhere in the Department, for obtaining program offices' conformance with FMFIA operating guidelines and time frames.
Closed – Implemented
In November 1985, responsibility for ensuring conformance with FMFIA guidelines was given to Education's Deputy Under Secretary for Management.
Department of Education The Secretary of Education should establish a focal point for implementing FMFIA internal control activities in each regional office and establishing a regional assessment structure more representative of the functions carried out in departmental regions.
Closed – Implemented
A new regional assessment structure was developed in September 1986 for implementation during 1987. Some regional activities are still not included in the assessable structure. No focal point was established and there are no plans to do so.
Department of Education The Secretary of Education should eliminate vulnerability assessment coverage gaps in Department headquarters.
Closed – Implemented
Education revised its inventory of assessable units for implementation in 1986. Several activities in the Office of Planning, Budget, and Evaluation were not considered as assessable units, as well as other units.
Department of Education The Secretary of Education should modify vulnerability assessments to obtain overall views of assessors on program risk.
Closed – Implemented
The 1986 vulnerability assessment instrument requests the assessor to provide judgment on the overall effectiveness of safeguards to protect resources under his control.
Department of Education The Secretary of Education should clarify vulnerability assessment questions subject to misinterpretation and provide better focus on risk issues.
Closed – Not Implemented
The revised vulnerability assessment instrument deletes questions in the prior instrument. New emphasis is on safeguards regarding various aspects of program operations. The new instrument is essentially a problem identification document and is so different that this recommendation is no longer applicable.
Department of Education The Secretary of Education should reinforce supervisory review requirements for vulnerability assessments and require that all relevant external reports and evaluations are appropriately considered.
Closed – Implemented
Vulnerability assessments ask the assessor to list applicable reviews and evaluations. There is no requirement to consider their implication.
Department of Education The Secretary of Education should instruct programming organizations to act on internal control weaknesses when initially disclosed by vulnerability assessments.
Closed – Implemented
The vulnerability assessment instrument requires a corrective action plan for each identified problem.
Department of Education The Secretary of Education should establish criteria for determining which completed internal control reviews (ICR) should be repeated or upgraded and require program organizations to give priority to completing those reviews.
Closed – Not Implemented
Education performed vulnerability mini-assessments of applicable activities, which showed that they all had low vulnerability to waste, fraud, and abuse. Therefore, no ICR were considered necessary because of the significance of the activities involved.
Department of Education The Secretary of Education should establish ICR quality assurance procedures to ensure that limitations in scope, evaluation of control objectives and techniques, testing, and recommended corrective actions are resolved before the results are used as the basis for the annual FMFIA report to the President and Congress.
Closed – Implemented
Better training is being provided in performing ICR. More technical assistance is being provided and 100-percent validation is to be made on completed corrective actions. Although procedures to ensure adequacy of ICR appear to have been established, only two ICR were performed in 1986, and none have been scheduled for 1987. Thus, there will be no way to verify adequacy of new procedures.
Department of Education The Secretary of Education should expand ICR training to improve program staff performance in determining review scope, evaluation of control objectives and techniques, testing, and corrective action. Case studies contrasting specific examples of effective and ineffective performance in these areas would be beneficial.
Closed – Implemented
In 1985, internal control training was provided in the areas recommended. An example of effective ICR was used, but no examples of ineffective performance were used to identify techniques to be avoided. Further training sessions have not been planned or held.
Department of Education The Secretary of Education should implement a tracking system that incorporates findings of GAO, the Office of the Inspector General (OIG), and outside evaluations into the process leading to the preparation of the Education year-end FMFIA report.
Closed – Implemented
GAO and OIG findings were not incorporated in the 1986 year-end report. A new system to track GAO and OIG reports was implemented and Education plans to incorporate material findings in the year-end report for 1987.
Department of Education The Secretary of Education should provide for ongoing testing of internal control weaknesses reported as corrected in the Department's tracking system.
Closed – Implemented
There is a requirement that all weaknesses reported as corrected be independently validated. Documentation to support that this is being done is available.
Department of Education The Secretary of Education should establish meaningful target dates for correcting all material weaknesses based on the time when final actions resolving the weaknesses are expected to occur.
Closed – Implemented
Target dates were established for all outstanding material weaknesses in November 1985.
Department of Education The Secretary of Education should complete separate internal control evaluations of its major automatic data processing (ADP) systems to establish a more meaningful basis for future reporting on the adequacy of ADP internal control systems.
Closed – Implemented
Criteria and procedures for performing ICR on ADP systems were drafted; however, only security-type reviews have been performed rather than reviews of the systems' general and application controls.
Department of Education The Secretary of Education should direct program and administrative offices to expand testing to all accounting systems not undergoing substantial modifications and include the use of hypothetical transactions in testing.
Closed – Not Implemented
Departmental reviews of accounting systems do not include tests of transactions through the accounting systems.
Department of Education The Secretary of Education should direct program and administrative offices to include information in corrective action monitoring reports on short-term measures considered, original target dates, and completed accounting system improvements.
Closed – Implemented
Education's accounting system managers are maintaining a database that allows them to identify interim steps taken toward completing accounting system improvements, which are being tracked against target completion dates. Managers are reporting short-term corrective actions taken.
Department of Education The Secretary of Education should direct program and administrative offices to give accounting system managers additional guidance, through training and questionnaire clarification, on applying the Comptroller General's accounting principles, standards, and related requirements in evaluating its systems.
Closed – Implemented
Education provided additional guidance and training to accounting system managers.
Department of Education The Secretary of Education should direct program and administrative offices to report the significance of accounting systems out of conformance with the Comptroller General's requirements and the seriousness of weaknesses in these systems.
Closed – Implemented
Education's year-end report for 1985 identifies the significance of accounting systems out-of-conformance and the seriousness of weaknesses.

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Topics

Accounting systemsInternal controlsProgram evaluationReporting requirementsFraud, Waste and AbuseMaterial weaknessesHigher educationFinancial assistanceCivil rightsData errors