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.

Additional Materials:

Contact:

J. William Gadsby
(202) 512-8387
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

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

GAO found that: (1) Education's second-year implementation of the act identified some new internal control weaknesses; (2) Education's progress in evaluating accounting systems in 1984 provided a better basis for reporting; (3) there were insufficient internal controls to prevent unauthorized access and manipulation; (4) Education excluded important program areas from vulnerability assessment coverage and did not effectively focus its assessment of remaining areas on potential risk of fraud; and (5) reviews performed on many major programs have been ineffective for determining the adequacy of internal controls. GAO also found that: (1) there was little assurance that corrective actions would be taken because Education did not have a complete inventory of identified material weaknesses; (2) a methodology for assessing automated systems' internal controls has not been developed; (3) Education did not ensure effective implementation of internal control activities by its program offices; (4) six of Education's largest systems did not conform with the Comptroller General's requirements; and (5) there was no adequate basis to state whether Education's system of internal controls, taken as a whole, conformed to the act's objectives.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In November 1985, responsibility for ensuring conformance with FMFIA guidelines was given to Education's Deputy Under Secretary for Management.

    Recommendation: 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.

    Agency Affected: Department of Education

  2. Status: Closed - Implemented

    Comments: 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.

    Recommendation: 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.

    Agency Affected: Department of Education

  3. Status: Closed - Implemented

    Comments: 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.

    Recommendation: The Secretary of Education should eliminate vulnerability assessment coverage gaps in Department headquarters.

    Agency Affected: Department of Education

  4. Status: Closed - Implemented

    Comments: The 1986 vulnerability assessment instrument requests the assessor to provide judgment on the overall effectiveness of safeguards to protect resources under his control.

    Recommendation: The Secretary of Education should modify vulnerability assessments to obtain overall views of assessors on program risk.

    Agency Affected: Department of Education

  5. Status: Closed - Not Implemented

    Comments: 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.

    Recommendation: The Secretary of Education should clarify vulnerability assessment questions subject to misinterpretation and provide better focus on risk issues.

    Agency Affected: Department of Education

  6. Status: Closed - Implemented

    Comments: Vulnerability assessments ask the assessor to list applicable reviews and evaluations. There is no requirement to consider their implication.

    Recommendation: The Secretary of Education should reinforce supervisory review requirements for vulnerability assessments and require that all relevant external reports and evaluations are appropriately considered.

    Agency Affected: Department of Education

  7. Status: Closed - Implemented

    Comments: The vulnerability assessment instrument requires a corrective action plan for each identified problem.

    Recommendation: The Secretary of Education should instruct programming organizations to act on internal control weaknesses when initially disclosed by vulnerability assessments.

    Agency Affected: Department of Education

  8. Status: Closed - Not Implemented

    Comments: 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.

    Recommendation: 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.

    Agency Affected: Department of Education

  9. Status: Closed - Implemented

    Comments: 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.

    Recommendation: 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.

    Agency Affected: Department of Education

  10. Status: Closed - Implemented

    Comments: 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.

    Recommendation: 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.

    Agency Affected: Department of Education

  11. Status: Closed - Implemented

    Comments: 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.

    Recommendation: 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.

    Agency Affected: Department of Education

  12. Status: Closed - Implemented

    Comments: There is a requirement that all weaknesses reported as corrected be independently validated. Documentation to support that this is being done is available.

    Recommendation: The Secretary of Education should provide for ongoing testing of internal control weaknesses reported as corrected in the Department's tracking system.

    Agency Affected: Department of Education

  13. Status: Closed - Implemented

    Comments: Target dates were established for all outstanding material weaknesses in November 1985.

    Recommendation: 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.

    Agency Affected: Department of Education

  14. Status: Closed - Implemented

    Comments: 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.

    Recommendation: 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.

    Agency Affected: Department of Education

  15. Status: Closed - Not Implemented

    Comments: Departmental reviews of accounting systems do not include tests of transactions through the accounting systems.

    Recommendation: 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.

    Agency Affected: Department of Education

  16. Status: Closed - Implemented

    Comments: 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.

    Recommendation: 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.

    Agency Affected: Department of Education

  17. Status: Closed - Implemented

    Comments: Education provided additional guidance and training to accounting system managers.

    Recommendation: 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.

    Agency Affected: Department of Education

  18. Status: Closed - Implemented

    Comments: Information on significance of 1986-identified material weaknesses were included in the 1986 year-end FMFIA report.

    Recommendation: The Secretary of Education should include, in future year-end FMFIA reports, information disclosing the significance of internal control weaknesses to Department operations.

    Agency Affected: Department of Education

  19. Status: Closed - Implemented

    Comments: Education's year-end report for 1985 identifies the significance of accounting systems out-of-conformance and the seriousness of weaknesses.

    Recommendation: 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.

    Agency Affected: Department of Education

 

Explore the full database of GAO's Open Recommendations »

Sep 12, 2016

Aug 8, 2016

Jun 15, 2016

May 19, 2016

May 17, 2016

Apr 11, 2016

Mar 16, 2016

Feb 8, 2016

Dec 14, 2015

Nov 30, 2015

Looking for more? Browse all our products here