Department of State's Progress in Implementing the Federal Managers' Financial Integrity Act

NSIAD-85-135: Published: Sep 25, 1985. Publicly Released: Sep 25, 1985.

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GAO reviewed the Department of State's compliance with the Federal Managers' Financial Integrity Act of 1982 (FMFIA) to assess: (1) whether actions taken as a result of the act are improving internal control and accounting systems; (2) its progress in implementing a program for evaluating systems of internal control; and (3) the reasonableness of State FMFIA reports.

GAO noted that State is making progress toward correcting reported internal control weaknesses; however, it has not made adequate progress in correcting long known weaknesses and accounting deficiencies related to personal property management. GAO found that: (1) the 1984 report on accounting systems stated that the systems were not in conformance with the Comptroller General's requirements; (2) areas excepted from the report on internal controls were of major importance to State operations; (3) the FMFIA implementation program has not resulted in detailed evaluations and tests of all systems of internal control; (4) effective action has not been taken to correct accounting and internal control weaknesses in personal property management; and (5) specific problems were not listed in the FMFIA report, but the report made reference to the problems and characterized them as minor accounting deficiencies. GAO also found that: (1) controls over personal property management were not adequate because of the lack of a departmentwide system for managing and accounting for property; (2) State failed to perform physical inventories at all locations and reconcile the inventories to financial records; (3) some vulnerability assessments and internal control reviews were not completed and analyzed by the year's end; and (4) no formal requirements exist to review the reasonableness of proposed corrective actions or to test and evaluate their effectiveness after implementation.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: State has developed NEPA and PCNEPA, issued control regulations, and instituted controls, compliance monitoring, and inventory certification. It has not, however, developed integrated accounting and general ledger control and stated that this may be 10 or more years away.

    Recommendation: To correct accounting conformance problems and improve internal controls in this area, the Secretary of State should direct the Under Secretary for Management and the Assistant Secretary for Administration and Security to design and implement, at all domestic and foreign locations, a personal property accounting system that will conform to the Comptroller General's requirements.

    Agency Affected: Department of State

  2. Status: Closed - Implemented

    Comments: State revised its Foreign Affairs Manual to require certifications that inventories were taken.

    Recommendation: To correct accounting conformance problems and improve internal controls in this area, the Secretary of State should direct the Under Secretary for Management and the Assistant Secretary for Administration and Security to develop and implement procedures to ensure that inventories are taken and reconciled annually at all locations as required by State regulations, including conducting periodic supervisory visits. Moreover, Assistant Secretaries and office heads should be required to certify annually that inventories of personal property have been taken and reconciled at all headquarters, other domestic and foreign locations under their purview, or to explain why these inventories and reconciliations were not performed.

    Agency Affected: Department of State

 

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