Internal Controls:

State's Controls Over Personal Property Management Are Inadequate

NSIAD-87-156: Published: Jun 10, 1987. Publicly Released: Jun 10, 1987.

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GAO evaluated the effectiveness of the Department of State's internal controls over personal property and its adherence to regulations concerning such property.

GAO found that: (1) of the 16 foreign offices it visited, most had not fully and properly taken inventory, and only 1 had adequately reconciled its inventory; (2) of the seven domestic offices it visited, none had properly taken and reconciled inventories; (3) although State has automated management systems at several locations, it has not provided all locations with sufficient guidance and training; and (4) State has not given attention to ensuring that internal controls are adequate. GAO also found that: (1) State's regulations contain insufficient requirements for domestic warehouse operations; (2) its controls over the security of warehouse property are inadequate; and (3) none of State's warehouses had taken or reconciled inventories of all their property in fiscal year (FY) 1986.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: State has begun compliance monitoring and this will continue. CPMO staff was increased from two to five positions.

    Recommendation: The Secretary of State should provide the Central Property Management Office (CPMO) with the necessary resources to carry out its responsibilities, including the establishment of a compliance monitoring program.

    Agency Affected: Department of State

  2. Status: Closed - Implemented

    Comments: Regulations were issued requiring all posts and offices to submit an annual regulations compliance report. Also, the Inspector General is providing feedback to CPMO staff from post inspections.

    Recommendation: The Secretary of State should direct other offices to participate, as needed, in a compliance monitoring program.

    Agency Affected: Department of State

  3. Status: Closed - Implemented

    Comments: On March 31, 1987, IG stated that he would provide reports when inspection teams focus on property management.

    Recommendation: The Secretary of State should ask the Inspector General (IG) to provide CPMO with copies of all audit and inspection reports that discuss compliance with personal property management regulations.

    Agency Affected: Department of State

  4. Status: Closed - Implemented

    Comments: State implemented a system requiring all posts and offices to certify inventory reconciliation and regulations compliance, established monitoring visits to check compliance, and established reporting of noncompliance or false certification to the Under Secretary for Management for imposition of sanctions. New regulations for domestic, foreign, and warehouse property management were published.

    Recommendation: The Secretary of State should direct the Under Secretary for Management to implement a new mechanism that would ensure that property management problems are corrected.

    Agency Affected: Department of State

  5. Status: Closed - Implemented

    Comments: Property management, part of the general services course at the Foreign Service Institute, was revised to accomplish this, as noted in State's December 1987 Financial Integrity Act report.

    Recommendation: To further strengthen property management controls and facilitate an automated control system, the Secretary of State should direct CPMO to develop a training program on managing and controlling nonexpendable personal property, with special attention to problems in establishing a nonexpendable property application (NEPA).

    Agency Affected: Department of State

  6. Status: Closed - Implemented

    Comments: A computer-based on-screen software training implementation guide was developed, as well as an implementation monitoring and reporting system. A Lotus 123 spreadsheet is used for monitoring and posts are querried about progress.

    Recommendation: To further strengthen property management controls and facilitate an automated control system, the Secretary of State should direct CPMO to develop a NEPA implementation guide and a monitoring mechanism that will identify when direct assistance is needed and when systems are fully operational.

    Agency Affected: Department of State

  7. Status: Closed - Implemented

    Comments: A security review was performed, with some action being taken immediately. A few actions requiring time and funding were not completed until late 1989.

    Recommendation: The Secretary of State should direct the Under Secretary for Management to immediately correct the physical security problems found at domestic warehouses.

    Agency Affected: Department of State

  8. Status: Closed - Implemented

    Comments: The guidance was added to Section 1255.5 of the Foreign Affairs Manual and dated November 14, 1988.

    Recommendation: The Secretary of State should direct CPMO to develop, for inclusion in the Foreign Affairs Manual, specific guidance and regulations sufficient to ensure adequate internal controls over domestic warehouse operations and to monitor compliance with the regulations.

    Agency Affected: Department of State

  9. Status: Closed - Implemented

    Comments: A July 1987 cable was sent to offices and posts emphasizing the importance of following regulations.

    Recommendation: The Secretary of State should reemphasize the importance and the need for principal officers and property control officials to ensure that regulations on personal property management are properly followed.

    Agency Affected: Department of State

  10. Status: Closed - Implemented

    Comments: State's December 1988 FMFIA report notes warehouse regulations (FAM 1255.5) were published in 1988. The regulations establish specific responsibilities for warehouse internal controls.

    Recommendation: The Secretary of State should identify the management control weaknesses found at domestic warehouses in the next annual Financial Integrity Act (FMFIA) report to the President and Congress, including actions taken and planned for correcting the weaknesses. The actions and plans should address the specific responsibilities of each warehouse organization and establish responsibility and authority for ensuring the adequacy of internal controls in operation at State's domestic warehouses.

    Agency Affected: Department of State

 

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