Internal Controls: State Department Needs to Improve Management of Travel Advances
NSIAD-88-178
Published: Aug 15, 1988. Publicly Released: Aug 23, 1988.
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Highlights
In response to a congressional request, GAO reviewed the Department of State's efforts to resolve problems in its management of travel advance funds, specifically: (1) current delinquent travel advances and those written off as uncollectible; (2) State's compliance with applicable laws and regulations in managing the funds; (3) the adequacy of State's internal controls over the disbursement of advances and collection of unused balances; and (4) State's implementation of a congressional recommendation concerning travel advance management.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of State | The Secretary of State should take immediate steps to make full use of State's authority to collect delinquent advances from employees through payroll deductions. |
Closed – Implemented
State has increased its efforts to collect delinquent travel advances through payroll deductions. Travel advances totalling $253,000 have been transferred to payroll for deduction in 1989. Approximately 1,200 dunning notices were sent out in February and March 1989 for advances issued in 1988. State has been able to close 478 accounts totalling $2.8 million.
|
| Department of State | The Secretary of State should take immediate steps to limit the amount of travel advances to foreign service employees to 80 percent of estimated reimbursable expenses, in conformance with governmentwide regulations. |
Closed – Implemented
Effective September 15, 1988, State began to apply the 80-percent limitation on travel advances to all Department personnel, both Foreign Service and Civil Service.
|
| Department of State | The Secretary of State should take immediate steps to assess interest, penalties, and processing charges on all delinquent travel advances, as required by the Debt Collection Act of 1982. |
Closed – Implemented
State now assesses interest on all advances determined by audit to be delinquent. Those with outstanding travel advances are being notified of the requirement to assess interest in conjunction with payroll withholding/special collection actions not cleared within 30 days of notification.
|
| Department of State | The Secretary of State should take immediate steps to use available remedies to liquidate delinquent advances to non-State travellers, such as: (1) making appropriate arrangements with other agencies for their help; (2) offsetting income tax refunds; and (3) reporting delinquent debts to consumer reporting agencies. |
Closed – Implemented
State has established reciprocal agreements with other agencies for collecting indebtedness as prescribed in P.L. 97-365 and Treasury Guidelines for the Federal Employee Offset Program. State refers other delinquent accounts to collection agencies for actions and notifies credit rating bureaus. For tax year 1989, State participated in the IRS Refund Offset Program.
|
| Department of State | The Secretary of State should take immediate steps to offset from any future request for travel advances an individual's unliquidated balance from prior advances or deny further advances to anyone with a delinquent account. |
Closed – Implemented
All requests for travel advances are checked against the most recent listing of outstanding advances to ensure that no prior outstanding advance exists. If an employee has an outstanding advance, for which a voucher has not been submitted along with proper payment, a new travel advance is not issued.
|
| Department of State | The Secretary of State should take immediate steps to file amended reports for FY 1986 and 1987 with the Department of the Treasury to reflect only write-offs that have been properly documented, and reevaluate the documented write-offs that exceed the authorized limits, especially those involving current and former federal employees, with a view toward having these individuals properly liquidate their accounts, rather than having State declare them uncollectible. |
Closed – Implemented
State has filed amended reports with Treasury to reflect as uncollectible travel advances of $342,000 and $14,000 for 1986 and 1987, respectively. The original reports had shown the uncollectable amounts to be $660,000 and $26,000 for 1986 and 1987, respectively. Concerning the amounts still shown as uncollectable, State's review identified 10 additional accounts that exceeded the limit.
|
| Department of State | The Secretary of State should take immediate steps to perform a detailed evaluation of State internal controls over travel advances, assessing State's vulnerability to fraud, waste, and abuse in the handling of travel advances, and taking corrective action on identified problems. |
Closed – Implemented
State has hired a contractor to review accounting and fiscal operation procedures and internal controls, including the travel advance function. The analysis and recommendations for travel advances have been completed and the contractor has developed desk procedures which encompass proper internal controls.
|
| Department of State | The Secretary of State should take immediate steps to review the bogus transactions, make adjustments to correct the records, assess the extent that laws and regulations may have been violated, and ensure adequate internal controls are in place to prevent any future fictitious accounting entries. |
Closed – Implemented
Independent audit firm has analyzed the financial transactions pertaining to these accounts. State issued: (1) a directive prohibiting the creation of artificial name accounts; (2) a directive prohibiting changes to accounting edits without written approval of the Director of Accounting Policy; and (3) a policy governing advances to FSNs.
|
| Department of State | The Secretary of State should take immediate steps to reconcile the accounts and records of each individual outstanding travel advance, in line with government-wide regulations, prior to transferring these accounts to the new financial management system. |
Closed – Implemented
State has initiated action to reconcile individual outstanding travel advances by hiring a contract accountant to handle accounts prior to 1987 and dedicated in-house staff to reconcile 1988 and 1989 accounts.
|
| Department of State | The Secretary of State should take immediate steps to ensure that adequate resources are devoted on a continuing basis to properly controlling travel advances. |
Closed – Implemented
State has approved 11 additional positions to implement and maintain the new travel advance initiatives. Of these 11 positions, six are for accountants. The remaining five positions are dedicated to establishing and maintaining a central file system.
|
| Department of State | The Secretary of State should take immediate steps to amend State's 1987 Federal Managers' Financial Integrity Act report on its management of travel advances to make it accurately reflect the actual status of State's efforts to correct identified weaknesses. |
Closed – Implemented
State provided a more detailed and balanced update on this serious internal control and management issue in its December 1988 report rather than amending the 1987 report.
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Topics
Accounting proceduresCollection proceduresFederal agency accounting systemsPayroll deductionsFinancial managementFinancial recordsInternal controlsTransportation expense claimsTravel allowancesPublic officials