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North Atlantic Assembly's Internal Controls

NSIAD-96-164R: Published: May 9, 1996. Publicly Released: Jun 10, 1996.

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Pursuant to congressional and other requests, GAO and the International Board of Auditors (IBAN) for the North Atlantic Treaty Organization (NATO) reviewed the internal financial and management controls of the North Atlantic Assembly's (NAA) International Secretariat. GAO and IBAN noted that: (1) from about 1988 to mid-1995, the Secretariat's financial records were under the control of the Assembly's financial officer and NAA funds were substantially abused and misused; (2) NAA initiated procedures in May 1995 to strengthen its internal management controls, but NAA financial management systems controls remain seriously inadequate; (3) NAA lacked the ability to record and document commitments and obligations in advance against approved budget categories, control over travel expenses, adequate administrative procedures and policies, compliance with Belgian tax laws, and an adequate external audit; (4) the NAA Secretary General did not always have access to key financial data; (5) there were several instances where NAA funds were spent without due regard for economy; and (6) NAA is still vulnerable to future improprieties because of continuing control weaknesses, but recommended actions should correct these problems if properly implemented.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To preclude future financial improprieties, the Secretary General, NAA, should establish an integrated system of basic internal controls that, together, would adequately protect NAA resources. This should include an obligations system, a transparent budget that shows each major expense item, policies that segregate duties, better documented personnel and travel procedures and policies, and a requirement for a fully independent external audit.

    Agency Affected: North Atlantic Assembly

    Status: Closed - Implemented

    Comments: The NATO Board of Auditors has completed a financial review of the NAA's books and has issued an unqualified opinion about the financial accounts. In addition, it followed up on GAO's joint audit of the NAA's internal controls and found that it has generally implemented the recommendation.

    Recommendation: Until NAA establishes an integrated system of internal controls, it should obtain outside assistance for administrative services and audit support. One possibility might be to seek assistance from NATO for administrative support, thereby subjecting itself to the NATO financial rules and regulations and civilian personnel regulations and regular audit by IBAN.

    Agency Affected: North Atlantic Assembly

    Status: Closed - Implemented

    Comments: NATO is providing support to the NAA.

    Recommendation: NAA should amend its Rules of Procedures to provide for the finance officer to report to the Secretary General. There should be a reporting line from the finance officer directly to elected officials as well.

    Agency Affected: North Atlantic Assembly

    Status: Closed - Implemented

    Comments: Action was taken to implement this recommendation.

    Recommendation: The NAA Standing Committee should define its standards for due regard for economy.

    Agency Affected: North Atlantic Assembly: Standing Committee

    Status: Closed - Implemented

    Comments: Action has been taken which addresses the intent of this recommendation.

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