Department of Energy's Second-Year Implementation of the Federal Managers' Financial Integrity Act

RCED-86-14: Published: Oct 17, 1985. Publicly Released: Oct 17, 1985.

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GAO evaluated the Department of Energy's (DOE) implementation of the Federal Managers' Financial Integrity Act (FMFIA), including: (1) improvements in internal controls and the process DOE uses to evaluate and correct control weaknesses; (2) the status of the DOE major accounting systems and evaluations made to determine if they conform to GAO requirements; and (3) the accuracy and completeness of the Secretary's annual report.

GAO found that DOE is making reasonable progress in implementing an internal control evaluation process that complies with Office of Management and Budget (OMB) guidelines. DOE has improved controls in four of the five areas of material weakness that it had identified. While GAO did not identify any material weaknesses not reported by DOE, it concluded that DOE needs to increase its internal control testing. In addition, GAO found that, in some instances: (1) vulnerability assessments and internal control reviews (ICR) were not performed according to DOE guidelines; and (2) although DOE has developed a comprehensive plan for reviewing its accounting systems for conformance with GAO standards, it did not adequately describe the scope of accounting system evaluations performed, did not adequately document evaluation results, and did not sufficiently test the systems. Finally, although its 1984 annual report stated that DOE had reasonable assurance that its systems of internal controls met FMFIA objectives and that its accounting systems conform to the Comptroller General's principles and standards, GAO concluded that DOE does not have an adequate basis for these assurances without better evidence based on sound ICR and checks to determine that its systems are working as intended.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DOE revised its guidelines for accounting systems reviews and disseminated instructions to DOE financial and internal control representatives in May and June 1986. DOE formalized its guidance on August 19, 1986.

    Recommendation: The Secretary of Energy should direct the Assistant Secretary for Management and Administration to clarify accounting system review guidelines to specify the types of documentation needed for the scope and results of the reviews.

    Agency Affected: Department of Energy

  2. Status: Closed - Implemented

    Comments: DOE revised its internal control order so that it no longer applies to integrated contractors. DOE believes that this is consistent with a GAO legal opinion stating that the act does not apply to private organizations. DOE plans to ensure the contractors' accountability through existing management evaluations. DOE plans no further action on this recommendation.

    Recommendation: The Secretary of Energy should direct the Assistant Secretary for Management and Administration to clarify guidance regarding coverage of integrated contractors to ensure that funds are properly accounted for and controlled.

    Agency Affected: Department of Energy

  3. Status: Closed - Implemented

    Comments: In May 1985, DOE began preparing quarterly reports on the status of accounting system corrective actions tracked in DOE units' local tracking systems. The GAO report indicated that this would be a satisfactory alternative.

    Recommendation: The Secretary of Energy should direct the Assistant Secretary for Management and Administration to implement a corrective action tracking system that will report to management whether implementation of planned corrective action of identified system deficiencies has been effective.

    Agency Affected: Department of Energy

  4. Status: Closed - Implemented

    Comments: DOE developed an optional questionnaire for performing quality assurance reviews on vulnerability assessments and distributed it to internal control representatives on June 12, 1986. DOE plans to include the questionnaire in its internal control directive, as recommended, at its next update.

    Recommendation: The Secretary of Energy should direct the Assistant Secretary for Management and Administration to establish guidelines for supervisory quality assurance reviews of completed vulnerability assessments so that they are conducted according to DOE guidance and produce valid, consistent assessments.

    Agency Affected: Department of Energy

  5. Status: Closed - Implemented

    Comments: DOE developed an ICR quality assurance checklist and distributed it to DOE internal control representatives on June 12, 1986. DOE has not included the checklist in its internal control directive, but plans to at its next update.

    Recommendation: The Secretary of Energy should direct the Assistant Secretary for Management and Administration to require supervisory managers to perform quality assurance reviews of ICR and certify that they have assurance that ICR comply with OMB and DOE guidance.

    Agency Affected: Department of Energy

  6. Status: Closed - Implemented

    Comments: DOE plans to continue its ongoing training efforts, but plans no formal action on this recommendation.

    Recommendation: The Secretary of Energy should direct the Assistant Secretary for Management and Administration to train personnel to perform vulnerability assessments and ICR according to DOE requirements.

    Agency Affected: Department of Energy

  7. Status: Closed - Not Implemented

    Comments: DOE distributed ADP internal control guidelines throughout the Department and discussed them at the DOE Internal Control Evaluation Conference in June 1985. DOE plans no further action on this recommendation.

    Recommendation: The Secretary of Energy should direct the Assistant Secretary for Management and Administration to ensure that managers are aware of the requirement to evaluate automatic data processing (ADP) internal controls and the guidance that is now available.

    Agency Affected: Department of Energy

  8. Status: Closed - Not Implemented

    Comments: DOE believes that its existing policy and procedures are clear enough. Its position is that weaknesses tracked under the local systems in question are minor deficiencies. Material weaknesses are tracked at the departmental level.

    Recommendation: The Secretary of Energy should direct the Assistant Secretary for Management and Administration to amend the DOE FMFIA order to define what constitutes a closed internal control recommendation. In communicating this amended guidance to managers throughout DOE, the Assistant Secretary should emphasize the need to ensure that internal control weaknesses are corrected before they are dropped from the tracking system and periodically follow up on corrective actions to ensure that problems have been fixed.

    Agency Affected: Department of Energy

  9. Status: Closed - Implemented

    Comments: The DOE 1986 annual report on internal controls states that DOE accounting systems, that account for over 70 percent of its budget, were tested in operation. The report identified the number of accounting systems and shows all as being in overall conformance with GAO and OMB requirements.

    Recommendation: The Secretary of Energy should not report general conformance with the Comptroller General's principles, standards, and related requirements until a more adequate basis has been developed, with accounting systems reviewed in operation to include testing. The Secretary should: (1) list in the FMFIA annual report those systems that he is not yet in a position to report on conformance; and (2) report on any systems that he has a basis to determine conformance.

    Agency Affected: Department of Energy

 

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