Internal Control Improvements Needed in Agriculture's Miscellaneous Payments System

AFMD-85-66: Published: Sep 19, 1985. Publicly Released: Sep 19, 1985.

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GAO reviewed the Department of Agriculture's (USDA) National Finance Center's (NFC) miscellaneous payments system to assess the: (1) adequacy of internal controls for ensuring the accuracy and reliability of payment transaction processing; and (2) controls for ensuring the system's compliance with Comptroller General (CG) requirements pertinent to payment systems.

GAO found that: (1) key internal control objectives for the system were not being met because field agency and NFC internal control techniques were inadequate or not used; (2) internal control weaknesses significantly increased the system's vulnerability to transaction data errors and unauthorized payment transactions; and (3) transaction data errors could undermine the system's effectiveness in complying with CG standards for accuracy in processing and financial reporting. GAO also found that: (1) control improvements were needed at the field-certifying-officer level to ensure the accuracy of system transaction data; (2) improvements were needed in NFC data entry activities to ensure the accuracy of data processed; (3) NFC needs to discontinue bypassing a system designed to ensure proper reporting; (4) NFC needs to increase the scope of its payment transaction audits to better ensure that undetected errors are identified; (5) NFC needs to better control sensitive codes used by the system to assist in ensuring that only authorized transactions are processed; and (6) NFC needs to update internal procedures for the payments system.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: USDA issued instructions.

    Recommendation: The Secretary of Agriculture should instruct the Assistant Secretary for Administration to direct the Director, Office of Finance and Management, to reemphasize to USDA agencies' field certifying officers the importance of their responsibility for ensuring the accuracy and reliability of miscellaneous payments data provided to NFC for processing, consistent with the statutory requirements prescribed for certifying officers.

    Agency Affected: Department of Agriculture

  2. Status: Closed - Implemented

    Comments: Section 4 of the USDA 1986 Federal Manager's Financial Integrity Act (FIA) report shows this action has been completed.

    Recommendation: The Secretary of Agriculture should instruct the Assistant Secretary for Administration to direct the Director, Office of Finance and Management, to establish a procedure for periodically analyzing reasons for system edit rejections by source so that appropriate actions to obtain improvements can be initiated.

    Agency Affected: Department of Agriculture

  3. Status: Closed - Not Implemented

    Comments: Due to passage of time, a new study would have to be accomplished to effectively perform this function. GAO will continue to monitor USDA FIA reports for recurring problems in the future.

    Recommendation: The Secretary of Agriculture should instruct the Assistant Secretary for Administration to direct the Director, Office of Finance and Management, to increase the number of essential miscellaneous payments system data fields for which rekeying is performed by data entry clerks to ensure accuracy, at least on a selective transaction basis.

    Agency Affected: Department of Agriculture

  4. Status: Closed - Implemented

    Comments: USDA will perform an annual analysis via statistical sample. The sample plan was being prepared as of November 1, 1985. A pilot program will audit a statistical sample of vouchers for Prompt Payment Act compliance.

    Recommendation: The Secretary of Agriculture should instruct the Assistant Secretary for Administration to direct the Director, Office of Finance and Management, to require that audits of miscellaneous payment vouchers include verification of critical transaction data fields to field supporting documentation.

    Agency Affected: Department of Agriculture

 

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