Internal Controls: Food and Nutrition Service Lacks Effective Controls
AFMD-88-16
Published: Mar 18, 1988. Publicly Released: Mar 18, 1988.
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Highlights
GAO reviewed the Department of Agriculture's Food and Nutrition Service's (FNS) accounting operations to: (1) determine whether its controls, systems, and procedures were effective; and (2) identify any internal and accounting control weaknesses.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Food and Nutrition Service | In order to ensure that a disciplined internal control system is maintained, the Administrator, FNS, should require that employees and their work be properly supervised. |
Closed – Implemented
This is now required.
|
| Food and Nutrition Service | In order to ensure proper accounting, the Administrator, FNS, should direct the headquarters' Accounting Division to record letters of credit as advances and to reduce the advances substantially by the amount of program expense shown in the periodic reports submitted by grantees. |
Closed – Implemented
Month-end accrual of advance payments.
|
| Food and Nutrition Service | In order to ensure the reliability and security of FNS financial information, the Administrator, FNS, should direct that proposed system changes be submitted for formal management approval prior to implementation. Criteria for determining when formal review and approval are necessary should include the nature of the proposed change and not solely the dollar amount or staff years of effort involved. |
Closed – Implemented
A regulation change requires approval.
|
| Food and Nutrition Service | In order to ensure the reliability and security of FNS financial information, the Administrator, FNS, should direct that appropriate separation of duties be maintained to reduce the risk of error or fraud and to ensure effective checks and balances. |
Closed – Implemented
Agency procedures were changed to require separation of duties.
|
| Food and Nutrition Service | In order to ensure the reliability and security of FNS financial information, the Administrator, FNS, should direct that written documentation be updated to include all changes made to the system. |
Closed – Implemented
FNS now requires full documentation of system changes.
|
| Food and Nutrition Service | The Administrator, FNS, should request that the Director, Office of Information Resources Management (OIRM), identify the difficulties encountered by FNS during its attempt to operate its backup plan and work with FNS to establish an operating contingency plan. |
Closed – Implemented
FNS directed OIRM to identify problems.
|
| Department of Agriculture | The Secretary of Agriculture should direct the Administrator, FNS, to submit a comprehensive plan for implementing the recommendations made in this report. This plan should be approved and its implementation monitored by the Secretary. |
Closed – Implemented
The Office of Financial Management will monitor implementation of the plan.
|
| Department of Agriculture | The Secretary of Agriculture should direct the Administrator, FNS, to improve FNS evaluations of its internal controls and accounting systems by performing them in sufficient depth to disclose all material weaknesses. Such weaknesses and planned corrective actions should be disclosed in the Service's annual FMFIA report. |
Closed – Implemented
The Administrator, FNS, will ensure that this is done.
|
| Food and Nutrition Service | In order to ensure that a disciplined internal control system is maintained, the Administrator, FNS, should require that all accounting transactions be properly and fully documented. |
Closed – Implemented
Operating procedures were changed.
|
| Food and Nutrition Service | In order to ensure that a disciplined internal control system is maintained, the Administrator, FNS, should require that transactions be processed in a timely manner. |
Closed – Implemented
Operating procedures were changed.
|
| Food and Nutrition Service | In order to ensure that a disciplined internal control system is maintained, the Administrator, FNS, should require that accurate and fully supported financial reports be prepared and distributed. |
Closed – Implemented
All other changes will result in this.
|
| Food and Nutrition Service | In order to ensure that a disciplined internal control system is maintained, the Administrator, FNS, should require that audit findings and recommendations be promptly resolved. |
Closed – Implemented
The Administrator has stated his belief that this should occur.
|
| Food and Nutrition Service | In order to ensure proper accounting, the Administrator, FNS, should direct the headquarters' Accounting Division to record advances receivable in its accounting system. |
Closed – Implemented
LOC drawdowns are to be recorded as advances.
|
| Food and Nutrition Service | In order to ensure proper accounting, the Administrator, FNS, should direct headquarters' Accounting Division to revise accounting procedures to require that an allowance for uncollectible amounts be recorded in the accounting system and that losses for bad debts be recorded as expenses against the allowance. |
Closed – Implemented
An allowance was established.
|
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