Internal Controls:

System Problems Affecting GSA's Financial Reporting

AFMD-88-2: Published: Feb 4, 1988. Publicly Released: Feb 4, 1988.

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GAO evaluated the General Services Administration's (GSA) system of internal accounting controls to identify ways for improving them and other GSA financial management practices.

GAO found that GSA: (1) corrected three of four material internal accounting control weaknesses reported to Congress in 1985; and (2) has initiated corrections for the fourth material weakness and a new material weakness identified in 1986. GAO also found that other uncorrected problems within GSA management included: (1) infrequent assets inventories; (2) inadequate internal controls for its automatic data processing systems, billing processes, and credit card usage; (3) lack of supporting documentation for funds transactions; (4) errors in its consolidated financial statements; (5) improper recording of its financial transactions; and (6) improper application of accounting principles. In addition, GAO found that GSA: (1) automated systems contained many inefficiencies; and (2) used the moving-average cost method for valuing its general supply inventory. GSA agreed with most of these findings, but believed that: (1) its inventory practices were sufficient; (2) the financial transaction discrepancies identified did not materially affect the relevant financial statements; (3) it had achieved adequate control over its automated system operations; (4) its moving-average cost method was preferable to the use of standard costs; and (5) it had already implemented controls over its credit card system.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Comptroller of General Services developed an action plan that addressed the internal accounting control problems and included a timetable for resolving them.

    Recommendation: The Administrator of General Services should direct the Comptroller to address internal accounting control problems and procedures by developing a plan that includes a timetable for resolving them.

    Agency Affected: General Services Administration

  2. Status: Closed - Implemented

    Comments: GSA has implemented this recommendation.

    Recommendation: To assist the Administrator of General Services in ensuring that actions to accomplish these improvements are progressing on schedule, and assist him in carrying out his responsibilities under the Financial Integrity Act (FIA), managers should include in reports under the act information on the status of efforts to correct weaknesses identified. To the extent weaknesses are not corrected by the end of the current fiscal year, they should be considered for inclusion in the Administrator's annual report required by the act.

    Agency Affected: General Services Administration

 

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