Financial Audit of Service America's 1989 and 1990 Operation of the House Restaurant System

GAO reviewed the financial statements of the firm operating the House Restaurant System. GAO found that: (1) it was unable to complete its audit of financial statements for 1989 and 1990 because it was unable to obtain key financial and accounting records to support payroll expenses and other material financial statement accounts; (2) the firm continued to use an incorrect formula to compute employee benefits and did not make the required contributions to the Thrift Savings Program in 1989; (3) the firm did not establish centralized control over restaurant equipment and inventory during 1989 and 1990, and could not ensure that certain inventory was adequately stocked; and (4) many problems could have been avoided if effective controls were in place to ensure that financial and accounting records were readily available.