Accounting for Automatic Data Processing Costs Needs Improvement

FGMSD-78-14: Published: Feb 7, 1978. Publicly Released: Feb 7, 1978.

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Automatic data processing is used extensively throughout the Government, but many problems have been encountered in accounting for related costs.

Of 26 Federal data processing organizations reviewed, none had adequate cost information on their automatic data processing assets and operations. Major cost elements such as utilities, space rental, data transmission costs, and military salaries were frequently omitted from reports of total costs. Only about half of the organizations spread the costs of long-lived hardware over its useful life and only a few did so for software. Earlier GAO reviews noted examples of savings that could have resulted if proper cost data were available. GAO and the Office of Management and Budget offered guidance in this area, but it was not effectively followed. Some factors accounting for this were: changes in computer systems which can now serve many users, financing of data processing operation by several different appropriations in some cases, and the fact that data processing costs are only a portion of program costs and thus have not been separately identified. It is essential to have reliable cost data in order to make sound decisions on needs for procurement, to distribute costs properly when multiple users are involved, and to make proper charges for services.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: Federal agencies should: establish automatic data processing activities as cost centers, control such activities through operating budgets, keep cost accounts for these centers in such detail that charges can be made to major end users, and render reports that show actual costs compared with operating budget estimates and provide full disclosure of all significant data processing-related expenses.

    Agency Affected:


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