Second-Year Implementation of the Federal Managers' Financial Integrity Act in the Department of Labor

HRD-86-29: Published: Nov 18, 1985. Publicly Released: Nov 18, 1985.

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J. William Gadsby
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GAO reviewed the Department of Labor's second-year efforts to implement and comply with the Federal Managers' Financial Integrity Act (FMFIA), which is aimed at strengthening management controls and accounting systems and helping to detect and deter fraud, waste, abuse, and mismanagement in federal agencies.

GAO found that, at the end of 1984, uncorrected internal control weaknesses existed in Labor's Unemployment Insurance and Job Training Partnership Act programs, as well as its other programs and accounting systems. These deficiencies precluded a determination that Labor's: (1) systems of internal control, taken as a whole, complied with FMFIA requirements; and (2) accounting systems, taken as a whole, generally conformed to the Comptroller General's requirements. GAO believes that, in order to determine whether its internal control systems provide reasonable assurances, Labor needs to collectively consider the: (1) comprehensiveness and quality of the evaluation work performed; (2) significance of the weaknesses disclosed; (3) status of corrective actions; and (4) extent to which accounting systems conform to the Comptroller General's requirements. GAO also believes that Labor's annual FMFIA report should provide sufficient information to determine the significance of reported internal control weaknesses.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: Labor's instructions to agency heads for preparing 1986 FMFIA letters requires them to quantify significant control weaknesses in terms of resource costs or other measures. Labor believes that its past internal control evaluations were adequate and state central systems are not subject to vulnerability assessment under Office of Management and Budget guidance.

    Recommendation: Labor should disclose: (1) functions where internal controls are adequate, inadequate, and not yet effectively evaluated; and (2) the significance of reported internal control weaknesses to its operations.

    Agency Affected: Department of Labor


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