Skip to main content

Energy Management: Controls Over the Livermore Laboratory's Indirect Costs Are Inadequate

RCED-94-34 Published: Nov 16, 1993. Publicly Released: Dec 16, 1993.
Jump To:

Highlights

Pursuant to a congressional request, GAO provided information on indirect contractor costs at the Department of Energy's (DOE) Lawrence Livermore National Laboratory, focusing on: (1) the adequacy of the laboratory's financial management controls over its indirect costs; and (2) DOE oversight of the laboratory's indirect costs.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Energy To ensure compliance with the federal cost accounting standards, the Secretary of Energy should direct the Chief Financial Officer to ensure that direct costs included in the Livermore Laboratory's overhead pool are removed.
Closed – Implemented
DOE approved a Livermore accounting change for FY 1995 that clarified the definition of direct and indirect costs and provided further guidelines and controls for charging costs. DOE also worked with Livermore to identify and remove from the overhead pools those costs more properly charged directly to programs.
Department of Energy In order to ensure the reliability of the Livermore Laboratory's accounting information, the Secretary of Energy should require the laboratory to develop and implement adequate internal controls to ensure the reliability of its financial information, including fully documenting its account structure to identify the authorized purpose of each account and separating key duties to ensure that charges to accounts are in conformance with the authorized purposes.
Closed – Implemented
DOE's Oakland Operations Office and Livermore Laboratory took steps to strengthen internal controls at the laboratory. Effective in fiscal year 1994, Livermore required independent review and approval in order to open new indirect cost accounts. New Livermore policy guidance was issued requiring compliance with the causal/beneficial requirement and requiring account titles adequately describing the indirect costs captured. Operations Office staff monitored laboratory activities to identify control weaknesses and worked with the laboratory to correct the problems.

Full Report

Full Report (44 pages)

Office of Public Affairs

Topics

Auditing and Financial Management
Accounting proceduresAdministrative costsAtomic energy defense activitiesContract costsCost accountingFederal agency accounting systemsFinancial managementInternal controlsLaboratoriesOverhead costs