Financial Management:

USDA Faces Major Financial Management Challenges

T-AIMD-00-115: Published: Mar 21, 2000. Publicly Released: Mar 21, 2000.

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Linda M. Calbom
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Pursuant to a congressional request, GAO discussed the financial management issues facing the Department of Agriculture (USDA), focusing on problems in the areas of: (1) implementing the Federal Credit Reform Act (FCRA) of 1990 and related accounting standards; (2) reconciling its Fund Balance with Treasury accounts; (3) addressing weaknesses in the Forest Service's financial accounting and reporting; (4) correcting certain other material internal control weaknesses; and (5) complying with some key laws and regulations.

GAO noted that: (1) FCRA and the related accounting standards were enacted to more accurately measure the government's costs of federal loan programs and to permit better comparisons both among credit programs and between credit and noncredit programs; (2) since 1994, the Inspector General (IG) has reported material weaknesses in the processes and procedures used by USDA's lending agencies to estimate and reestimate loan subsidy costs; (3) the USDA Chief Financial Officer established a task force in March 1999 to assist in resolving the agency's credit reform problems; (4) to date, USDA has not provided the resources needed to properly address its credit reform problems; (5) the IG was unable to fully substantiate the Fund Balance accounts with U.S. Treasury because USDA had not reconciled the balance with the amount reported by Treasury; (6) prior to 1999, USDA merely adjusted its records to agree with Treasury's; (7) since 1999, USDA discontinued adjusting its records to agree with Treasury's and began disclosing any differences in its reports to Treasury; (8) USDA formed a task force to resolve outstanding differences and develop procedures that will prevent the reconciliation problems from recurring in the future; (9) since the first audit of the Forest Service's financial statements, USDA's IG has found serious accounting and financial reporting weaknesses; (10) the Forest Service has completed several actions and begun others that, if successfully carried through, represent important steps toward achieving financial accountability; (11) at USDA, several persistent internal control weaknesses contributed to the IG's inability to form an opinion on USDA's fiscal year 1999 consolidated financial statements; and (12) the IG reported instances in which USDA was not complying with federal regulations, including: (a) component agencies' failure to comply with the Federal Financial Management Improvement Act; (b) lending agencies' failure to comply with provisions of the Debt Collection Improvement Act; and (c) USDA's failure to comply with the Chief Financial Officer Act.

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