In July 1980, GAO began auditing the Federal Insurance Administration's (FIA) National Flood Insurance Program (NFIP). The objective of the audit was to express an opinion on the NFIP fiscal 1980 financial statements. GAO will not meet this objective because the Federal Emergency Management Agency (FEMA) has been unable to produce financial statements for NFIP. Pursuant to federal regulations, the GAO report to Congress on NFIP was due April 15; 6.5 months after the close of the fiscal year. Since that date has passed, it is no longer useful for GAO to continue auditing the 1980 statements. Accordingly, GAO stopped the 1980 audit and redirected its efforts toward a more in-depth study of the internal control system.
Recommendations for Executive Action
|Federal Emergency Management Agency||1. The Federal Emergency Management Agency should staff the Accounting Branch with qualified accountants and charge them to improve the National Flood Insurance Program accounting and reporting system.|
|Federal Emergency Management Agency||2. The Federal Emergency Management Agency should require the contractor to use an accounting system which provides for financial statements prepared in accordance with generally accepted accounting principles and standards.|
|Federal Emergency Management Agency||3. The Federal Emergency Management Agency (FEMA) should require the contractor, as insurance program operator, to establish and maintain recordkeeping procedures sufficient to provide FEMA and the Federal Insurance Administration with accurate, complete, and timely information.|
|Federal Emergency Management Agency||4. The Federal Emergency Management Agency should emphasize to Federal Insurance Administration financial monitors that they are responsible for insuring that adequate control is maintained over Federal funds, and that their duties include monitoring all contractor accounting controls and financial reporting procedures.|