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GAO examined the Food and Nutrition Service's (FNS): (1) financial statements for the fiscal years ended September 30, 1988 and 1987; (2) internal control system; and (3) compliance with laws and regulations.

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Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Agriculture 1. The Secretary of Agriculture should direct the Administrator, FNS, to: (1) enforce FNS oversight of state controls over food coupons, including inventory audit procedures, recordkeeping, and reporting to FNS; and (2) develop the policies and procedures necessary to ensure the consistent monitoring of state agency controls.
Closed - Implemented
On November 29, 1991, FNS issued additional guidance on coupon inventory controls through a technical assistance package for states to improve their oversight and controls. States are implementing the guidance and FNS has provided GAO with Florida, Massachusetts, and North Dakota review packages as examples.
Department of Agriculture 2. The Secretary of Agriculture should direct the Administrator, FNS, to ensure that FNS staff are skilled in applying generally accepted accounting principles and in preparing financial reports to Treasury and the Office of Management and Budget (OMB). A needs determination should be conducted to ascertain how many staff with accounting skills are needed, and a sufficient number should be engaged and properly trained to ensure the reliable accounting and financial reporting of FNS transactions.
Closed - Implemented
FNS engaged a contractor to conduct a needs determination and based upon the contractor's February 1991 report, FNS instituted a training program for accounting personnel and hired five accountants.
Department of Agriculture 3. The Secretary of Agriculture should direct the Administrator, FNS, to ensure that financial statements and reports are prepared using required accounting policies, procedures, and methodologies.
Closed - Implemented
Effective September 30, 1991, FNS has developed procedures for preparing financial reports, recording adjustments, calculating bad debt allowances, and determining the food stamp redemption liability. The effectiveness of these procedures is being examined by USDA IG as part of its 1991 audit of FNS.
Food and Nutrition Service 4. FNS should follow the guidelines OMB established for its Federal Managers' Financial Integrity Act reporting in its July 5, 1990, memorandum, including OMB Circulars A-123 and A-127, and carefully consider the significance of nonconformance when arriving at an overall statement of compliance.
Closed - Implemented
FNS has followed OMB guidelines and has included applicable weaknesses in its 1990 annual FMFIA report, dated October 2, 1990.

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