EPA-FMFIA: EPA's Implementation of the Federal Managers' Financial Integrity Act

Highlights

GAO reviewed the Environmental Protection Agency's (EPA) second-year implementation of the Federal Managers' Financial Integrity Act (FMFIA), focusing on: (1) improvements in EPA internal controls and the process EPA uses to evaluate and correct internal control weaknesses; (2) the status of the EPA accounting system and evaluations made to determine whether it conforms to the Comptroller General's requirements for such systems; and (3) the accuracy and completeness of the EPA annual FMFIA report.

Recommendations

Recommendations for Executive Action

Agency Affected	Recommendation	Status
Environmental Protection Agency	In future FMFIA annual reports, the Administrator, EPA, should list all EPA internal control material weaknesses until they have been substantially corrected.	Closed – Implemented EPA completed its resegmentation process.
Environmental Protection Agency	To more effectively implement the FMFIA process and to provide a stronger basis to report on the status of EPA internal controls, the Administrator, EPA, should fully define the role of EPA program managers in the FMFIA process, with a view toward having managers be more involved in evaluating internal controls.	Closed – Implemented EPA established the Resource Management Division to coordinate, monitor, and provide guidance for FMFIA implementation. Order 1000.24 FMFIA instructions have been superceded by Resource Management Directive Section 25.60, Internal Controls issued in July 1988, which defines program managers roles. This is supplemented by a guidebook issued on August 1, 1988.
Environmental Protection Agency	To more effectively implement the FMFIA process and to provide a stronger basis to report on the status of EPA internal controls, the Administrator, EPA, should schedule ICR for identified high and medium vulnerability weakness areas, where other forms of corrective actions were unsuccessful or inappropriate.	Closed – Implemented EPA used several of the Office of Management and Budget suggested techniques to address the high and medium vulnerability areas.
Environmental Protection Agency	To more effectively implement the FMFIA process and to provide a stronger basis to report on the status of EPA internal controls, the Administrator, EPA, should have the FMFIA tracking system monitor and follow up on all internal control weaknesses.	Closed – Implemented EPA has taken actions to update its corrective action tracking system to monitor uncorrected internal control weaknesses.
Environmental Protection Agency	To more effectively implement the FMFIA process and to provide a stronger basis to report on the status of EPA internal controls, the Administrator, EPA, should require responsible program managers in the various EPA functional areas to validate that actions taken to correct weaknesses reported as corrected are adequate to prevent or reduce their recurrence.	Closed – Implemented EPA presently requires program managers to do this.
Environmental Protection Agency	To more effectively implement the FMFIA process and to provide a stronger basis to report on the status of EPA internal controls, the Administrator, EPA, should assess FMFIA training needs and train staff as necessary.	Closed – Implemented In fiscal year 1985, EPA trained 600 managers and supervisors in the FMFIA process.
Environmental Protection Agency	The Administrator, EPA, should not report that the EPA accounting system is in conformance with the Comptroller General's principles, standards, and related requirements until the system has been adequately evaluated while in operation.	Closed – Implemented EPA disagreed with this recommendation at the time of the report; however, extensive testing throughout all financial areas is now being performed through an ongoing quality assurance program.
Environmental Protection Agency	To ensure that the accounting system evaluation made under FMFIA is thorough and comprehensive, the Administrator, EPA, should establish and implement a formal plan, including policies and procedures, on how EPA will implement section 4. The plan should include requirements for: (1) reviewing and testing the Financial Management System in operation to determine conformance with EPA policies and procedures and the Comptroller General's requirements; and (2) using Office of the Inspector General-reported accounting system weaknesses to determine whether planned actions have been implemented and whether they resolve the reported problems.	Closed – Implemented EPA agreed and issued Order 2550.1 in June 1985 to implement this recommendation.
Environmental Protection Agency	To ensure that the accounting system evaluation made under FMFIA is thorough and comprehensive, the Administrator, EPA, should properly record letter-of-credit payments.	Closed – Implemented EPA agreed with this recommendation and instituted a procedural change through a directive issued in October 1987 to comply with it.

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Topics

Justice and Law Enforcement

Accounting systemsInternal controlsProgram evaluationReporting requirementsFinancial managementExpenditure of fundsMaterial weaknessesHazardous wastesPayroll recordsConstruction grants