Financial Management

Inadequate Accounting and System Project Controls at AID Gao ID: AFMD-93-19 May 24, 1993

The Agency for International Development (AID) has experienced serious accounting system and financial reporting problems that precluded it from (1) reporting the use and status of all its appropriated funds, (2) ensuring that it had received property it had paid for and reliably reporting on its disposition, and (3) promptly and accurately responding to requests from Congress and others for information on program operation costs. The problems occurred because AID managers had not enforced established accounting and financial reporting procedures and devoted enough resources to resolving unmatched disbursement and clearing apparent over-disbursements in some appropriation accounts. Also, AID had not satisfactorily managed financial system improvement projects, with the result that its systems did not provide up-to-date and reliable reports.

GAO found that: (1) AID has experienced serious accounting system and financial reporting problems; (2) AID overseas offices did not promptly and accurately report disbursements, and AID could not ensure that disbursements against valid, pre-established obligations were valid; (3) at the end of fiscal year 1991, AID property management systems overstated vehicle acquisitions by 44 percent and disposals by 14 percent, reported more than 20,000 items valued at $1.9 million that could not be located, and understated property balances in overseas offices by $19 million; (4) AID did not use automated techniques to exchange information and report financial and quantitative data, which resulted in inaccurate and inefficient information; (5) top management did not effectively support and oversee two major system improvement initiatives; and (6) AID has not established a steering committee to ensure top management involvement or formulated a detailed system development, testing, and implementation plan.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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